Investment Deterrence and Capital Flight

The combination of sanctions, tariffs, and domestic instability has triggered capital flight and deterred new foreign investment. Regulatory uncertainty, payment blockages, and the risk of asset expropriation have made Iran an increasingly unattractive destination for international investors.

Digital, AI, and Talent Integration

Mexico is emerging as a strategic AI and digital infrastructure hub for North America, with major investments in data centers, advanced manufacturing, and tech talent. Integration with US firms and regulatory alignment under USMCA enhance regional competitiveness, resilience, and innovation in technology-driven sectors.

Critical Minerals Strategy Accelerates

Canada is rapidly advancing its critical minerals sector, with new provincial and federal strategies, international partnerships (notably with India), and investment in recycling. This positions Canada as a key supplier for global EV, battery, and tech supply chains, reducing reliance on China.

Rising Role in Global Supply Chains

Indonesia has emerged as a major beneficiary of global supply chain diversification, with U.S. imports from Indonesia rising 34% in 2025. This shift, driven by U.S.-China trade tensions, positions Indonesia as a key sourcing hub for international manufacturers.

Public-Private Partnerships Drive Infrastructure

Turkey has implemented 272 PPP projects worth $215 billion since 1986, including airports and bridges. The PPP model remains central to infrastructure, with a focus on sustainability, human-centered development, and attracting international financing.

German Investment Shift: US to China

German direct investment in the US fell by 45% in 2025, while investment in China surged to over €7 billion. Uncertainty from US trade policy and pressure from Chinese authorities are prompting German firms to localize production and supply chains in China, affecting global business operations.

Regulatory Uncertainty and Policy Delays

Delays in enacting trade and investment agreements, as seen in the US-Korea deal, highlight persistent regulatory uncertainty. Such unpredictability undermines business confidence, complicates compliance, and can trigger retaliatory measures affecting multinational operations.

Oil exports shift toward Asia

Discounted Iranian crude continues flowing via opaque logistics and intermediaries, with China and others adjusting procurement amid wider sanctions on other producers. For energy, shipping, and trading firms, this sustains volume but raises legal exposure, documentation risk, and payment complexity.

Automotive profitability under tariffs

Toyota flagged that U.S. tariffs reduced operating profit by about ¥1.45tn and reported a sharp quarterly profit drop, alongside a CEO transition toward stronger financial discipline. For manufacturers and suppliers, this implies continued cost-down pressure, reallocation of investment, and trade-policy sensitivity.

Energy Transition and Power Security

Eskom’s reforms and renewable energy expansion have reduced load shedding, but high electricity costs and grid vulnerabilities persist. Recent tariff relief for energy-intensive industries aims to prevent deindustrialization, yet long-term competitiveness depends on sustainable pricing and infrastructure modernization.

US Tariff Threats Disrupt Trade

President Trump’s threats of up to 25% tariffs on German and EU exports have destabilized markets and undermined Germany’s fragile economic recovery. These measures threaten over €250 billion in US-German trade, forcing companies to reassess supply chains, investments, and market strategies.

German Investment Pivot to China

German direct investment in China surged 55% in 2025, reaching over €7 billion. Firms are localizing supply chains in China to hedge against US trade volatility, deepening economic ties with Beijing and complicating EU efforts to reduce China dependence.

EU-Mercosur Deal Sparks Unrest

France’s opposition to the EU-Mercosur trade agreement, driven by farmer protests and political divisions, delays ratification and threatens supply chain stability. The deal’s fate will shape market access, regulatory risks, and strategic raw materials sourcing for years.

China demand anchors commodity exports

China continues to pivot toward Brazilian soybeans on price and availability, booking at least 25 cargoes for March–April loading. This supports agribusiness, shipping and FX inflows, but concentrates exposure to China demand cycles, freight swings and trade-policy shocks.

USMCA Review and North America

The mandated USMCA joint review is approaching, with U.S. officials signaling tougher rules of origin, critical-minerals cooperation, and potential bilateralization. Any tightening could reshape automotive and industrial supply chains, compliance costs, and investment decisions across Mexico, Canada, and the U.S.

Monetary Policy, Currency Strength, and Consumer Trends

The Israeli shekel remains strong, supported by a trade surplus and foreign investment. The Bank of Israel’s rate cuts and low unemployment are fostering economic growth, while consumer markets shift toward buyer dominance, affecting real estate, automotive, and retail sectors.

Geopolitical Uncertainty and Peace Negotiations

US-brokered peace talks with Russia continue, but unresolved issues over territorial concessions and security guarantees create deep uncertainty for investors. The outcome will shape Ukraine’s future market access, reconstruction, and integration with the EU.

Critical Minerals and Supply Chain Security

The US government is investing $2.5 billion in a Strategic Resilience Reserve to secure critical minerals, awarding contracts to domestic producers. This policy aims to reduce import dependency, enhance national security, and drive supply chain resilience in defense, energy, and advanced manufacturing sectors.

Customs crackdown on free zones

Customs plans tighter duty-exemption rules and higher per-item fines to curb false origin, under-valuation, and minimal-processing practices in free zones. Likely impacts include stricter ROO documentation, more inspections, longer clearance times, and higher compliance costs for importers and assemblers.

Regulatory Sovereignty and Policy Autonomy Concerns

The imposition of EU-style ESG and regulatory standards through the trade agreement raises concerns about Brazil’s policy autonomy and federal structure. Businesses face higher compliance costs and potential exclusion from markets if unable to meet external certification and traceability requirements.

Haushalts- und Rechtsrisiken

Fiskalpolitik bleibt rechtlich und politisch volatil: Nach früheren Karlsruher Urteilen drohen erneut Verfassungsklagen gegen den Bundeshaushalt 2025. Unsicherheit über Schuldenbremse, Sondervermögen und Förderlogiken erschwert Planungssicherheit für öffentliche Aufträge, Infrastruktur-Pipelines und Co-Finanzierungen privater Investoren.

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.

Geopolitical Risks and Regional Diplomacy

Egypt’s proximity to regional conflicts, especially Gaza and Sudan, creates persistent geopolitical risks. Diplomatic efforts focus on regional stability, but disruptions can impact trade, investment sentiment, and supply chains, especially via the Suez Canal and border regions.

Gaza Conflict Drives Regional Instability

The ongoing Israel-Gaza conflict and its aftermath continue to disrupt supply chains, trade flows, and investor sentiment. Border controls, humanitarian access, and security risks remain volatile, impacting logistics, foreign investment, and business operations across the region.

Deepening Property Crisis Threatens Stability

China’s property downturn, the longest in modern history, has led to a surge in foreclosed assets and falling prices, especially in rural regions. This crisis undermines banking sector health, limits stimulus options, and poses systemic risks for economic and financial stability.

Low inflation and financing conditions

L’inflation française a touché 0,4% en janvier (plus bas depuis 2020), favorisant une baisse du Livret A à 1,5%. Coût du capital potentiellement plus bas (crédit immobilier ~3,1%), mais consommation et prix de services modérés influencent prévisions de ventes et salaires.

Auto sector disruption and China competition

Chinese vehicle imports are surging, widening the China trade gap and intensifying pressure on local manufacturing. Government is courting Chinese investment (e.g., potential plant transfers) while considering trade defenses and new-energy-vehicle policy. Suppliers face localisation shifts, pricing pressure and policy uncertainty.

FX reserves and rupee stability

External buffers improved, with liquid reserves around $21.3bn and SBP reserves near $16.1bn after IMF inflows. Nevertheless, debt repayments and current-account pressures can quickly tighten import financing, raise hedging costs, and disrupt supplier payments and inventory planning.

Strategic Role in National Security Policy

The bomb shelter mandate is part of Poland’s broader civil defense modernization in response to regional threats. This positions the sector as strategically important, attracting interest from defense-oriented investors and suppliers, but also linking it to evolving geopolitical risk.

Currency Volatility and Capital Controls

The ruble’s real effective exchange rate surged 28% in 2025, driven by a trade surplus and high interest rates. While this curbed inflation, it hurt export competitiveness and budget revenues, complicating financial planning for foreign investors and multinational operations.

Regulatory Reforms for Foreign Investment

Sweeping reforms to business, visa, and property laws are opening more sectors to foreign ownership, simplifying bureaucracy, and enhancing expat residency options. These changes aim to boost FDI and position Thailand as Southeast Asia’s leading expat and investment destination.

US-Israel Strategic Partnership and Aid

The US continues to provide substantial military and economic aid to Israel, reinforcing bilateral ties and defense cooperation. This partnership underpins Israel’s security posture but also shapes the regulatory and sanctions environment, influencing international investment and technology transfer.

EU Green Deal and CBAM Impact

The EU’s Carbon Border Adjustment Mechanism (CBAM) and green deal policies are reshaping Turkey’s export landscape. Sectors with high carbon intensity face new costs and compliance requirements, affecting competitiveness in key markets and driving urgent green transition needs.

Advanced Manufacturing and Automation

Japan's leadership in semiconductor equipment, packaging, and automation is reinforced by robust growth in AI-driven demand. Investments in high-end manufacturing and automation support global supply chain reliability, with Japanese firms commanding key positions in advanced technology markets.

Supply Chain Disruptions from Geopolitical Crises

Ongoing instability in the Red Sea and Mediterranean, including French shipping giant CMA CGM’s route reversals, creates unpredictability in global supply chains. These disruptions affect transit times, freight rates, and inventory management for businesses dependent on Asia-Europe trade.

Export Growth Amid Rising Competition

Despite global headwinds, Turkey achieved record exports in 2025, notably to the EU and Italy. However, rising input costs, increased Asian competition, and sector-specific declines (e.g., white goods) signal the need for policy support, innovation, and cost-effective production to sustain export momentum.