Infrastructure-Led Investment Boom

India is experiencing a capital expenditure-driven investment surge, with nearly 80% of FY26 investments focused on infrastructure, power, metals, chemicals, and transport. This policy-driven growth is transforming the business landscape, though consumer demand remains subdued, impacting employment and sectoral balance.

Geopolitical Tensions Impact Supply Chains

Export controls, especially U.S. restrictions on semiconductor technology to China, create operational uncertainty for Korean firms. Temporary exemptions for Samsung and SK Hynix highlight ongoing risks to production stability and cross-border supply chain planning.

Sanctions Expand Geopolitical Risks

The US has broadened sanctions against entities in China, Iran, and Venezuela, targeting defense, technology, and energy sectors. These measures heighten compliance risks, restrict market access, and increase uncertainty for multinational firms operating in or trading with sanctioned jurisdictions.

Trade Policy and Tariff Structures

India's evolving trade policies, including tariff adjustments and trade agreements, influence import-export dynamics. Protectionist measures in certain sectors may affect supply chains and sourcing strategies, while ongoing negotiations for free trade agreements could enhance market access.

Energy Transition and Industrial Competitiveness

Germany's post-Russia energy policy has led to high energy prices and supply insecurity, undermining industrial competitiveness. Heavy reliance on expensive LNG imports and renewables, coupled with the nuclear phase-out, has increased costs for business, driving capital flight and threatening long-term investment.

Domestic Political Dynamics

Internal political shifts and governance issues influence economic policies and regulatory frameworks. Uncertainty in domestic policy-making can lead to abrupt changes in business regulations, impacting foreign investment strategies and operational continuity.

Geopolitical Supply Chain Vulnerabilities

France and the broader EU face increasing risks from supply chain dependencies, especially for critical minerals, electrical steel, and copper. Geopolitical tensions with China and hardware scarcity challenge the resilience of industrial and energy supply chains, impacting cost structures and strategic planning.

Regulatory and Political Uncertainties

Brazil faces ongoing regulatory changes, including tax reforms and sector-specific rules, as well as political uncertainties tied to the 2026 election cycle. These factors can affect the business environment, requiring vigilant monitoring by international investors and operators.

Special Investment Facilitation Council Scrutiny

The SIFC, established to streamline investment, faces criticism for lack of transparency and overlapping mandates with the Board of Investment. The IMF and Finance Ministry warn that insufficient disclosure of incentives and decisions may erode investor confidence and policy predictability.

Nearshoring and Supply Chain Shifts

Mexico continues to attract nearshoring investment, especially in manufacturing and AI hardware assembly, as global firms seek resilient supply chains. However, rising wages, regulatory hurdles, and competition from Central America challenge Mexico’s cost advantage and long-term positioning.

Energy Security and Geopolitical Intervention

The US’s assertive energy doctrine, exemplified by intervention in Venezuela, reflects a strategy to secure hydrocarbon dominance and counter rivals like China and Russia. This approach influences global energy markets, supply chain decisions, and investment risks in resource-rich regions.

Currency Volatility and FX Intervention

The Korean won posted a record low annual average against the US dollar, prompting $1.745 billion in FX interventions. Currency instability impacts import costs, inflation, and foreign investment strategies, requiring businesses to monitor exchange rate risks and hedging options closely.

Black Sea and Ukraine Security Engagement

Turkey’s leadership in Black Sea naval security and post-war Ukraine reconstruction positions it as a key regional player. This enhances opportunities in defense, infrastructure, and logistics, but also exposes businesses to geopolitical risk from renewed conflict or shifting alliances.

Energy Crisis And Industrial Distress

Chronic electricity shortages and soaring power costs have led to eased antitrust rules, allowing distressed industries to jointly negotiate for cheaper energy. Persistent supply disruptions and Eskom’s R105 billion municipal debt threaten manufacturing viability and investor sentiment.

Fiscal Discipline and Tax Reform Challenges

Thailand’s Medium-Term Fiscal Framework targets deficit reduction and public debt control, with phased VAT increases and tax reforms. Political will is crucial; delays or reversals risk credit downgrades, higher funding costs, and reduced fiscal space for crisis response.

Nearshoring and Supply Chain Realignment

Ongoing global supply chain disruptions and US-China tensions have accelerated nearshoring to Mexico. Investment in manufacturing, especially in automotive and electronics, is rising, but infrastructure and security challenges remain critical for long-term competitiveness.

Persistent Dependence on China Trade

Despite diversification efforts, China remains Germany’s largest trading partner, with bilateral trade at $287 billion in 2024-25. This dependence exposes German businesses to geopolitical risks and supply chain vulnerabilities, complicating efforts to realign trade and investment strategies.

Agricultural Sector Crisis and Policy Response

French agriculture faces crisis from low incomes, regulatory burdens, and disease outbreaks. The government announced €300 million in support, import suspensions, and stricter controls, but unrest persists, impacting supply chains and investment confidence in the sector.

Supply Chain Diversification and Realignment

Indian exporters are actively shifting supply chains, establishing subsidiaries in the US and Africa, and targeting new markets in Europe and Asia to offset US tariff risks. This trend is accelerating India’s integration into alternative global value chains and reducing overdependence on single markets.

Infrastructure Investment and Financing Innovation

India is targeting $2.2 trillion in infrastructure investment by 2030, launching risk guarantee funds and PPP models to unlock private capital. Major rail, logistics, and energy projects promise improved connectivity, reduced costs, and new opportunities for foreign investors and supply chain operators.

Sanctions, Export Controls, and Compliance Risk

The US is intensifying sanctions enforcement, especially on Iran and entities linked to protest crackdowns. New secondary sanctions and export controls, including on advanced technology, raise legal and operational risks for global businesses, requiring robust compliance systems and constant monitoring of regulatory changes.

Environmental Regulation and Plantation Ban

West Java’s ban on new oil palm plantations and push for sustainable crops reflect tightening environmental regulations. The policy aims to prevent degradation and water shortages, affecting agribusiness strategies and signaling broader ecological priorities in land use.

Geopolitical Risks and Security Concerns

Heightened geopolitical tensions, including relations with Russia and China, impact UK trade policies and investment climates. Security concerns influence supply chain resilience strategies and necessitate careful risk assessment for businesses engaged in sensitive sectors or reliant on global sourcing.

Persistent Cartel Violence and Risk

Ongoing cartel violence, drug trafficking, and organized crime remain major risks for business operations, especially in northern states. Despite recent high-profile arrests and extraditions, fragmentation and adaptation of criminal groups continue to threaten logistics, investment, and workforce safety.

Rising Global Trade Barriers

U.S. tariffs and the EU’s Carbon Border Adjustment Mechanism are increasing costs for Korean exports, particularly autos, steel, and electronics. These barriers challenge competitiveness and require strategic adjustments in pricing, compliance, and market targeting for international businesses.

US-China Trade Realignment Intensifies

US-China trade contracted sharply in 2025, with US imports from China down 28% and exports down 38%. Southeast Asia gained market share, reflecting a global supply chain shift. Ongoing tariffs and legal challenges create uncertainty for international business planning.

Selective Openness and Strategic Free Trade Zones

The launch of Hainan as the world’s largest free trade port exemplifies China’s approach to selective openness—attracting global capital and technology while maintaining central control. Such initiatives offer new opportunities but also reinforce the need for careful navigation of regulatory and political boundaries.

Supply Chain Resilience Efforts

US companies are increasingly focusing on supply chain resilience by reshoring manufacturing and diversifying suppliers. This shift aims to reduce dependency on vulnerable foreign sources, particularly in critical sectors like semiconductors and pharmaceuticals, impacting global production networks.

Escalating Human Rights Crisis and Crackdown

Iran’s security forces have responded to protests with lethal force, causing mass casualties and widespread arrests. The government’s actions have drawn international condemnation, increasing reputational and compliance risks for foreign investors and partners.

Real Estate and Infrastructure Investment Dynamics

Security tensions and labor shortages have slowed new construction, causing housing prices to rise. Government incentives and strategic planning in border regions, especially the Gaza Envelope, offer opportunities for foreign investors, but market volatility and regional risks remain high.

Supply Chain Diversification Gains

Southeast Asia, including Thailand, is capturing sourcing share as global supply chains shift away from China due to tariffs and trade tensions. Thailand’s imports to the U.S. rose 28% in 2025, positioning the country as a key alternative for international supply chain strategies.

Sustainability Standards and Market Access

Environmental regulations and sustainability standards are increasingly shaping Brazil’s export competitiveness. The end of the Soy Moratorium raises deforestation concerns, potentially threatening market access, especially in the EU, where new trade deals include strict environmental provisions.

Escalating Western Sanctions Pressure

Intensified US and EU sanctions, including new 500% tariffs, are sharply restricting Russia’s energy exports, financial flows, and trade. These measures are undermining Russia’s budget, squeezing oil revenues, and creating significant compliance risks for international businesses.

Geopolitical Tensions Over Taiwan

Escalating China-US and China-Japan frictions over Taiwan have led to sanctions, military drills, and trade restrictions. These developments heighten regional instability, increase compliance risks, and threaten supply chain continuity for international businesses operating in or trading with China.

Global Supply Chain Vulnerabilities

China’s tightening of export controls on critical minerals and dual-use goods, especially to Japan, highlights the fragility of global supply chains. These actions, which impact sectors from semiconductors to EVs, force multinationals to reassess sourcing and resilience strategies amid rising geopolitical risk.

Arctic Geopolitics and Resource Competition

Greenland’s vast mineral reserves, especially rare earths, are increasingly accessible due to climate change, attracting global interest. Strategic competition among the US, EU, Russia, and China over Arctic resources and routes directly impacts trade, investment, and supply chain strategies.