Investment Paralysis Hits Key Sectors

Russian investment growth stagnated in 2025, with transport, construction, and extractive industries most affected. Only military and import substitution sectors show resilience. Reduced state funding and asset depletion raise concerns for foreign investors and long-term business planning.

Second-Life Battery Market Growth

The French market for second-life EV batteries is expanding rapidly, fueled by rising used EV sales and demand for energy storage. Batteries are increasingly reused for grid storage and renewables, extending asset life and opening new revenue streams for investors and operators.

Fragmentation of Global Governance

The US withdrawal from multilateral organizations, including climate bodies, signals a shift toward bilateralism and regional blocs. This undermines global regulatory coherence, complicating cross-border operations and increasing compliance complexity.

Political Volatility Amid Snap Elections

Prime Minister Takaichi’s snap election on February 8, 2026, introduces short-term political uncertainty. The outcome will shape fiscal, trade, and security policy, with potential impacts on regulatory stability, economic stimulus, and Japan’s international posture, affecting investor confidence and business planning.

Geopolitical Alliances and Trade Policy Coordination

US trade and investment policies are increasingly intertwined with geopolitical alliances, as seen in evolving US-South Korea agreements and pressure on Indo-Pacific partners to align with US strategic interests. This affects market access, regulatory frameworks, and supply chain security for international businesses.

Semiconductor Supply Chain Realignment

Taiwan’s $250 billion investment in US chip manufacturing and supply chain relocation aims to reduce reliance on Asian supply chains, boost US manufacturing, and address security vulnerabilities. This shift will significantly impact global supply chains and technology sector competitiveness.

Labor Market Reforms and Demographic Pressures

Japan’s aging population and persistent labor shortages are driving new policies to attract foreign workers and accelerate automation. Recent regulatory changes aim to ease immigration and support workforce renewal, directly impacting operational costs, talent strategies, and investment decisions.

Rapid Expansion of Renewable Energy

Egypt signed $1.8 billion in renewable energy deals, inaugurated Africa’s largest solar project, and aims for 42% renewables by 2030. International partnerships and concessional financing are driving this transformation, positioning Egypt as a regional clean energy leader.

E-Commerce and Logistics Transformation

South Korea’s logistics and third-party logistics (3PL) markets are expanding rapidly, fueled by e-commerce growth, technology adoption, and sustainability efforts. The market is projected to reach $41.7 billion by 2033, with trends toward omnichannel logistics, customized solutions, and green practices shaping operational strategies.

Critical China-Iran Energy Nexus

China purchases over 80% of Iran’s oil, often via independent refiners and shadow fleets to evade sanctions. Any escalation in US pressure or Iranian instability could disrupt this flow, affecting global energy security and bilateral trade dynamics.

Energy Sector Transformation and LNG Imports

Egypt’s declining domestic gas production and unreliable regional supply have shifted it from a gas exporter to a major LNG importer. Record LNG imports, mainly from the U.S., expose Egypt to price volatility and supply risks, while new infrastructure and supply deals seek to stabilize industrial energy needs.

New Tariff Regimes and Trade Policy Volatility

The US has imposed sweeping tariffs, including 25% on trade with Iran and advanced AI chips sold to China. These measures create uncertainty for multinationals, disrupt established supply chains, and may provoke legal challenges and WTO disputes.

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.

Shifting Trade Partnerships and Diversification

US unpredictability has prompted partners like India, the EU, and others to seek alternative trade relationships, including new deals with China. This diversification reduces US leverage, alters global trade flows, and impacts long-term market positioning for multinationals.

Energy Sector Expansion and Export Infrastructure

Israel’s energy sector is expanding, with new gas contracts, export pipelines to Egypt, and increased production. Long-term contracts and infrastructure investments support revenue stability, but regional geopolitical tensions pose ongoing risks to supply and capital allocation.

Energy Crisis and Cost Relief Measures

Persistent energy shortages and high tariffs have hampered industrial output. Recent government relief measures, including tariff reductions and export refinance schemes, offer short-term support but underscore ongoing risks for manufacturers and supply chain reliability.

US Military and Financial Support Remains Critical

The US continues to provide substantial military and financial aid to Israel, underpinning its security and economic resilience. This support shapes Israel’s defense posture, investment climate, and risk environment, but also ties business operations to evolving US-Israel policy dynamics and potential geopolitical backlash.

Critical Minerals and Green Transition Partnerships

Brazil and the EU are advancing cooperation on lithium, nickel, and rare earths, vital for the digital and clean energy transitions. This positions Brazil as a key supplier in global critical minerals value chains, attracting investment but also requiring adherence to high transparency and environmental standards.

Technology Sector Volatility and AI Investment

Major US tech firms are ramping up AI investments, but market performance is diverging due to supply chain disruptions and tariff uncertainty. Long-term AI adoption promises sectoral transformation, yet near-term volatility affects global tech partnerships and investment strategies.

Supply Chain Diversification and Resilience

Vietnam remains a key beneficiary of global supply chain shifts, especially as firms diversify away from China. Its strategic location, robust manufacturing base, and integration into RCEP and CPTPP enhance resilience, but exposure to global shocks and regulatory risks persists.

Regulatory and Policy Shifts for Business

Japan is implementing regulatory reforms to attract foreign investment and enhance business resilience. Policy changes in economic security, industrial strategy, and trade are designed to support supply chain diversification, technological innovation, and long-term competitiveness for international firms.

US-UK Tariff Tensions Escalate

President Trump’s imposition of 10–25% tariffs on UK exports over the Greenland dispute threatens to cost UK businesses £6–15bn and risks recession. The uncertainty disrupts trade, supply chains, and investment planning, with sectors like manufacturing and chemicals most exposed.

Supply Chain Stability Improves, Risks Remain

Only 7.5% of German firms report supply chain difficulties, a significant improvement from previous years. The auto sector especially benefits, but ongoing geopolitical tensions and critical dependencies—such as on semiconductors—require continued vigilance and risk management for international businesses.

Drone Strikes Disrupt Supply Chains

Ukrainian drone and missile attacks on Russian refineries and infrastructure in 2025 caused a 25% drop in energy income and the lowest refinery deliveries since 2010. These disruptions threaten supply reliability and raise operational risks for businesses dependent on Russian energy.

Tech Sector Growth and Foreign Investment

Israel’s high-tech sector, including AI, cybersecurity, and fintech, continues to attract major foreign investment. Projects like Nvidia’s new campus and robust M&A activity underscore Israel’s role as a global innovation leader, though infrastructure and regulatory adaptation are ongoing challenges.

Aggressive US Industrial and Tariff Policy

Sweeping tariffs, export controls, and industrial subsidies under the Trump administration aim to boost domestic manufacturing and reduce trade deficits. These measures raise input costs, provoke foreign retaliation, and complicate cross-border investment and supply chain management for global firms.

Commodity Export Competitiveness

South Africa’s strategic mineral and agricultural exports benefit from global rediversification and commodity demand, but are constrained by domestic logistics, policy uncertainty, and rising input costs, impacting trade balances and sectoral investment strategies.

Mandatory Bomb Shelter Integration Law

Poland’s Shelter Act (2026) requires all new multi-family and public buildings to include designated bomb shelter spaces. This regulatory shift significantly increases construction costs, impacts project timelines, and alters investment risk profiles for developers and international investors.

Critical Minerals and Battery Supply Chains

Major investments in domestic lithium refining and battery materials, backed by the Canada Growth Fund, BMW, and Breakthrough Energy, aim to secure Canada’s role in the global EV supply chain. These efforts reduce reliance on overseas processing and support North American clean energy ambitions.

Logistics and Port Inefficiencies

Severe congestion and operational failures at major ports, particularly Cape Town and Durban, have led to export delays and substantial losses for key sectors. These structural weaknesses in logistics undermine South Africa’s competitiveness and disrupt global supply chains reliant on South African goods.

Privatization and Investment in Key Sectors

Privatization of state-owned enterprises, airports, and power companies is accelerating, with strong interest from global investors. This shift aims to unlock efficiency, attract FDI, and modernize infrastructure, but success depends on transparent processes and policy continuity.

Eastern Economic Corridor Infrastructure Push

Thailand is accelerating infrastructure megaprojects in the Eastern Economic Corridor, including the U-Tapao Airport City PPP and a proposed Disneyland-style complex. These initiatives are designed to attract FDI, boost tourism, and create a high-tech industrial hub, but require policy continuity and investor confidence.

Public-Private Partnerships in Infrastructure

South Africa is leveraging public-private partnerships to improve energy and logistics infrastructure. These collaborations are key to enhancing supply chain efficiency, supporting industrialization, and positioning the country as a regional trade and investment hub.

Infrastructure and Resource Constraints

Taiwan faces challenges in scaling advanced manufacturing due to land, water, and power limitations. These constraints affect expansion plans for high-tech industries and may drive further overseas investment, influencing long-term industrial competitiveness.

Investment Climate Amid Geopolitical Tensions

Geopolitical instability, including US-EU disputes and global conflicts, has led to increased market volatility and cautious investment. French markets have seen declines, and sectors like tech and industry face job cuts, prompting investors to adopt more defensive and selective strategies.

Defense Sector Expansion and Privatization

Israel’s defense industry is expanding internationally, with IPOs of key firms like IAI and increased exports to Europe amid heightened demand. Privatization and global partnerships enhance competitiveness, but regulatory and labor hurdles, as well as security considerations, shape the sector’s trajectory.