Mission Grey Daily Brief - September 24, 2024

Summary of the Global Situation for Businesses and Investors

As global leaders gather at the United Nations, pressure mounts on President Biden to loosen restrictions on Ukraine's use of weapons. Meanwhile, China amplifies Russian war propaganda, influencing public opinion worldwide. In Britain, Prime Minister Keir Starmer faces challenges as he restricts payments for retirees. Lastly, Sri Lanka's new president, Anura Kumara Dissanayake, takes office, marking a potential shift in the country's foreign relations.

Ukraine Seeks More Weapons from the West

As the war in Ukraine enters its third year, President Volodymyr Zelensky is pushing for permission from President Biden to use longer-range weapons supplied by NATO to strike deeper inside Russia. This request comes as Ukraine slowly loses ground to mass Russian assaults in the Donbas region, and as Russian strikes target civilian infrastructure ahead of the approaching winter.

European lawmakers are urging EU member states to lift restrictions on Ukraine's use of Western weapons, arguing that the current limitations hinder Ukraine's ability to defend itself under international law. However, President Biden has been reluctant to escalate the conflict and risk a direct confrontation with Russia, as Putin already blames NATO for the war and has made veiled threats of nuclear retaliation.

China Amplifies Russian War Propaganda

China has emerged as a key player in the information war surrounding the Russia-Ukraine conflict. Through media strategies, China has shifted blame for the war from Russia to NATO and the US, even though Ukraine is not a NATO member. This alignment with Russian narratives stems from a strategic agreement between the two countries, creating an "echo chamber" effect.

China's primary objective appears to be criticizing Western countries, particularly the US and NATO, rather than showing genuine concern for Ukraine. Chinese media has drawn false distinctions between the Ukrainian government and its people, echoing Russian propaganda. This collaboration extends beyond the war, with Chinese media amplifying Russian narratives about Taiwan.

Britain's Prime Minister Faces Challenges

Britain's Prime Minister, Keir Starmer, is facing challenges as his Labour Party, which won a parliamentary majority in the July election with only 34% of the vote, takes a tough stance on economic issues. Starmer has restricted payments that help retirees with heating costs and has warned of impending budget cuts, causing concern among his allies and the British public.

As Starmer prepares to address his party's annual conference, analysts expect him to shift his tone and emphasize how the government's early harsh measures will lead to long-term benefits for Britain. Starmer is likely to highlight the legacy of issues he inherited and pivot to discussing structural changes that will strengthen the country.

Sri Lanka's New President Takes Office

Sri Lanka's new president, Anura Kumara Dissanayake (AKD), has been sworn in, marking a potential shift in the country's foreign relations. AKD, a 55-year-old Marxist leader, is known for his anti-India stance and proximity to China. His election comes after mass protests in 2022 that ousted the previous president, Gotabaya Rajapaksa, and his clan from power.

AKD campaigned as the candidate of "change," promising economic relief and an end to corruption. He has pledged to renegotiate the terms of the IMF bailout and abolish the powerful executive presidency. With China already leasing the strategic Hambantota Port, AKD's election poses a challenge to India's interests in the region.

Recommendations for Businesses and Investors

Ukraine-Russia Conflict: The conflict's impact on energy prices and supply chains should be closely monitored, especially with winter approaching. Businesses should assess their exposure to the region and consider supply chain diversification.
China's Propaganda Machine: Businesses should be cautious of operating in countries that heavily censor information and manipulate public opinion, such as China. Investing in countries with free media and strong democratic institutions reduces the risk of unexpected shifts in public sentiment and government policies.
Britain's Political Landscape: Businesses should consider how Starmer's potential long-term structural changes could impact their operations in Britain. While the current government's tough economic stance may cause short-term challenges, the focus on structural reforms could lead to a more stable and predictable business environment in the long term.
Sri Lanka's Foreign Relations: Companies investing in Sri Lanka should monitor the new president's foreign policy decisions, particularly regarding relations with China and India. A shift towards China could increase the country's debt burden and impact its ability to secure favorable trade deals with other nations.

Stay informed and stay resilient. Mission Grey is here to help you navigate the complex global landscape.

Themes around the World:

Persistent Energy and Power Constraints

South Africa continues to face chronic electricity shortages and grid instability, impacting industrial output and investor confidence. Despite some renewable energy progress, reliance on coal and delays in infrastructure upgrades create ongoing risks for manufacturing, mining, and supply chains.

US Immigration and Talent Policy Uncertainty

Ongoing legislative and regulatory changes to OPT, H-1B, and related visa programs are creating uncertainty for international students and employers. Proposed reforms could alter talent flows, affect workforce planning, and impact the US's position as a global hub for skilled labor, especially in STEM fields.

Strategic US-Japan Alliance Coordination

The trade dispute tests US support for Japan, with Tokyo seeking closer coordination with Washington and G7 partners. The evolving alliance dynamics influence regional stability, investment decisions, and the global technology ecosystem.

Energy Sector Under Strain

Iran’s oil exports, once above 2 million barrels per day, remain below pre-2018 levels due to sanctions and trade restrictions. The Strait of Hormuz, a critical chokepoint for global oil, faces heightened risk of disruption, threatening energy markets and shipping security.

Moderate Economic Growth, High Inflation

Brazil’s economy is projected to grow around 1.7% in 2026, with inflation remaining high at 12-12.75%. Fiscal stimulus and strong agriculture support growth, but high interest rates and external risks require cautious planning for investment and supply chain strategies.

Technology and Semiconductor Supply Chain Realignment

Australia's participation in the Pax Silica coalition and rare earths sector expansion positions it as a key player in trusted technology supply chains. This reduces dependence on China, attracts global tech investment, and supports the growth of domestic semiconductor and advanced manufacturing industries.

Supply Chain Resilience Initiatives

Taiwan is diversifying production locations, notably with TSMC’s US and European expansion, and joint US-Taiwan artillery production. These efforts aim to mitigate risks from potential blockades or disruptions, ensuring continuity for global tech and defense supply chains.

Renewable Energy Expansion and Green Finance

Egypt signed $1.8 billion in renewable energy deals, including Africa’s largest solar project and battery storage facilities. Supported by international banks, these initiatives advance Egypt’s 2030 clean energy targets, offering opportunities for green investment and supply chain localization.

Industrial Policy and Market Intervention

The US is intensifying industrial policy through subsidies and intervention, particularly in energy and manufacturing. While supporting domestic sectors, these measures increase market volatility and complicate international investment decisions.

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.

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.

Foreign Investment Trends and Regulatory Hurdles

Foreign direct investment, especially from Japan, is rising in Australian real estate and infrastructure, driven by housing undersupply and growth prospects. However, complex regulatory processes and development approvals present challenges, requiring strategic navigation for international investors.

Collapse of the Iranian Rial and Hyperinflation

Iran’s currency has plummeted to over 1.4 million rials per USD, with annual inflation around 40%. This has eroded purchasing power, raised import costs, and destabilized local operations, making pricing and payment settlements highly unpredictable for international businesses.

Energy Sector Reform and Pemex Challenges

Mexico’s energy sector faces structural challenges, with Pemex’s high debt and underperforming refineries limiting energy independence. While international oil firms are negotiating new projects, contract terms and financial risks remain barriers to large-scale foreign investment.

Aggressive US Tariff and Sanctions Policy

The US has imposed sweeping tariffs, including a new 25% tariff on countries trading with Iran, and expanded secondary sanctions. These measures disrupt supply chains, provoke diplomatic friction, and increase compliance risks for multinational firms.

Export Controls and Supply Chain Security

China is intensifying export controls on critical minerals and dual-use goods, especially targeting countries perceived as adversaries. These measures disrupt global supply chains, particularly in high-tech and automotive sectors, and signal a willingness to weaponize trade policy for geopolitical leverage.

Financial Sector Volatility and Shadow Banking

The UK financial sector faces ongoing challenges from declining business volumes and profitability, alongside systemic risks from the booming, largely unregulated $16tn shadow banking sector. Regulatory vigilance and stress testing are crucial to safeguard stability and investor confidence.

China’s Growing Role and Risks

China remains Brazil’s top export destination, with purchases rising 6% in 2025 to US$100 billion, mainly in soy, beef, and sugar. However, recent Chinese quotas on beef imports and increased use of trade defense instruments pose new risks for Brazilian supply chains.

Chronic Export Underperformance and Structural Barriers

Despite ambitious targets to reach $60 billion in exports, Pakistan’s export-to-GDP ratio has declined to 10.4%. Structural issues—such as weak infrastructure, regulatory uncertainty, and financial system crowding out private credit—continue to hamper export growth and international trade integration.

Israel’s Strategic Expansion in the Red Sea

Israel’s recognition of Somaliland and moves to secure maritime access in the Horn of Africa signal a major strategic shift. This enhances Israel’s security and logistics options but risks regional backlash, complicates relations with China, Turkey, and Arab states, and introduces new geopolitical uncertainties for international business operations.

Strategic Shift Toward Indo-German Partnership

Germany is deepening its economic and strategic ties with India, signing 19 agreements in 2026 covering defence, semiconductors, critical minerals, and green energy. This shift aims to diversify supply chains, foster innovation, and reduce dependence on China, with bilateral trade exceeding $50 billion.

Massive Reconstruction and Investment Needs

A €682 billion international support package over ten years is planned for Ukraine’s recovery, focusing on infrastructure, compensation, and economic stability. Reconstruction offers significant opportunities for foreign investors, but success depends on security and regulatory reforms.

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.

China-Pakistan Economic Corridor Acceleration

CPEC Phase 2.0 is being fast-tracked amid global supply chain disruptions and regional security threats. China’s planned $10 billion investment and new infrastructure projects position Pakistan as a pivotal trade gateway, but success hinges on security, regulatory clarity, and regional stability.

Regional Political Tensions and Mediation

Turkey’s active mediation in regional conflicts, including the Russia-Ukraine war and Middle East crises, positions it as a diplomatic actor. Political volatility and shifting alliances may impact cross-border trade, investment risk, and supply chain continuity for global businesses.

Strategic Role in Global Supply Chains

Indonesia’s position as a top beneficiary of global supply chain shifts—especially as U.S.-China trade tensions persist—has led to a 34% increase in U.S. imports from Indonesia in 2025. This strengthens Indonesia’s role as a preferred sourcing hub, but also exposes it to external demand and regulatory volatility.

Inflation Moderation and Economic Stability

After peaking at 64% in 2023, inflation is projected to fall below 20% by end-2026. Economic growth continues, with GDP expanding 3.7% in early 2025. Stabilizing inflation and steady growth support a more predictable business environment for international operations and investment planning.

Regulatory and Tax Reforms for Investment

India’s 2026 Budget prioritizes regulatory clarity, tax simplification, and capital cost reduction to attract FDI. Reforms in corporate law and sectoral policies, especially for M&A and digital assets, aim to boost private investment and ease cross-border operations.

Trade Imbalances and Export Disruptions

Ukraine’s 2025 trade deficit reached $44.5 billion, with exports down 3% and imports up 20%. Key export sectors—agriculture and metals—face declining volumes due to infrastructure attacks, logistical challenges, and increased competition, directly impacting foreign exchange earnings and supply chain reliability.

Strategic Supply Chain Realignment

US efforts to reduce reliance on China for critical minerals and advanced manufacturing have accelerated. Initiatives with allies aim to diversify sourcing, but supply chain resilience remains challenged by geopolitical tensions and resource nationalism.

Cautious Federal Reserve Policy Outlook

The Federal Reserve, after cutting rates by 75 basis points in 2025, is expected to pause further easing in early 2026 due to persistent inflation and labor market weakness. This cautious stance affects global capital flows, borrowing costs, and currency markets, influencing international investment strategies.

Infrastructure Safety and Operational Risks

Recent fatal crane accidents in major infrastructure projects highlight persistent safety and regulatory enforcement issues. Such incidents can delay project delivery, raise insurance and compliance costs, and affect Thailand’s reputation as a reliable investment destination.

Agribusiness Drives Export Growth

Agribusiness accounted for 22% of Brazil’s exports in 2025, with coffee, soy, corn, and meat leading. The sector grew 7.1%, but faces volatility from global commodity prices, sanitary barriers, and sustainability demands, especially in EU and Asian markets.

US Sanctions Policy Intensifies

The US continues to expand sanctions, targeting Iranian officials, entities, and financial networks linked to oil sales and human rights abuses. These measures increase compliance risks for global firms, especially those with exposure to sanctioned jurisdictions and complex cross-border transactions.

Geopolitical Tensions and Regional Conflict

Recent military clashes with Israel and US strikes on Iranian infrastructure have heightened regional instability. These tensions threaten energy exports, insurance costs, and the safety of international operations in and around Iran.

Strategic Export Controls and Technology Restrictions

China has prioritized export controls on dual-use goods and sensitive technologies, targeting countries like Japan and reviewing foreign acquisitions. These measures, aimed at protecting national security, increase compliance risks and uncertainty for multinational firms operating in or sourcing from China.