Regional devolution and infrastructure push

The new administration is prioritising decentralisation, regional investment, housing, transport, and industrial policy through a proposed ‘Number 10 North’. Businesses may see more subnational decision-making, place-based incentives, and uneven regulatory or procurement dynamics across UK regions and devolved administrations.

Fiscal stress and funding costs

France’s debt burden reached 117.5% of GDP, with interest costs projected above €74 billion in 2027 and long yields near 4%-4.74%. This is raising sovereign risk, tightening financing conditions, and increasing pressure for spending restraint and policy uncertainty.

Energy security tied to Middle East

Middle East conflict and shipping disruption remain central business risks because Japan depends heavily on imported fuel, with reports citing 80-93% of crude linked to Hormuz exposure. Oil near $100 raises logistics, manufacturing, utilities, and import bills across Japan-based supply chains.

Energy Security Drives Policy

Taiwan’s dependence on seaborne energy imports, with natural-gas inventories reportedly covering only around ten-plus days, is sharpening business risk. Regional energy shocks and blockade scenarios are pushing debate on reserve expansion, LNG infrastructure flexibility, and possible nuclear restarts to support power reliability.

Sanctions intensify financial isolation

Washington expanded maximum-pressure measures to more than 1,000 targets and recently sanctioned Iranian banks, exchange houses, insurers, ships and shell companies. The widening restrictions increase payment, compliance and counterparty risks for firms exposed to Iranian trade, finance or logistics.

CUSMA protections under strain

The U.S. decision to hit even CUSMA-compliant goods, alongside refusal to renew the pact in its current form, undermines confidence in North American trade rules and signals prolonged renegotiation risk around rules of origin, enforcement, and market access.

Oil infrastructure under attack

Ukrainian strikes hit Russian refineries, pipelines, ports and tankers at least 30 times in July, pushing crude processing to about 3.6 million barrels per day, roughly one-third below seasonal norms, disrupting exports and increasing volatility in fuel, freight and insurance markets.

FDI resilience amid volatility

Officials say foreign direct investment realization in first-half 2026 reached 240% of target despite global conflict, energy disruption, and trade uncertainty. That suggests continued investor appetite, but also underscores how much Indonesia’s business outlook depends on preserving macroeconomic and political stability.

AI infrastructure straining finance

Large U.S. data-center expansion linked to artificial-intelligence investment is cited as adding pressure to bond markets and long-term yields. For international businesses, this suggests stronger competition for capital, possible power and infrastructure bottlenecks, and higher funding costs for adjacent projects.

Hormuz transit disruption escalates

Strait of Hormuz traffic has collapsed from about 130 ships a day before the war to roughly five recently, while oil flows reportedly fell below 2 million barrels per day from more than 8 million, sharply raising shipping delays, freight costs and energy-market 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.

Oil shock threatens operating costs

Officials warn Middle East escalation and disruption around Hormuz could lift oil prices, weaken the rupiah, and increase subsidy pressures by as much as Rp100 trillion. For businesses, that implies higher transport, fuel, plastics, and archipelago-wide logistics costs.

Forced-labor scrutiny raises compliance

The additional 12.5% US action tied to forced-labor enforcement puts supply-chain traceability under sharper focus. Products linked to aluminum, cotton, electronics, lithium batteries and tobacco were highlighted, increasing due-diligence pressure on import sourcing, labor controls and customs documentation.

Winter gas vulnerability exposed

Britain enters winter with exceptionally low gas storage resilience, just three to four days versus around 90 in Germany and over 100 in France. With gas supplying more than one-third of UK energy, price spikes could disrupt households, industry, and operating cost planning.

Retaliation targets compliance functions

China’s latest countermeasures increasingly hit the compliance architecture behind foreign restrictions, including due diligence, testing, auditing, and certification. For multinational firms, this raises the operational burden of forced-labor screening, product approvals, and supplier verification, especially for China-linked manufacturing and sourcing networks.

Spillover To Secondary Trade Routes

Iranian and aligned actors have signaled potential pressure on other export corridors, especially Bab al-Mandeb, which carries around 10% of world oil flows. That creates a second-layer risk for Europe-Asia shipping, forcing firms to prepare wider rerouting and cost escalation scenarios.

Federal Reserve Holds Amid Persistent Inflation

The Fed held rates at 3.50-3.75% with three dissents favoring hikes, as CPI runs at 3.5% driven by energy costs. Treasury yields hit near 20-year highs with 10-year notes above 4.7%, while mortgage rates at 6.66% undermine affordability and government debt service exceeds $827 billion.

Canal revenue collapse pressure

Red Sea insecurity has sharply reduced Suez traffic, with canal revenue falling from $10.25 billion in 2023 to about $4 billion in 2024 and ship passages roughly halving. The foreign-exchange hit constrains Egypt’s fiscal space, import capacity, and macro stability.

Railway build-out reshapes logistics

Both governments agreed to accelerate phase one of the China-Thailand railway and define phase two implementation, with Thailand targeting completion around 2030. The project could materially alter inland freight flows, cross-border sourcing patterns and industrial location decisions for exporters.

US secondary sanctions escalation

The U.S. Senate passed a Russia sanctions bill authorizing tariffs up to 100% on major buyers of Russian energy and broader measures on banks, officials and state firms, sharply raising compliance, trade-routing and counterparty risks across Russia-linked international commerce.

US sanctions squeeze finance

Washington has expanded pressure through repeated sanctions rounds, including more than 1,000 entities overall and fresh actions on Shahr Bank, exchange houses and shell companies in Dubai, Hong Kong and Singapore, complicating payments, trade finance, settlement channels and counterparty screening for firms.

Judicial Crackdown Raises Governance Risk

Investigations and detentions targeting CHP municipalities and leaders, including Istanbul Mayor Ekrem Imamoglu and numerous local officials, have intensified perceptions of rule-of-law deterioration. Reuters-linked reporting noted the pressure has rattled financial markets and heightened governance concerns for foreign investors.

High rates squeeze businesses

The central bank kept rates near 14% after only symbolic cuts, citing inflation risks. Expensive credit is straining companies, with warnings of autumn bankruptcies, weaker investment, delayed payments and rising stress across small businesses, industrial borrowers and domestic demand-dependent sectors.

Strategic Sectors Cooperation Expands

Despite tariff friction, US-India cooperation is broadening in defence, civil nuclear energy, and trusted AI. Bilateral goods trade reached about $141 billion in 2025, and sectoral openings could still support cross-border investment, technology partnerships, and resilient supply chains.

Tighter screening of foreign investment

France lowered the review threshold for non-EU investors in sensitive listed companies from 25% to 10%, covering firms listed outside the EU. Faster 10-day decisions may preserve financing access, but cross-border M&A in defense, AI, semiconductors and infrastructure now faces higher scrutiny.

Diversificación exportadora gana tracción

Las fricciones con Estados Unidos están impulsando una búsqueda más activa de diversificación comercial. Mientras exportaciones mexicanas de vehículos ligeros a EE.UU. cayeron 3.6% en el semestre, los envíos a otros mercados crecieron 21%, favoreciendo estrategias de mercado y cobertura geográfica.

Alternative Route Buildout

Ukraine, the EU, Romania, and Moldova are accelerating Solidarity Lanes and Danube logistics to preserve trade flows. Recent talks focused on port capacity, rail and road upgrades, border infrastructure, customs clearance, and European financing, creating opportunities but also execution bottlenecks.

EU clean trade partnership

South Africa and the EU advanced their Clean Trade and Investment Partnership around green hydrogen, critical minerals, sustainable fuels and grid expansion. With 2025 trade at €45 billion and the EU supplying over 40% of FDI, implementation could materially reshape export, sourcing and project-finance decisions.

Regional conflict threatens diversification

Escalating attacks from Yemen and Iraq, alongside broader Iran-linked tensions, risk pulling Saudi Arabia deeper into conflict. Recent coverage notes this could undermine foreign investment momentum, pressure fiscal balances, and complicate execution of megaprojects central to broader business opportunities.

Iraq corridor and energy integration

Turkey’s most consequential near-term business theme is deepening Iraq integration through energy and transport. Ankara and Baghdad are advancing the $17 billion Development Road, with financing decisions nearing and construction targeted before year-end, potentially reshaping regional freight, transit and investment flows.

US economic engagement is expanding

Islamabad is pursuing broader commercial ties with Washington through mining, trade finance, digital payments and real estate. Notably, the US EXIM Bank has announced about $1.25 billion for Reko Diq, signaling selective opportunities despite still-thin overall foreign investment inflows.

Emergency exporter financing expands

The government launched a R$18.5 billion emergency credit package through Treasury resources and BNDES to support tariff-hit exporters and strategic industries. Financing covers working capital, investment and market adaptation, helping firms preserve operations and redirect sales abroad.

Defense supply chains face curbs

China added 13 European entities to its dual-use export restriction list, including three French companies, requiring approvals for rare-earth related sales. The move heightens procurement uncertainty for French defense and advanced-technology manufacturers dependent on specialized Chinese materials and components.

Stricter foreign investment screening

France lowered the review threshold for non-European investors in sensitive listed companies from 25% to 10%, covering sectors such as AI, semiconductors, energy and healthcare. The move raises deal uncertainty, lengthens approvals and tightens strategic M&A conditions.

China Ties Stay Fraught

Australia continues balancing deep commercial dependence on China with sharper security tensions. Officials stressed China remains the largest trading partner, while diplomatic frictions over Taiwan and regional security create volatility for market access, investor sentiment, and strategic planning.

Defence export rules streamlined

Israel is accelerating defence-sector commercialization after Knesset approval of the first phase of licensing reform, shortening exporter registration and marketing-license processing, digitizing procedures, and setting documentation rules that could support faster international sales and sector investment.