Labor Mobilization and Wartime Capacity

The prolonged war continues to constrain labor availability, operating hours, transport reliability and business planning, while capital and public spending remain defense-focused. Companies should expect persistent workforce shortages, higher security and continuity costs, and uneven execution risk across manufacturing, construction and services.

US tariff escalation risk

Washington’s Section 301 case has advanced to a proposed 25% tariff on many Brazilian goods, with a final decision due by July 15. Exporters face renewed uncertainty, weaker competitiveness, and pressure to diversify markets, contracts, and advocacy efforts.

UK-EU Food Trade Easing

A planned UK-EU agreement from summer 2027 would remove many physical checks and certificates on meat, dairy, fish, eggs and other foods. The government says the new regime could add £5.1 billion annually, improving agri-food trade, costs and supply predictability.

Cybersecurity and Scam Crackdown

Bangkok is intensifying cooperation on cybersecurity, online scams and transnational digital crime with partners including France. Stronger enforcement may improve the operating environment for digital firms, but it also implies tighter compliance, due diligence and security expectations for finance and platform businesses.

War costs strain fiscal outlook

Israel’s multi-front wars have cost about NIS 405 billion, or more than 17% of GDP, with debt above 69% of GDP. Higher taxes, heavier borrowing, and expanding defence budgets could squeeze infrastructure, healthcare, and broader public investment priorities.

South China Sea Hedging

Vietnam’s business environment remains shaped by careful balancing between China and the United States while defending maritime claims under UNCLOS. This diplomacy supports investor confidence, but any deterioration in South China Sea tensions could disrupt shipping security, energy access, and strategic manufacturing planning.

Outbound Investment To America

Taiwan says companies may invest up to $250 billion in the United States under a bilateral investment understanding, supported by government-backed credit guarantees. This could accelerate production diversification and U.S. market access, but may redirect capital, talent, and capacity away from Taiwan.

Gas Investment Revival Momentum

Cairo is trying to restore investor confidence in hydrocarbons and regional gas trading. Officials cite 102 oil and gas discoveries since July 2024, plans for $17 billion of new investment, and full repayment of $6.1 billion arrears to foreign partners.

Labor shortages and high borrowing

Military mobilization, casualties and defense-sector demand are intensifying labor shortages, while elevated rates—cut only to around 14.5% after a prolonged 21%—continue to restrict credit. The result is rising operating costs, recruitment pressure and weaker private-sector investment conditions.

India Trade Diversification Deepens

Australia is accelerating economic diversification through deeper India ties, including CECA talks, expanded energy and uranium trade, critical minerals cooperation, and maritime initiatives, offering firms a growing alternative growth corridor as exposure to China-related strategic risk persists.

Infraestructura, agua y capacidad

La oportunidad manufacturera supera la capacidad instalada en corredores clave. Persisten cuellos de botella en puertos, cruces fronterizos, energía, transporte y disponibilidad de agua, factores que elevan costos, retrasan expansiones y limitan la velocidad con la que México puede capturar relocalización productiva.

Weak Growth, Export Dependence

Thailand’s economy remains fragile, with first-quarter 2026 growth estimated at 2.2% year on year and the central bank cutting its 2026 forecast to 1.5%. Strong electronics exports are offsetting weak consumption and tourism, increasing exposure to external demand shocks.

Regional Supply Chain Integration

Thailand is deepening economic links with Vietnam under an upgraded strategic partnership, targeting bilateral trade of US$25 billion from about US$22.1 billion in 2025. Stronger logistics, aviation, digital, and green-industry ties could reinforce mainland ASEAN supply-chain resilience.

Tax Reform Transition Uncertainty

Implementation of the CBS-IBS tax overhaul is advancing, but delayed regulation, undefined split-payment mechanics, and dual-system coexistence are increasing compliance costs. Companies face major ERP, invoicing, contracting, and pricing adjustments, which may defer investment and disrupt operating planning through transition years.

Section 301 Supply-Chain Exposure

US Section 301 investigations into excess capacity and forced-labour risks have become a central business issue for India. Sectors including textiles, autos, steel, chemicals and healthcare products could face extra scrutiny, raising compliance costs and complicating long-term investment assumptions for exporters.

Infrastructure buildout and financing

Vietnam is accelerating highways, ports, rail, airports and industrial infrastructure to support double-digit growth ambitions for 2026-2030. However, execution depends on public-investment efficiency, private conglomerate participation, land clearance, materials availability and transparent bidding, affecting project timelines and investor confidence.

Labor Shortages and Mobilization

Prolonged conflict continues to strain Israel’s labor market through reserve mobilization, security-related absenteeism and limits on Palestinian labor access. Construction, agriculture, logistics and some industrial operations face staffing gaps, project delays, wage pressures and greater dependence on alternative foreign-worker channels.

Rupiah Weakness and Tighter Rates

The rupiah has traded near Rp17,700 per US dollar, prompting Bank Indonesia to raise rates 50 basis points to 5.25%. Higher funding costs, FX volatility and a wider current-account deficit increase hedging needs and pressure importers, leveraged firms and investment planning.

Consumer Relief and Tariff Cuts

The government is cutting tariffs on more than 100 food items until 2028, while freezing fuel duty and easing haulier road taxes. These measures may soften input and consumer-price pressures, but also signal continued policy intervention affecting retail, transport and import planning.

Maritime chokepoints and war risk

Regional conflict has made Hormuz and Bab el-Mandeb the dominant risk to Saudi trade. With more than 70% of crude exports redirected via Yanbu, any Red Sea disruption would raise freight, insurance, delivery times, and energy-market volatility.

Nuclear Uncertainty And Verification

IAEA monitoring gaps have deepened after conflict damage, with inspectors unable to verify parts of Iran’s enriched uranium stockpile, including 440.9 kilograms enriched to 60%. This keeps nuclear negotiations volatile and sustains the risk of renewed sanctions, military action, and investor hesitation.

Regional Supply Chain Coordination

Japan is deepening cooperation with regional partners, notably South Korea, on energy, industrial resilience, and strategic supply chains. This supports contingency planning and shared procurement, while also reducing disruption risks for companies dependent on Northeast Asian manufacturing and logistics networks.

Export-led investment incentives

The government is courting international business with aggressive tax incentives tied to the Istanbul Financial Center, transit trade and corporate relocation. Officials cite record 2025 goods and services exports of $395.9 billion, signalling continued support for export-oriented investors and regional headquarters.

Regulatory reform and governance

Hanoi is pushing legal reform to attract capital, improve intellectual-property protection and streamline investment, talent visas and digital rules. Yet corruption cases, project delays and uneven local implementation still complicate approvals, procurement and compliance, making execution risk a core consideration for foreign businesses.

PIF capital reallocation domestically

The Public Investment Fund is shifting roughly 80% of its portfolio toward domestic investments, reducing international exposure from 30% to 20%. This supports local supply chains and contract opportunities, but may tighten foreign capital deployment and reprioritize mega-project timelines.

Trade Routes Under Regional Shock

Conflict linked to Iran and Afghanistan is disrupting Pakistan’s external trade corridors, raising freight and insurance costs. Commerce Ministry estimates $850 million in lost Afghan-related exports and transit earnings, while GCC exports could fall another $600 million within months if instability persists.

Shadow Fleet Shipping Disruption

European authorities are increasingly intercepting and inspecting vessels tied to Russia’s shadow fleet, including recent seizures and expanded stop-and-search powers. This raises freight uncertainty, maritime legal risk, environmental liability and delivery delays for cargoes connected to Russian oil and related trade routes.

Tighter Migration, Labour Constraints

UK net migration fell 48% to 171,000 in 2025 as work-visa rules tightened. Lower inflows may intensify labour shortages in care, hospitality, logistics and other service sectors, raising wage pressures and complicating recruitment strategies for international employers.

US Tariffs and Diplomatic Friction

Washington’s 30% tariffs on South African goods, combined with political tensions and G20 disruption, raise market-access risk for exporters. Firms with US exposure face margin pressure, trade diversion, compliance uncertainty, and a stronger case for diversifying destinations and supply chains.

Vision 2030 Spending Recalibration

Saudi Arabia is trimming or reprioritizing flagship projects as financing constraints and regional instability bite. Reports of halted consultancy payments and scaled-back giga-projects signal tighter public spending, altering timelines, contract pipelines, and opportunities across construction, services, and real estate.

Fuel Prices and External Shock Exposure

The Iran-related oil shock is lifting Brazil’s inflation and policy sensitivity despite some revenue gains from higher crude prices. Fuel subsidies and delayed pass-throughs distort pricing signals, affecting transport, aviation, agribusiness logistics, import costs, and supply-chain budgeting across the economy.

Climate and Food Inflation Risks

Below-normal monsoon and El Nino risks could lift food inflation, weaken rural demand and complicate monetary policy. For consumer-facing businesses, this matters for pricing, household purchasing power, agricultural inputs and the broader stability of demand across India’s interior markets.

Energy and LNG Geopolitical Exposure

Renewed Middle East tensions are pushing oil prices higher, with Brent near $98 and WTI above $96 in recent reporting. For US-linked supply chains, this raises freight, petrochemical, and energy-input volatility, while strengthening the strategic importance of domestic energy and export capacity.

Energy Security and Import Costs

Japan remains heavily exposed to imported fuel, with roughly 95% of oil sourced from the Middle East and about 70% transiting Hormuz. Elevated LNG and power prices, plus delayed nuclear restarts, threaten industrial margins, logistics costs, and energy-intensive manufacturing competitiveness.

Higher-For-Longer US Interest Rates

Federal Reserve officials signaled rate hikes remain possible if inflation stays above 2%, with policy rates currently at 3.5% to 3.75%. Elevated financing costs would pressure investment returns, commercial borrowing, inventory carrying costs, and dollar-sensitive emerging-market operations linked to US demand.

Cybersecurity compliance pressure rising

France recorded 6,167 data-breach notifications in 2025, up 9.5% year on year, with hacking behind roughly half. The CNIL plans tougher inspections and sanctions in 2026, increasing compliance, vendor-management and operational-resilience demands for firms handling large datasets.