Tax Reform Transition Risk

Brazil’s consumption tax overhaul is entering implementation, replacing PIS, Cofins and IPI with CBS, while uncertainty persists over effective rates, exemptions, and compliance. Companies face transition costs, pricing adjustments, ERP redesign, and temporary disruption to investment and supply-chain planning.

Monetary Policy Constrains Financing Outlook

Bank Indonesia kept its policy rate at 4.75% but signaled exchange-rate defense takes priority over easing. With inflation targeted at 2.5% plus or minus 1% and rate cuts delayed, businesses may face a higher-for-longer borrowing environment and slower domestic demand momentum.

FDI Liberalisation Accelerates Manufacturing

India is easing FDI rules for foreign firms with up to 10% Chinese or Hong Kong ownership, while fast-tracking approvals in strategic manufacturing. Total FDI reached $88.29 billion in April-February FY2025-26, improving capital access for electronics, batteries, and industrial supply chains.

India-US Trade Pact Recalibration

India’s near-final bilateral trade deal with the United States is being redrafted after Washington’s temporary 10% universal tariff replaced an earlier 18% India-specific framework. Market-access terms, Section 301 probes, agriculture access and digital trade rules could materially reshape export competitiveness and sourcing decisions.

Rupiah Weakness Raises Operating Costs

The rupiah hit a record low near 17,315 per US dollar, down roughly 3.6% year to date, prompting heavy central-bank intervention. Import-intensive sectors face rising landed costs, FX hedging expenses, and tighter financial conditions for capital expenditure decisions.

Skilled Labor and Migration Dependence

Demographic decline and retirements are deepening Germany’s labor shortages across healthcare, logistics, manufacturing, and services. Business groups say the economy needs roughly 300,000 net migrants annually, making immigration policy, integration capacity, and social climate increasingly material to operating continuity and expansion.

War Economy Distorts Markets

Military expenditure now dominates resource allocation, supporting output while undermining civilian sectors. Defence spending is estimated around 7.5% of GDP, absorbing labour, credit and industrial capacity, which distorts prices, suppresses private investment and reduces predictability for international commercial operators and investors.

Corporate Investment in Strategic Sectors

Business support is strong for government investment in economic security, energy and other priority industries, with 79% of surveyed major firms backing the broader strategic-sector agenda. This favors semiconductors, digital infrastructure and advanced manufacturing, but may steer incentives and competition toward politically preferred industries.

Clean Energy Supply Chain Controls

China is considering curbs on advanced solar manufacturing equipment exports and already tightened controls on battery materials, graphite anodes, and related know-how. Given its dominance across solar components, batteries, and processing, these moves could reshape global energy transition supply chains.

Myanmar Border Trade Reopens

The reopening of a key Myanmar-Thailand bridge after months of closure should revive cargo movement, services, and local commerce. However, martial law in parts of Myanmar still leaves cross-border trade, route security, and supply-chain predictability vulnerable to renewed disruption.

Offshore Energy Infrastructure Vulnerability

Iranian missile and drone threats exposed Israel’s gas-sector fragility: Tamar alone sustained domestic supply while Leviathan and Karish were shut. Four weeks of shutdowns reportedly cost about NIS 1.5 billion, lifted electricity costs 22%, and disrupted exports to Egypt and Jordan.

Labor Shortages Hit Construction

Foreign worker availability remains constrained, especially in construction, where China reportedly paused sending workers, leaving around 800 expected arrivals missing. Labor scarcity, security compliance concerns and disrupted recruitment channels can delay projects, raise costs and tighten real-estate supply.

Gas Storage Capacity Expansion

New UK gas storage licensing for the MESH project highlights acute resilience gaps. Planned capacity could double national storage, add up to six days of supply and improve deliverability, materially affecting winter security, price volatility, infrastructure investment and offtake strategies.

US Tariffs Reshape Manufacturing

US trade policy is pushing Korean manufacturers, especially automakers, to expand local production in America. Auto exports fell 5.5% in April, partly due to tariff pressures, implying further supply-chain localization, capital reallocation, and changing market-entry strategies for exporters and suppliers.

Reform Conditionality Affects Capital

Disbursement of parts of EU support is tied to rule-of-law, anti-corruption, and potential tax reforms, including discussion of a 20% VAT for some firms above UAH 4 million revenue. Businesses should expect regulatory adjustment, compliance tightening, and shifting fiscal obligations.

BOJ Tightening and Yen Volatility

The Bank of Japan kept rates at 0.75% but raised FY2026 core inflation forecasts to 2.8% and cut growth to 0.5%. With three dissenters backing a 1.0% hike, financing costs, bond yields, and yen volatility will increasingly shape import pricing and investment decisions.

Semiconductor Capacity Globalization

TSMC and other firms are accelerating overseas expansion, including major U.S. investment commitments, reshaping Taiwan’s industrial footprint. This diversifies geopolitical risk, but could redirect capital, talent and supplier ecosystems away from Taiwan’s domestic manufacturing base.

Shadow Banking Payment Exposure

Iran relies heavily on shadow banking, exchange houses, shell firms, and yuan-conversion networks to repatriate oil proceeds. Recent U.S. actions against 35 entities and multiple exchange houses increase transaction risk for banks, traders, and insurers linked to opaque settlement channels.

EU Accession Reforms Shape Market

Ukraine says it faces 145 EU requirements, but reform delivery remains uneven, especially on anti-corruption and rule of law. Accession progress will determine regulatory harmonization, market access, customs modernization, and investor confidence, while delays prolong compliance and policy uncertainty.

Macro Policy Balancing Act

The RBI is maintaining a data-dependent stance as oil shocks, rupee pressure and inflation risks complicate policy. This cautious approach supports stability, but uncertainty over rates, fuel prices and external balances could affect borrowing costs, investment timing and consumer demand across sectors.

Defence Industrial Build-out and AUKUS

AUKUS implementation and a major Japan frigate deal are accelerating defence-industrial investment, including Western Australia shipbuilding and base upgrades. This supports engineering, technology and infrastructure demand, but also raises fiscal burdens, execution risk and sovereign-capability requirements for suppliers.

Infrastructure Concessions and Investment

Brazil’s longer-term competitiveness still depends on expanding private investment in ports, logistics, sanitation, and transport concessions. Continued reforms can improve trade efficiency and market access, but fiscal rigidity and political uncertainty may slow project execution, permitting, and contract confidence.

Pipeline Politics Influence Regional Stability

The restored Druzhba pipeline helped unblock EU funding after disputes with Hungary and Slovakia, underscoring how regional energy transit politics can affect Ukraine-related decisions. Companies should monitor neighboring-state bargaining, since it can influence financing timelines, policy coordination, and cross-border trade conditions.

Sanctions Pressure Reshapes Markets

The EU’s 20th sanctions package intensifies pressure on Russia’s energy, banking, maritime, and crypto channels, while targeting shadow-fleet vessels and third-country circumvention. This alters regional trade patterns, compliance burdens, shipping calculations, and counterparty risk for companies operating across Eastern Europe and Eurasia.

Trade Momentum Faces External Shock

Indonesia’s March exports fell 3.1% year on year even as the trade surplus widened to US$3.32 billion. Global conflict, logistics disruption, and softer external demand are undermining export momentum, complicating market-entry plans, inventory management, and cross-border sourcing strategies.

Leadership Fragmentation Policy Uncertainty

Internal rivalry among the IRGC, civilian officials, and the post-Khamenei leadership is producing contradictory signals on negotiations, shipping access, and economic policy. For international business, that raises the risk of abrupt rule changes, weak policy execution, and fragile deal durability.

Industrial Strategy and Reshoring

Government efforts to protect strategic industries are reshaping supply chains through tariffs, subsidies and targeted support. Manufacturers warn domestic production losses in chemicals, fuels and steel increase import dependence, while planned electricity bill cuts of up to 25% aim to retain investment.

Tougher Anti-Dumping Trade Defenses

Australia imposed anti-dumping duties of up to 82% on Chinese hot-rolled coil and opened another steel case covering Vietnam and South Korea. The sharper trade-remedy stance increases market-access risk, compliance burdens, and pricing volatility for regional steel and manufacturing supply chains.

EV Transition Reorders Manufacturing

Thailand’s auto market is shifting rapidly toward electric vehicles, with Chinese brands dominating bookings and Japanese firms accelerating responses. This transition is reshaping supplier networks, investment flows, and competitive dynamics across the country’s core automotive manufacturing and export ecosystem.

Tourism And Event Economy Boom

Tourism reached 123 million visitors in 2025 with spending of $81.1 billion, or about SR304 billion by local reporting, while airports, hospitality and mega-events expand demand across construction, retail, aviation and services, creating openings but also capacity and labor pressures.

Softening Consumers, Uneven Demand

US GDP grew 2.0% annualized in the first quarter, but real consumer spending rose only 0.2% in March after inflation. Businesses face a split market: AI-linked sectors remain strong, while price-sensitive households are cutting discretionary spending, affecting retail, travel, housing, and imported goods demand.

FDI Rules Liberalised Selectively

India has eased FDI rules for overseas firms with up to 10% Chinese or Hong Kong shareholding, while retaining restrictions on direct border-country entities. Faster 60-day approvals in selected manufacturing segments should improve deal execution, but screening and ownership compliance remain important.

Dependência comercial da China

O comércio bilateral Brasil-China atingiu US$ 170,8 bilhões, com superávit brasileiro de US$ 29 bilhões em 2025. Porém 74,2% das exportações seguem concentradas em commodities, aumentando exposição a demanda chinesa, termos de troca e pressões por diversificação produtiva.

Persistent Inflation Pass-Through Risk

Tariff refunds are unlikely to lower consumer prices meaningfully, while replacement duties keep pass-through pressures alive. Temporary 10% tariffs expire in late July, but likely follow-on measures mean businesses should plan for sustained price volatility and cautious consumer demand.

Energy Infrastructure Vulnerability Persists

Repeated attacks on power assets continue to damage generation and networks, raising operating costs, outage risks, and import dependence. Energy accounted for more than a quarter of applications to the US-Ukraine Reconstruction Investment Fund, underscoring both urgent need and investment opportunity.

Domestic Gas Reservation Shift

Canberra will require east-coast LNG exporters to reserve 20% of output for domestic users from July 2027, aiming to curb shortages and lower prices. The intervention changes contract economics for Shell, Santos and Origin-linked projects while reshaping energy-intensive manufacturing and export planning.