AI and Advanced Technology Investments

South Korea is tripling AI spending, aiming to become a top-three global AI power. This government-led push is accelerating innovation, attracting foreign direct investment, and reshaping the tech sector, with significant implications for supply chains and talent acquisition.

Energy Transition Drives High Costs

Germany’s shift away from Russian energy and nuclear power has resulted in persistently high energy prices and supply insecurity. This undermines industrial competitiveness, deters investment, and increases vulnerability in critical infrastructure, with significant implications for energy-intensive sectors and supply chains.

AI Industry Expansion and Investment

Driven by government plans to triple AI spending and strong private sector momentum, South Korea aims to become a global AI leader by 2026. This accelerates foreign direct investment, especially in advanced manufacturing and data centers, reshaping supply chains and business priorities.

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.

Accelerating Trade Surplus and Export Growth

Vietnam’s trade surplus exceeded $20 billion in 2025, with exports reaching $475 billion and targeting 8% growth in 2026. Foreign-invested sectors drive this performance, while the US and China remain key partners. Trade policy reforms and FTAs underpin expansion, but rising global barriers and origin fraud risks require vigilance.

NATO Unity Threatened by US Actions

US threats to annex Greenland challenge the foundation of NATO, risking alliance fragmentation. Denmark’s security guarantees and military posture are under scrutiny, raising uncertainty for international investors and businesses reliant on transatlantic stability and defense cooperation.

Supply Chain Shifts and ‘China Plus One’

Vietnam benefits from supply chain diversification as firms relocate from China, boosting manufacturing and exports. However, dependence on Chinese inputs persists, and a potential US-China trade deal could reverse some gains, challenging Vietnam’s move up the value chain and long-term competitiveness.

Clean Energy and Green Hydrogen Push

India is emerging as a top destination for clean energy investment, targeting nearly $300 billion by 2030 and aiming for 5 million metric tons of green hydrogen annually. This transition supports economic growth, cost reduction, and supply-chain opportunities in renewables and green tech.

USMCA Uncertainty and Trade Tensions

The upcoming review of the USMCA and threats of renegotiation or expiration by the US create uncertainty for Mexico’s trade stability, supply chains, and investment planning, with potential tariff hikes and regulatory changes impacting cross-border business operations.

Geopolitical Shifts and Supply Chain Security

Germany’s reduced reliance on Russian energy, driven by EU sanctions, has increased vulnerability to supply disruptions and higher costs. The transition to LNG and renewables heightens infrastructure risks, impacting industrial supply chains and investment decisions.

Digital Finance and Stablecoin Experimentation

Pakistan’s partnership with World Liberty Financial, linked to the Trump family, on a dollar-pegged stablecoin signals a bold shift toward digital finance. The initiative aims to streamline remittances and attract blockchain investment, but raises regulatory, ethical, and geopolitical concerns.

Export Controls and Tech Rivalry Intensify

US export controls on advanced semiconductors and AI technology have spurred China’s drive for tech self-reliance, while exemptions for firms like Samsung highlight geopolitical maneuvering. These measures reshape global supply chains and innovation ecosystems.

Currency Volatility and Baht Strength

The Thai baht appreciated over 8% in 2025, harming export competitiveness and squeezing margins for manufacturers. Persistent currency volatility, driven by capital flows and digital assets, complicates pricing, hedging, and investment planning for international businesses operating in Thailand.

Geopolitical Leverage of Critical Minerals

China is leveraging its dominance in rare earths and other critical minerals as a tool in geopolitical disputes, notably with Japan. Subtle export restrictions and licensing delays create uncertainty for global manufacturers, especially in high-tech and automotive sectors, and may prompt supply chain realignment.

Regional Security and Geopolitical Tensions

Iran’s weakened regional influence and ongoing US-Israel confrontation heighten geopolitical risks. The threat of military escalation, regime change scenarios, and proxy conflicts in neighboring countries increase uncertainty for international trade and investment strategies.

Global Supply Chains Face Realignment

US policies on tariffs, export controls, and investment screening are accelerating the realignment of global supply chains. Companies are diversifying sourcing and production, investing in US and allied markets, and reassessing risk exposure to geopolitical shocks, especially in high-tech sectors.

Fiscal Policy and Tax Reform Uncertainty

South Africa faces potential tax increases, including VAT and digital economy taxes, to address revenue shortfalls. Fiscal consolidation and improved ratings have boosted investor sentiment, but persistent debt and policy uncertainty could impact future investment strategies and operational costs.

Geopolitical Risks: Nile Water and Sudan

Tensions with Ethiopia over the GERD dam and instability in Sudan pose ongoing risks to water security, border stability, and regional alliances. US mediation efforts continue, but unresolved disputes could impact agricultural output, investment confidence, and cross-border trade.

Currency Depreciation and Financial Stability

The Korean won’s sharp depreciation—over 2% in early 2026—raises concerns for outbound investments and financial stability. Authorities are balancing market liberalization with intervention, as large capital outflows could exacerbate volatility, impacting international investors and trade partners.

Renewable Energy Investment Acceleration

Egypt signed $1.8 billion in renewable energy deals with Norway’s Scatec and China’s Sungrow, including Africa’s largest solar project. With a target of 42% renewables by 2030, international financing and technology partnerships are critical for energy security, industrial growth, and climate commitments.

Regulatory Instability and Economic Reforms

Iran’s government has responded to unrest by replacing the central bank governor and promising reforms. However, regulatory unpredictability, inflation, and currency collapse undermine investor confidence and complicate compliance for foreign businesses.

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.

Investment Stagnation and Infrastructure Cuts

Sanctions and war have led to a 20% cut in Russian rail investment and stagnating GDP, with industrial output declining. Foreign direct investment is constrained, and infrastructure projects face delays, raising long-term risks for investors and operators.

Sharp Decline in Russian Oil Exports

Russian oil exports have dropped 40% since October 2025, with Urals crude trading below $35 per barrel. Sanctions, logistical hurdles, and attacks on infrastructure have forced Russia into clandestine shipping, reducing revenue and increasing operational risk.

EU Considers Anti-Coercion Measures

In response to US tariffs, the EU is preparing to activate its anti-coercion instrument, potentially restricting US market access and imposing retaliatory tariffs. This unprecedented move could escalate into a full-scale trade war, amplifying risks for Finnish companies.

Escalating Security Commitments in Ukraine

France’s pledge to potentially deploy troops to Ukraine after a ceasefire, in coordination with the UK, signals a new phase of European security engagement. This move increases geopolitical risk, especially with Russia warning that Western troops would be considered legitimate targets, impacting regional stability and investment confidence.

Humanitarian Aid Restrictions and NGO Ban

Israel’s sweeping ban on 37 international humanitarian organizations and new registration requirements have severely restricted aid flows to Gaza. This has heightened reputational and compliance risks for foreign companies and NGOs, and may impact supply chains relying on humanitarian access or local partners.

Labor Cost Pressures and Wage Policy

Labor unions are pressing for significant wage increases in Jakarta to match the city’s high living costs. Rising labor costs could affect operational budgets, investment decisions, and Indonesia’s competitiveness as a manufacturing and services hub.

Business Operations Face Regulatory Uncertainty

Vague wording in China’s export controls leaves Japanese and foreign firms exposed to unpredictable enforcement, complicating compliance, risk management, and long-term planning for international operations dependent on Japanese and Chinese inputs.

Monetary Policy Shifts And Interest Rate Uncertainty

The Federal Reserve faces leadership changes and ongoing debates over inflation and interest rates. Uncertainty in monetary policy affects capital costs, currency volatility, and investment strategies for international businesses operating in or exposed to the US market.

Renewable Energy Transition Accelerates

Major infrastructure projects like EnergyConnect and policy grants are driving Australia’s shift toward renewables, aiming for 82% clean energy by 2030. Supply chain, labor, and regulatory challenges remain, but the sector offers significant opportunities for foreign investment.

Geopolitical Tensions Shape Strategic Choices

Persistent border militarization and economic interdependence with China, plus regional instability, compel India to compartmentalize security and trade. Strategic diversification of supply chains and partnerships is essential for mitigating risks from global conflicts and maintaining operational continuity.

Sanctions And Secondary Trade Risks

Sweeping new US sanctions, including up to 500% tariffs on countries buying Russian energy, intensify global trade tensions. These measures affect energy markets, complicate compliance for multinationals, and may trigger retaliatory actions, impacting cross-border investment and supply chain stability.

Agricultural Supply Chain Vulnerabilities

Railway grain shipments fell 27.3% in 2025, and wheat exports dropped 25% in December due to Russian strikes on ports and logistics. These disruptions, along with delayed harvests and market competition, threaten Ukraine’s role as a global food supplier and heighten risks for agribusiness investors.

Major Infrastructure and Capital Relocation Push

Significant investments are flowing into Indonesia’s new capital, IKN, with new projects in commercial, culinary, and office sectors. This development signals increased investor confidence and aims to establish IKN as a new economic growth hub by 2028, influencing long-term investment strategies.

Infrastructure Reconstruction and Investment Challenges

Gaza’s reconstruction is estimated to require $50–70 billion, but funding pledges remain inadequate. The scale of destruction, combined with political and security risks, creates significant challenges for infrastructure, energy, and technology investors seeking stable returns in post-conflict environments.