Tech retention drives tax policy

Israel is moving to protect its core innovation base through a direct R&D tax credit tied to the 2026 budget. The measure responds to the 15% global minimum tax, while brain-drain concerns and democracy-related uncertainty continue to weigh on multinational location decisions.

Supply Chains Need Redundancy

German manufacturers are adapting to repeated disruptions from Hormuz, semiconductor shortages and tariffs by building stockpiles, early-warning systems and alternative sourcing. Volkswagen alone manages procurement from over 65,000 suppliers, underscoring the scale of resilience investments now required.

Geopolitical energy and logistics pressure

Middle East conflict is raising fuel, freight and insurance costs, prompting Thailand to establish logistics war rooms and contingency planning. Although the region accounts for only 3.7% of Thai exports, higher energy prices can squeeze manufacturing margins and disrupt supply chains.

Security and Water Stress Risks

Operational risk is elevated by insecurity and resource stress. The OECD estimates insecurity reduces potential growth by 1–2 percentage points annually, while worsening water scarcity and leakage losses of up to 46% threaten manufacturing continuity, site selection and logistics reliability in key industrial regions.

Helium and LNG Disruptions

Qatar supply shocks are straining LNG and helium availability, both critical to Korean industry. Qatar provides about 14.9% of Korea’s LNG imports and around 65% of helium imports, creating risks for electricity pricing, semiconductor fabrication, and advanced manufacturing continuity.

Ports and Rail Bottlenecks Persist

South Africa’s weak freight system remains a major commercial constraint. Cape Town, Durban and Ngqura rank 391st, 398th and 404th of 405 ports globally, limiting gains from rerouted shipping and raising delays, inventory costs, and supply-chain uncertainty for exporters and importers.

Foreign Investment Screening Tightens

Berlin is considering stricter scrutiny of foreign takeovers and tougher market-entry conditions, including possible joint-venture expectations in sensitive sectors. For international investors, this signals a more interventionist policy environment around technology, industrial resilience and strategic assets.

Reshoring Incentives Support Manufacturing

Federal industrial strategy continues to favor domestic production in semiconductors, defense-linked manufacturing, and strategic supply chains, reinforced by tariff policy and AI-led productivity ambitions. Multinationals may benefit from localization incentives, but must balance them against higher labor, compliance, and input costs.

Fragile Growth and Export Weakness

Macroeconomic conditions have stabilised but remain soft for investors. Real GDP growth improved from 0.5% in 2024 to 1.1% in 2025, driven mainly by consumption, while exports declined amid logistics constraints and external tariff pressure on key tradable sectors.

Industrial Competitiveness Diverges

While semiconductors outperform, traditional sectors face mounting pressure. Taiwan’s machine tool industry is losing share amid currency effects, tariffs, and stronger competition from China, Japan, and South Korea, underscoring uneven resilience across export manufacturing and supplier ecosystems.

Antitrust Pressure Targets Tech Deals

US regulators are intensifying scrutiny of acquihires and nontraditional technology deals seen as bypassing merger review, especially in AI. This raises execution risk for cross-border investors, startup exits, and strategic partnerships involving intellectual property, talent acquisition, and digital market concentration.

Reconstruction Capital Mobilization

International reconstruction financing is becoming more operational, with the U.S.-Ukraine Reconstruction Investment Fund expected to reach $200 million this year and already approving its first deal. This improves prospects for co-investment, especially in energy, infrastructure, critical minerals, manufacturing, and dual-use technologies.

Gas infrastructure security risk

War-related shutdowns at Leviathan and Karish exposed the vulnerability of Israel’s offshore gas system. The month-long disruption was estimated to cost around NIS 1.5 billion, raised electricity generation costs by about 22%, and tightened export flows to Egypt and Jordan before partial restoration.

PIF Funding Prioritization Shift

Saudi Arabia is reassessing capital allocation across strategic projects as execution costs rise. The Public Investment Fund, with assets around SAR 3.47 trillion, remains central, but tighter prioritization increases project-selection risk, financing discipline, and the need for stronger commercial viability from foreign partners.

Logistics Bottlenecks and Rail Reform

Rail and port inefficiencies remain South Africa’s most immediate trade constraint, with government estimating losses near R1 billion daily. As 69% of freight still moves by road, delays, congestion and costly inland transport continue to weaken export competitiveness and supply-chain reliability.

Labour Market and Investment Freeze

Canada lost more than 100,000 full-time jobs in the first two months of 2026, while unemployment rose to 6.7%. Trade uncertainty is freezing activity in wholesale, retail and manufacturing, increasing operational caution for multinationals evaluating expansions, hiring and capital commitments.

Transport Corridor Infrastructure Vulnerability

Strikes on Bandar Anzali exposed the fragility of Iran-linked logistics corridors, including the International North-South Transport Corridor connecting India, Iran and Russia. Damage to customs and port assets could raise insurance premiums, delay cargo and weaken confidence in alternative Eurasian trade routes.

Major Fiscal Stimulus Reshapes Demand

Berlin is pivoting toward large-scale fiscal expansion, with infrastructure and defence spending potentially reaching €1 trillion over multiple years. Planned 2026 investment and defence outlays of €232 billion could lift growth, procurement demand, and project opportunities across sectors.

Foreign Investment Still Resilient

Despite macro volatility, Turkey continues attracting strategic investment. Dutch firms alone have invested about $34 billion since 2002, around 17% of total FDI, while the Netherlands led last year’s inflows with $2.8 billion, supporting manufacturing, agriculture, renewables, and services opportunities.

Uneven Export Growth Momentum

Taiwan’s economy remains strong but increasingly uneven, with AI and electronics outperforming traditional sectors. February orders rose 23.8%, yet China orders fell 0.2% and Europe orders fell 5.6%, signaling sectoral divergence, demand volatility and more selective investment conditions.

Political Stability with Reform Pressure

Prime Minister Anutin’s coalition controls about 292 of 499 parliamentary seats, improving short-term policy continuity after years of upheaval. For investors, that supports execution, but weak growth, court-related political risk and delayed structural reforms still cloud the operating environment.

Data Centres Face Stricter Conditions

Australia is welcoming digital infrastructure investment but imposing national-interest conditions on data centres, including renewable power procurement, water efficiency, local jobs, and grid-cost sharing. This raises compliance expectations while giving clearer approval signals for AI and cloud investors.

Ports Diversify Beyond Coal

Logistics infrastructure is broadening beyond traditional commodities. Port of Newcastle recorded 11.12 million tonnes of non-coal cargo in 2025, while Melbourne is adding a new port-linked container park, improving freight efficiency, renewable-project logistics, and supply-chain resilience.

Trade Diversification Through Ports

Canadian exporters are rerouting shipments away from U.S.-exposed corridors toward Atlantic and Pacific gateways. Cargo from Ontario to Saint John rose 153%, with 8,083 TEUs exported in 2025, highlighting how port modernization and rail optionality are reshaping logistics, market access and resilience.

Green Compliance Reordering Supply Chains

Sustainability standards are becoming a hard market-access issue as EU CBAM rules tighten from 2026 and RE100 pressures expand through multinational supply chains. Around 80% of FDI firms prefer green-energy industrial parks, making low-carbon power and emissions data increasingly decisive for exporters.

Structural Inflation in Inputs

Inflation pressures are increasingly tied to food, services, and administered prices rather than only currency weakness. The central bank cited drought, frost, rents, education, natural gas, tobacco, and water tariffs, creating unpredictable input costs for consumer, industrial, and retail operators.

Foreign Investment Screening Tensions

Canada’s investment climate is facing strain from sanctions, national security reviews, and rising treaty arbitration. Multiple ICSID and related claims, including a dispute seeking at least US$250 million, may raise concerns over policy predictability for foreign investors in strategic sectors.

Industrial Export Sectors Under Pressure

Steel, autos, lumber, cabinets, and other manufacturing segments remain exposed to U.S. duties. Canadian steel exports to the U.S. were reportedly down 50% year-on-year in December, while affected firms are cutting output, jobs, and capital spending.

Coalition Budget Politics Increase Uncertainty

The Government of National Unity is pairing reform messaging with heightened policy sensitivity around fiscal choices, fuel levies and growth delivery. For investors, coalition management raises uncertainty over budget execution, regulatory timing and the consistency of business-facing reforms across sectors.

WTO Rules Face US Challenge

Washington’s push to weaken traditional WTO most-favored-nation principles signals a more unilateral trade posture. For multinationals, this raises the likelihood of differentiated tariffs, more bilateral bargaining, and a less predictable rules-based environment for market access, dispute resolution, and long-term trade strategy.

EU Trade Pact Reshapes Flows

Australia’s new EU free trade agreement removes over 99% of tariffs on EU goods and gives 98% of Australian exports duty-free entry by value, potentially adding A$10 billion annually, boosting investment, trade diversification, and cross-border services activity.

Business Costs and Industrial Slowdown

March composite PMI fell to 51.0, a six-month low, while manufacturers’ input costs rose at the fastest pace since 1992. Fuel, transport and energy-driven cost inflation is eroding profitability, depressing hiring, and increasing pass-through pressure across supply chains.

High Rates Squeeze Investment Planning

Elevated financing costs and inflation pressures continue to constrain private investment despite selective state support. Expert RA expects the policy rate to fall only gradually toward 12% by end-2026, while possible tax increases and weakening profitability raise refinancing, expansion, and SME solvency risks.

Currency pressure complicates planning

The rupee has come under severe pressure from higher oil prices and geopolitical stress, recently falling to record lows beyond 94 per dollar. This increases imported-input costs and hedging needs, while affecting margins, inflation exposure, and capital allocation decisions for foreign businesses.

Nuclear Power Supports Reindustrialization

France’s nuclear-heavy power mix, supplying around 70% of electricity, remains a major attraction for manufacturers, digital operators and foreign investors. It underpins price stability and lower-carbon operations, but rising competition for electricity from data centers may tighten future availability.

Monetary Easing Amid Inflation Risk

Brazil’s central bank cut the Selic rate to 14.75%, starting an easing cycle, but kept a cautious tone as oil-linked inflation risks persist. Elevated real rates, higher fuel costs and uncertain further cuts shape financing conditions, consumer demand and logistics expenses.