Tech Controls and China Decoupling

U.S.-China technology rivalry continues to constrain semiconductor and AI supply chains via export controls and licensing, while China accelerates substitution. Firms face dual-ecosystem risks, tighter compliance, potential reconfiguration of R&D and manufacturing footprints, and higher costs for advanced computing capacity.

Trade Diversification and New Markets

With exports to the US and China declining, Germany is actively pursuing trade agreements with India, Mexico, Australia, and the UAE. This diversification aims to reduce reliance on traditional markets, mitigate geopolitical risks, and unlock new growth opportunities for German exporters.

Energy Security and Infrastructure Deals

A new 15-year gas agreement with Azerbaijan and major investments in natural gas and renewables are central to Turkey’s drive for energy security and reduced import dependency. These moves enhance industrial competitiveness and supply chain resilience.

Agricultural Export Resilience and Vulnerability

Despite war, Ukraine’s maritime corridor has shipped 100 million tons of grain since 2023, but attacks on ports have slashed agricultural exports by 47% year-on-year. This volatility threatens global food security and the stability of agri-business supply chains.

Critical Minerals and Mining Ambitions

With $2.5 trillion in mineral reserves, Saudi Arabia is investing $110 billion to become a regional mining and processing hub. Strategic partnerships, especially with the US, aim to reduce supply chain dependence on China and position the Kingdom as a key player in global mineral supply chains.

Energy reform and grid constraints

CFE’s new “mixed project” rules allow private partnerships but require CFE majority (≥54%) in joint investments, shaping contract design and bankability. Meanwhile grid modernization, storage and microgrids accelerate as industrial demand rises, making power availability a gating factor for plants.

Regulatory Uncertainty and Standards Divergence

Diverging regulatory regimes between the UK, EU, US, and China complicate compliance for international businesses. Ongoing disputes over digital services, food standards, and AI governance increase operational complexity and may fragment market access for UK-based firms.

Foreign Investment Decline and Decoupling

Foreign direct investment in China fell 9.5% in 2025, with many investors shifting to emerging markets due to geopolitical tensions, economic slowdown, and concerns over regulatory unpredictability. This trend challenges China’s long-term growth and integration with global capital markets.

Defense procurement surge and controls

Large US-approved arms packages and sustained defense demand support Israel’s defense-industrial base but heighten regulatory sensitivity. Companies in dual-use, electronics, aviation, and logistics face tighter export-control, end-use, and supply-chain traceability requirements, plus potential delays from licensing and oversight.

Supply Chain Vulnerabilities Persist

Supply chain disruptions have eased but remain a concern, especially in sectors reliant on semiconductors and critical materials. Geopolitical tensions, particularly US-China and EU-US, continue to threaten the stability and resilience of German and European supply chains.

Semiconductor controls and AI choke points

Tighter export controls, selective approvals, and new tariffs on advanced chips are reshaping global tech supply chains. Firms face compliance burdens, China retaliation risk, and higher hardware costs; U.S.-based capacity and trusted suppliers gain strategic priority.

Environmental Governance and ESG Pressures

Environmental and labor issues, particularly in mining and palm oil, have led to regulatory crackdowns, including permit revocations for violators. International investors face growing ESG expectations, and Indonesia’s ability to enforce standards will shape its reputation and access to sustainable finance.

US Infrastructure Investment Momentum

Ongoing US infrastructure initiatives, including digital and green energy projects, are creating new opportunities for international investors and suppliers. These investments aim to enhance competitiveness, supply chain resilience, and sustainable growth, influencing sectoral strategies.

Escalating tariffs and legal risk

Wide-ranging import tariffs—especially on China—are lifting input costs and retail prices, while Supreme Court review of IEEPA authorities adds reversal risk. Companies should stress-test pricing, customs bonds, and contract clauses for sudden duty changes.

Accelerating Supply Chain Diversification

Vietnam is rapidly emerging as a preferred hub for high-value electronics manufacturing, with global firms like Google and Apple relocating advanced production and engineering processes from China. This shift is driven by geopolitical tensions, U.S. tariffs, and the need for resilient, independent supply chains, positioning Vietnam at the center of global value chains.

US Tariffs Disrupt German Exports

Recent US tariffs have led to a 9.4% drop in German exports to the US, particularly impacting the automotive and machinery sectors. The resulting volatility and unpredictability in transatlantic trade relations are forcing German businesses to seek alternative markets and reconsider investment strategies.

Energy Transition and LNG Import Surge

Egypt is rapidly expanding renewable energy projects, signing $1.8 billion in deals with Norway and China. However, domestic gas production decline and regional supply disruptions have turned Egypt into a major LNG importer, raising costs and supply chain complexity.

Rate-cut uncertainty, sticky inflation

With CPI around 3.4% and the Bank of England cautious, timing and depth of rate cuts remain contested. Volatile borrowing costs affect capex decisions, leveraged buyouts, real estate financing, FX expectations and consumer demand, complicating pricing and hedging strategies.

Logistics and rail capacity buildout

Saudi ports handled 8.3m containers in 2025 (+10.6% YoY), while Saudi Arabia Railways carried 30m tons of freight and 14m passengers in 2025, cutting 2m truck trips. Accelerating multimodal capacity supports supply-chain resilience and inland distribution competitiveness.

Vision 2030 Economic Transformation

Saudi Arabia’s Vision 2030 drives diversification beyond oil, fostering rapid growth in non-oil sectors, digital innovation, and foreign investment. This transformation reshapes market opportunities, regulatory frameworks, and competitive dynamics for international businesses.

Trade Policy Uncertainty and Tariffs

Ongoing US tariff negotiations and underutilization of free trade agreements (FTAs) create uncertainty for exporters. Only 54% of eligible Thai firms use FTAs, and shifting US policies pose risks for trade-dependent sectors, requiring businesses to diversify markets and adapt strategies.

Trade Policy Shifts and Bilateral Agreements

A forthcoming US-Indonesia trade agreement could quadruple bilateral trade, offering tariff exemptions for Indonesian commodities and US access to critical minerals. However, the deal’s structure and alignment with industrial policy will determine whether Indonesia can achieve balanced, sustainable trade growth.

Chronic Debt Dependency Crisis

Pakistan’s reliance on foreign loans from China, Saudi Arabia, UAE, and the IMF has reached critical levels, with external debt exceeding $128 billion. This dependency forces policy compromises and exposes businesses to currency volatility, regulatory unpredictability, and lender-driven reforms.

Expansion of Non-Energy Exports

Russia is targeting a 67% increase in non-energy exports by 2030, focusing on machinery, chemicals, and agriculture. While energy remains dominant, this diversification drive—mainly toward 'friendly' countries—offers new opportunities and risks for foreign investors navigating Russia’s evolving trade landscape.

Sovereign Wealth Fund and State Intervention

The Danantara sovereign wealth fund, managing $1 trillion in assets, is central to President Prabowo’s industrialization and investment agenda. While intended to boost efficiency and co-investment, increased state involvement and leadership changes have raised questions about governance, fiscal discipline, and market independence.

Logistics Modernization and 3PL Expansion

Mexico’s third-party logistics (3PL) market is forecast to nearly double to $26.8 billion by 2033, driven by nearshoring, e-commerce, and infrastructure investment. Enhanced customs coordination, digitalization, and cross-border logistics partnerships are improving supply chain efficiency and supporting regional integration.

US-South Korea Trade Tensions Escalate

The US has raised tariffs on South Korean autos, pharmaceuticals, and other goods from 15% to 25%, reversing previous concessions and straining bilateral relations. This move directly impacts South Korea’s export competitiveness, especially in autos, and adds volatility to global supply chains.

Administrative Delays and Bureaucratic Risks

The rapid rollout of new shelter regulations has strained local planning offices, causing project approval delays. This increases operational risk for developers and international investors, with potential for missed deadlines and higher holding costs.

Economic Stability Amid Global Volatility

Praised by the OECD, Australia’s economic management has delivered low unemployment, controlled inflation, and avoided recession. Ongoing reforms in energy, competition, and housing policy underpin a stable environment for international trade and investment, though global uncertainty and productivity challenges persist.

Fiscal Stabilization and Policy Reform

South Africa is nearing a fiscal turning point, with debt-to-GDP stabilizing and primary surpluses returning. Improved fiscal credibility has strengthened the rand and bonds, but sustaining reforms and managing coalition politics remain critical for long-term investor confidence.

Gaza Conflict Drives Regional Instability

The ongoing Israel-Gaza conflict and its aftermath continue to disrupt supply chains, trade flows, and investor sentiment. Border controls, humanitarian access, and security risks remain volatile, impacting logistics, foreign investment, and business operations across the region.

Capital Controls Tighten Amid Fiscal Strain

New regulations require declarations for cash exports over $100,000 and restrict gold bar movements. These controls aim to curb capital flight, increase transparency, and stabilize the ruble, but may deter foreign investment and complicate international financial operations in Russia.

AI Basic Act compliance burden

Korea’s new AI framework requires labeling AI-generated content, user notification, and human oversight for high-impact uses (health, transport, finance). Foreign platforms with large Korean user bases may need local presence. Compliance costs and liability management will shape market entry and product design.

US Sanctions and Trade Risks

South Africa faces potential US financial sanctions and exclusion from trade agreements like AGOA, which could trigger capital flight, currency devaluation, and higher borrowing costs. These risks create significant uncertainty for foreign investors and multinational supply chains.

Labor Market and Talent Dynamics

Taiwan’s advanced manufacturing sector is experiencing labor shortages and competition for engineering talent, exacerbated by global expansion. Demographic trends and workforce development are critical factors for sustaining innovation and operational resilience.

Persistent Energy Infrastructure Attacks

Russian strikes on Ukraine’s energy grid have caused widespread blackouts and threaten business continuity. Nearly 60% of Kyiv was recently without power, with similar conditions nationwide. Energy insecurity remains a top risk, impacting manufacturing, logistics, and foreign investment confidence.