PLI Gains Face WTO Scrutiny

India’s production-linked incentives continue attracting investment, with Rs 2.4 lakh crore invested, 14.15 lakh jobs created, and Rs 15.2 lakh crore exports enabled. Yet WTO members questioned PLI, tariff changes, local-content effects, and market-access implications for investors.

Buy British procurement expansion

The Chancellor is pushing a cross-government ‘Buy British’ procurement model after 86% of 1,200 major defence contracts reportedly went to UK firms. International suppliers may face tighter localisation expectations, while domestic content, apprenticeships, and regional footprint become more important in public tenders.

Infrastructure constraints shape expansion

Both Taiwan and Arizona expansion plans highlight practical bottlenecks in land, water, power, energy, and labor. Officials explicitly pledged support for these inputs, indicating that infrastructure availability will increasingly influence fab timing, supplier siting, and operational resilience decisions.

Defense Spending Reshapes Industry

Canberra announced an additional A$4.6 billion for AUKUS submarine shipyard development, taking total Osborne yard investment to A$8.5 billion. The spending supports sovereign industrial capacity, with implications for advanced manufacturing, procurement pipelines, and defense-adjacent infrastructure suppliers.

Escalating Tariff War Across Multiple Fronts

US imposed 12.5% Section 301 tariffs on China under forced labor pretext, part of broader 60-country action. Combined effective tariff rate exceeds 20%, with Washington pursuing replacement levies through multiple trade statutes after Supreme Court struck IEEPA tariffs unconstitutional.

Semiconductor tariffs threaten downstream industries

Market commentary around the U.S. Section 301 action highlights particular vulnerability in mature-node chips used in autos and consumer electronics. If tariffs widen to finished goods containing non-U.S. chips, cost pressures could spread through global manufacturing and cross-border electronics supply chains.

Federal Reserve Holds Hawkish

The Federal Reserve kept rates at 3.50%-3.75%, but three dissents favoring hikes and 76% market odds for a September move signal tighter financial conditions ahead. Elevated inflation, partly linked to tariffs and Middle East energy shocks, raises borrowing and valuation risks for business investment.

Reshoring Incentives Gain Force

The administration is pairing tariffs with tax measures and public pressure to accelerate domestic investment, especially in autos and strategic industries. This strengthens incentives to localize production in the United States, but may redirect capital from lower-cost global manufacturing networks.

Indian Visitor Policy Boost

A new 30-day visa waiver for Indian visitors is expected to support tourism demand from Thailand’s third-largest source market. Authorities project Indian arrivals could reach 2.55 million this year, benefiting airlines, hotels, retail and payments providers serving higher-spending leisure and business travellers.

Settlement spending raises external risk

Finance Minister Smotrich announced roughly NIS 2.4 billion, about $790 million, for new West Bank settlement neighborhoods and access roads, alongside legalization of 34 outposts. The measures may heighten geopolitical scrutiny, sanctions exposure, and reputational risks for international counterparties.

Election Politics Amplify Uncertainty

The tariff dispute is now entangled with Brazil’s October presidential election, as Lula and Flávio Bolsonaro trade blame and Washington’s actions become politicized. Investors should expect elevated policy volatility, headline risk, and delayed commercial decisions until the electoral picture clarifies.

Strait of Hormuz Energy Supply Crisis

Renewed US-Iran conflict has severely disrupted Strait of Hormuz shipping, through which 40% of India's crude and 90% of LPG imports transit. Oil prices surged above $90/barrel, Indian Oil cancelled Iraq liftings, and seafarer deployments were halted, threatening energy costs, inflation, and industrial output.

Energy transit strategy accelerating

Ankara is pursuing broader pipeline realignment with Iraq, including a one-year BOTAS transport formula, possible 750,000-barrel interim capacity and ambitions to lift corridor capacity to 2.5 million barrels daily. This could strengthen Turkey’s role in regional energy transit and downstream infrastructure investment.

Sanctions and Blockade Tighten

The US expanded maximum-pressure measures with a naval blockade and sanctions on more than 1,000 entities, including tankers, insurers, and shadow-fleet operators. These actions raise compliance risks, complicate payments and shipping, and further restrict lawful commercial engagement with Iran-linked trade.

Regional Diplomacy Brings Funding

Pakistan’s military-led diplomacy with Saudi Arabia, the United States and Iran has helped unlock external financial support, including a reported $3 billion Saudi loan rollover package. These ties may support near-term liquidity, but also tie business conditions more closely to geopolitical volatility.

Batam gains relocation momentum

Batam is emerging as a major supply-chain diversification hub as firms shift production from China. Free-trade-zone incentives, proximity to Singapore, and rising exports—reaching about US$19.6 billion in 2025—are strengthening Indonesia’s appeal for manufacturing, logistics, and data-center investment.

IMF constraints shape energy policy

IMF programme restrictions are limiting Pakistan’s ability to introduce time-based electricity tariffs, delaying cheaper daytime power for industry. Officials say this is slowing battery-storage adoption, grid efficiency improvements and renewable integration, raising uncertainty for manufacturers and energy-intensive businesses.

Budget reforms before election

The government wants structural reforms and a full 2027 budget before the presidential election, despite lacking a parliamentary majority. Planned spending reprioritization across industry, defense, agriculture, energy and AI creates execution risk for investors dependent on public support or regulation.

GDP Growth Slows Amid Bifurcated Economy

Q2 GDP decelerated to 1.5% from 2.1%, below forecasts. Consumer spending surged 3.2% driven by upper-income households, but manufacturing lost 75,000 jobs. AI investment remains robust while broader business investment stalls due to tariff and geopolitical uncertainty.

Asian refiners supply exposure

Saudi crude supply disruptions carry outsized implications for Asian buyers. Reported 2024 export shares show China took 25.6% of Saudi crude, South Korea 15.8%, Japan 15.4%, and India 10.5%, meaning prolonged disruption could raise feedstock costs and tighten regional product markets.

Vietnam gains China-plus-one inflows

Recent reporting highlights Vietnam as a leading Southeast Asian beneficiary of production and investment diversifying away from China. Its proximity to southern China, lower labor costs, and wide FTA network continue to attract manufacturing, especially for export-oriented multinational supply chains.

Alternative export logistics turn complex

Saudi efforts to bypass disrupted chokepoints increasingly rely on layered workarounds involving the Suez Canal, Egypt’s SUMED pipeline, and tanker shuttling. Capacity constraints—SUMED at about 2.5 million barrels daily—make exports more expensive, operationally complex, and less predictable for buyers.

Inflation and currency risks persist

Despite stronger growth, Egypt still faces elevated inflation and external vulnerability. The IMF expects inflation around 16.7% in second-half 2026 after currency depreciation and energy-price increases, complicating pricing, wage planning, import costs, and profitability for foreign businesses operating locally.

EU Trade And Reform Push

European business leaders are pressing for a modern EU-Thailand free trade agreement, alongside OECD-linked governance, anti-bribery and regulatory reforms. With EU-Thailand trade at 1.64 trillion baht in 2025, progress could materially improve market access and investor confidence.

Energy shocks pressure industry

Middle East conflict and disruption around Hormuz are pushing up French oil and gas import costs, feeding inflation, higher borrowing costs and weaker growth. Energy-intensive sectors and transport operators face renewed margin pressure, while policy volatility around subsidies may increase.

State footprint privatization drag

The IMF warned that divestment of state assets and reduction of the state’s economic role are proceeding more slowly than planned. Delays in privatization and persistent state dominance can deter private investment, distort competition, and slow market-opening opportunities for foreign firms.

USMCA review prolongs uncertainty

Mexico’s trade outlook is dominated by a prolonged USMCA review, with interim arrangements possible by year-end but complex issues pushed into 2027. Annual reviews through 2036 increase policy uncertainty for exporters, manufacturers, and investors planning North American production footprints.

China debt rollover dependency persists

Pakistan repaid a $1.4 billion Chinese commercial loan in July and is awaiting refinancing, underscoring reliance on external creditors. State Bank reserves fell to $17.2 billion, while upcoming Chinese and Saudi deposit rollovers remain central to sovereign and banking-sector stability.

Selective exemptions reshape exporters

Energy, potash, fish, critical minerals, and some auto-related products were exempted from the new U.S. tariffs, while consumer and manufactured goods remain exposed. The uneven treatment will redirect capital, favor resource sectors, and pressure diversified exporters to rebalance portfolios.

Sanctions Compliance Gaps Exposed

Reports that sanctioned Russia- and Iran-linked entities retained UK work-visa sponsor licences highlight enforcement inconsistencies in Britain’s sanctions regime. International firms face elevated due-diligence expectations as authorities tighten controls around restricted counterparties, labour mobility and exposure to politically sensitive supply-chain relationships.

US Tariffs Raise Trade Friction

Washington imposed a 12.5% tariff on Australian exports under a forced-labour probe, despite Canberra’s objections and modern slavery laws. The move increases pricing uncertainty, complicates US market access, and may prompt supply-chain reviews, compliance upgrades, and trade diversification efforts.

Indonesia partnership expands regional integration

Thailand and Indonesia adopted a 2026–2030 strategic partnership roadmap covering trade, investment, energy, food security, digital economy, and logistics links, with bilateral trade around US$17 billion and ambitions to reach US$20 billion or more by 2030.

Election-linked bilateral tensions

The trade fight is unfolding alongside Brazil’s presidential campaign and wider diplomatic friction, including visa denials to US officials and allegations of political interference. This politicization increases volatility in bilateral decision-making and raises scenario risk for internationally exposed businesses.

Pipeline capacity expansion urgency

Saudi Arabia’s East-West pipeline has become strategically critical as exports shift from the Gulf to the Red Sea. Recent reporting says Riyadh is considering expanding capacity from about 7 million to 9 million barrels per day, with major implications for infrastructure spending and contractors.

Energy Policy Uncertainty Persists

Business advocacy around electricity reform highlights continued regulatory inconsistency on private generation, distribution competition and rooftop solar rules across municipalities. This fragmented framework may slow private energy investment, complicate site selection and increase operating-cost uncertainty for energy-intensive sectors.

Alcohol and Dairy Frictions Persist

Provincial bans on U.S. alcohol and Canada’s dairy supply-management system are central triggers for the tariff dispute. These politically sensitive sectors risk becoming bargaining chips, with spillovers for food, beverage, retail, and agribusiness firms operating across Canada and the U.S.