Foreign Investment Screening Stays Tight

Despite closer US economic coordination, Taiwan is maintaining legal restrictions on foreign investment in sensitive sectors including power, telecoms, minerals, and infrastructure. This preserves national security controls, but may slow deal execution, require deeper regulatory diligence, and limit access in strategic industries.

Gulf diplomacy and security coordination

Saudi-led Gulf coordination is intensifying in response to Iranian attacks and shipping threats, aiming to protect energy infrastructure, ports, and trade routes; for businesses, this improves crisis management capacity but leaves regional escalation risk materially elevated.

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.

Mining Export Competitiveness Pressure

Mining remains central to exports and fiscal receipts, but logistics failures and regulatory uncertainty are constraining expansion. Mineral ores account for about 52% of merchandise exports, while producers face lost volumes, higher haulage costs and dependence on reforms to unlock critical minerals investment.

Reconstruction Capital Still Constrained

Ukraine’s recovery needs are estimated near $588 billion over the next decade, versus current wartime financing focused mainly on state continuity. Private investment remains limited by war-risk insurance gaps, absorption capacity, and uncertainty over future reconstruction finance architecture.

Tariff Regime Rebuild Uncertainty

Washington is rebuilding its tariff regime after the Supreme Court voided emergency tariffs that had generated $166 billion. New Section 301 actions could cover partners representing 70% of imports, raising landed costs, legal uncertainty, and pricing risk for importers.

US Trade Talks Escalate

Bangkok is fast-tracking a reciprocal trade agreement with Washington while preparing for a Section 301 hearing. With bilateral trade above $93.6 billion in 2025, outcomes could reshape tariffs, sourcing decisions, compliance burdens, and Thailand’s attractiveness for export-oriented manufacturing.

Sanctions Regime Deepens Isolation

Western sanctions continue to reshape Russia’s trade and financing environment, constraining technology imports, maritime services and bank access. New EU measures and possible tighter G7 enforcement raise compliance costs, elevate secondary-sanctions risk, and complicate sourcing, payments, insurance and market-entry decisions.

Monetary Tightening and Inflation

Turkey’s central bank held the policy rate at 37% and overnight lending at 40%, while March inflation was 30.87%. Elevated financing costs, softer domestic demand, and delayed rate cuts raise borrowing, hedging, and working-capital pressures for importers, exporters, and investors.

AI Export Boom Concentration

Taiwan’s exports rose 39% year on year to US$67.62 billion in April, driven by AI servers and advanced chips, but this strong concentration deepens exposure to cyclical swings, capacity bottlenecks, and policy shocks in major end-markets.

External Accounts Stabilizing Fragilely

March recorded a current-account surplus above $1 billion, remittances of $3.8 billion, and foreign reserves around $15.8 billion, with projections above $18 billion by June. Yet this stability remains exposed to oil shocks, debt repayments, and export weakness.

Tax Base Expansion and Budget Pressure

The FY27 budget is expected to broaden taxation into agriculture, retail, real estate, IT and export income, while targeting a 2% primary surplus. With tax collection at Rs11.735 trillion versus a Rs12.3 trillion target, businesses should prepare for heavier documentation and compliance burdens.

China Exposure Drives Diversification

Berlin is reassessing dependence on China amid trade deficits, raw-material concerns, and industrial overcapacity. German exports to China rose only 2.1% in 2024, imports fell 4.3%, and direct investment dropped 18%, encouraging nearshoring, supply-chain diversification, and tighter scrutiny in strategic sectors.

Digital Trade Regulatory Friction

India-US negotiations explicitly cover digital trade, underscoring persistent uncertainty around data governance, platform regulation, and cross-border digital market access. Multinationals in technology, e-commerce, and services should expect continued compliance adaptation as India balances openness with strategic regulation.

Land Bridge Logistics Corridor

Bangkok is accelerating its 1 trillion baht Land Bridge linking Ranong and Chumphon, with cabinet review expected by mid-2026. The project could cut transit times by four days and shipping costs by 15%, reshaping regional routing, port investment and distribution strategies.

Defense spending reshapes industry

The National Assembly approved a defense trajectory rising by €36 billion to €436 billion for 2024-2030, lifting annual spending to €76.3 billion or 2.5% of GDP by 2030. This supports aerospace, munitions, drones, cybersecurity, and strategic supply-chain localization.

Energy shock and Hormuz disruption

Middle East conflict and the Strait of Hormuz blockade have raised oil, gas, fertilizer, and petrochemical risks for Turkey, an energy importer. Higher input costs are feeding inflation, widening external balance pressures, and increasing uncertainty for manufacturing and transport-intensive sectors.

Nuclear Talks Shape Business Outlook

Diplomatic negotiations over sanctions relief, uranium limits and maritime access remain a major swing factor for Iran’s business environment. Any breakthrough could improve trade conditions and asset values, while failure would prolong restrictions, policy volatility and geopolitical risk exposure.

US Tariff and Tax Friction

U.S.-UK trade tensions have intensified around Britain’s 2% digital services tax, with Washington threatening tariffs. Official data show UK goods exports to the U.S. fell 24.7%, or £1.5 billion, after recent tariff measures, raising costs and uncertainty.

Infrastructure Damage and Industrial Disruption

Strikes on refineries, power plants, petrochemicals, and industrial facilities are degrading productive capacity and exports. Reported infrastructure damage exceeds $200 billion, with steel output down by up to 30%, worsening shortages of inputs, electricity, and logistics reliability for manufacturers and traders.

High Rates, Sticky Inflation

The central bank cut Selic to 14.50%, yet inflation expectations remain above target, with 2026 IPCA near 4.9%. High borrowing costs, cautious easing and volatile fuel prices will keep financing expensive, slowing investment while supporting the real and carry trades.

North American Sourcing Rules Tighten

Roughly $300 billion in tariffed goods are estimated to be reaching the United States annually through rerouting via Southeast Asia and Mexico. Rising scrutiny of transshipment and USMCA rules of origin could reshape regional manufacturing strategies, customs enforcement exposure, and cross-border investment decisions.

Deep Dependence on Chinese Inputs

India’s trade deficit with China reached $112.1 billion in FY2026, with China supplying 16% of total imports and 30.8% of industrial goods. Heavy dependence in electronics, machinery, chemicals, batteries and solar components leaves manufacturers exposed to geopolitical and supply disruptions.

Energy Leverage and Export Infrastructure

Energy is emerging as Canada’s strongest negotiating lever with Washington. Canadian energy exports to the U.S. reached nearly C$170 billion in 2024, while new pipeline, electricity, LNG, nuclear and West Coast export projects could materially improve supply resilience and investor appeal.

Labor Policy Erodes Investor Appeal

Labor regulation changes are weakening perceptions of South Korea’s business climate. In a 2026 survey, firms ranked labor policy and flexibility as the top challenge, with negative assessments jumping from 9.4% to 71%, raising concerns over operating predictability and investment attractiveness.

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.

Logistics Corridors Gaining Importance

Egypt is promoting alternative Europe-Gulf freight corridors via Damietta, Safaga, and Ro-Ro links to Italy and Saudi routes. These channels can reduce transit disruption from regional chokepoints, strengthening Egypt’s logistics-hub appeal for exporters, distributors, and supply-chain diversification.

Exports Surge Despite Disruptions

South Korea’s export engine remains highly resilient, with April shipments rising 48% to $85.89 billion and the trade surplus widening to $23.77 billion. Strong external demand supports investment planning, though geopolitical shocks and sector imbalances could quickly alter the outlook.

EU trade dependence and customs update

EU-bound exports rose 6.31% in the first four months to $35.2 billion, with automotive alone contributing $10.3 billion. Turkey’s competitiveness increasingly depends on deeper EU industrial integration, customs union modernization, and alignment on green and digital trade standards.

Energy Security Pressures Industry

Taiwan’s power system remains vulnerable because it relies heavily on imported LNG and coal. LNG reserves cover roughly 11 days, versus about 100 days for oil, prompting diversification toward U.S. and Australian supply, more storage, vessel escort planning, and possible nuclear restarts.

Imported Inflation and Wage Pass-Through

A weak yen is feeding imported inflation in food and energy while wage growth momentum continues. Businesses face rising labor and input costs, pressuring margins, contract pricing, and consumer demand assumptions across manufacturing, retail, and services sectors.

Suez Canal Revenue Shock

Red Sea insecurity and regional conflict have slashed Canal earnings, with officials citing roughly $10 billion in lost revenue and traffic falling up to 35% at peak. Shipping diversions weaken FX inflows, strain logistics planning, and complicate trade routing decisions.

Energy Supply Bottlenecks

Vietnam’s power capacity remains below plan at nearly 90,000 MW versus a target above 94,000 MW, while key pricing and offshore wind rules are unresolved. For manufacturers and data centers, this raises risks of electricity shortages, operating disruptions, and higher energy-security spending.

Red Sea Corridor Risk Management

Regional conflict around Iran and Hormuz is increasing supply-chain risk, but Saudi Arabia has mitigated exposure through the East-West pipeline, alternative Red Sea routes, and ports handling over 17 million containers annually. Businesses should still plan for security-driven volatility.

IMF Reforms Stabilize Economy

IMF-backed reforms, exchange-rate flexibility, and tighter policies have improved resilience, with reserves at $52.8 billion and inflation down from 38% to 11.9% before renewed shocks. Investors benefit from stronger buffers, though implementation discipline remains critical for confidence.

Semiconductor Ecosystem Scaling Up

India is expanding its semiconductor ecosystem through OSAT partnerships, policy incentives and talent development, attracting players such as Infineon. The strategy supports electronics localization and supply-chain resilience, but the absence of major greenfield fabs means import dependence will persist in the near term.