Wage Growth and Cost Pass-Through

Spring wage settlements remain strong, with Rengo reporting average increases just above 5% for a third straight year, while real wages rose 1.9% in February. Stronger pay supports consumption, but also encourages broader price pass-through and raises operating costs for employers.

Defence Industrial Expansion Drive

Canada’s defence spending surge is reshaping industrial policy, supply chains and procurement. Ottawa says the strategy could create up to 125,000 jobs, raise defence exports 50% and channel more spending to domestic firms, creating opportunities in aerospace, shipbuilding, electronics and dual-use technologies.

Foreign investment rules improve

Saudi Arabia’s 2025 Investment Law allows full foreign ownership and strengthens investor protections, supporting capital inflows despite regional turbulence. Incentives including tax exemptions, fee reductions, and easier capital flows improve entry conditions for multinationals in selected sectors.

Strategic Reserve Policy Intervention

New legislation empowers Export Finance Australia to buy, stockpile and sell fuel and critical minerals, marking a more interventionist industrial policy. The framework should improve resilience and project bankability, but also signals a larger government role in commodity markets and pricing.

China-Driven Export Dependence

Brazil’s exports to China reached a record US$23.9 billion in Q1 2026, with crude oil exports to China surging 122% and accounting for 57% of Brazil’s oil shipments. Strong demand supports exporters, but concentration raises vulnerability to Chinese policy shifts.

Antitrust and Regulatory Intervention

US authorities are pursuing a more interventionist regulatory stance spanning antitrust, digital platforms, and merger scrutiny. Cases involving Meta, Live Nation, and proposed online platform rules signal greater legal uncertainty for acquisitions, platform dependence, market access, and long-term investment planning.

Manufacturing Faces Export Squeeze

Indonesia’s manufacturing PMI fell sharply to 50.1 in March from 53.8 in February as export orders softened, output contracted, and supply disruptions raised costs. International firms should expect pressure on margins, hiring, production schedules, and supplier reliability in trade-exposed sectors.

Middle East Energy Supply Shock

Hormuz-related disruption is raising South Korea’s import costs and supply risks across oil, LNG and petrochemicals. Authorities secured roughly 50 million alternative crude barrels for April versus normal demand near 80 million, implying persistent operational pressure for refiners, manufacturers, transport, and energy-intensive exporters.

Alternative Gulf Trade Corridors

Egypt and Saudi Arabia are developing a Damietta-Safaga-Duba logistics corridor to bypass Hormuz-related disruption and shorten Europe-Gulf cargo flows. If scaled effectively, it could enhance Egypt’s hub status, reshape distribution networks, and create new opportunities in warehousing, shipping, and multimodal transport.

External Financing and IMF Dependence

Business conditions remain closely tied to IMF reviews, disbursements, and reform compliance. Pakistan recently secured preliminary approval for about $1.2 billion, while facing debt repayments and limited bond market access, keeping sovereign liquidity and policy predictability central to investor risk assessments.

Judicial Reform and Legal Certainty

Judicial reform is undermining confidence in contract enforcement, commercial dispute resolution and regulatory predictability. Lawmakers are already considering corrective changes after concerns that inexperienced judges and shorter procedures weakened business confidence, while surveys show rule-of-law concerns rising among the main obstacles to operating and investing in Mexico.

Climate Plan Spurs Regulatory Pressure

Berlin’s 67-measure climate program commits about €8 billion to wind, electric mobility, charging, and heating networks, targeting an extra 27 million tonnes of CO2 cuts by 2030. Yet criticism over insufficient ambition signals continuing policy revisions, compliance pressure, and litigation risk for businesses.

Budget Law and Tax Friction

Implementation of the 2026 budget has been delayed after parliament referred amendments to the Council of State. Contested provisions include higher fuel and gas excise duties and capped indexation, creating near-term uncertainty for labour costs, consumer demand, and operating expenses.

Chabahar Corridor Faces Uncertainty

Chabahar remains strategically important for India, Central Asia access, and supply-chain diversification beyond Pakistan, but its sanctions waiver expires this month. Uncertainty over operating rights, financing, and legal protections complicates logistics planning, infrastructure investment, and long-term corridor development for international users.

AI Infrastructure and Data Sovereignty

Mistral’s $830 million debt financing backs a Paris-area AI data center with 13,800 Nvidia GPUs and 44MW capacity, part of a 200MW European target by 2027. The trend strengthens France’s digital sovereignty appeal while raising power, permitting, and semiconductor dependence issues.

Defense Industrial Ramp-Up Accelerates

Paris plans an extra €36 billion in defense spending through 2030, taking the budget to €76.3 billion and 2.5% of GDP. Missile, drone, and air-defense procurement is expanding sharply, creating opportunities in aerospace, electronics, advanced manufacturing, and dual-use supply chains.

Inflation Pressures Delay Easing

March inflation accelerated to 4.14% year on year, while 2026 expectations rose to 4.71%, above the target ceiling. Fuel and food costs are pressuring households and raising uncertainty over interest-rate cuts, credit conditions and consumer-demand assumptions.

Nickel Export Levy Shift

Jakarta is advancing export levies on processed nickel products including NPI and ferronickel, potentially generating Rp6.78-13.57 trillion annually. The move will reshape smelter economics, favor higher-value battery materials, and raise regulatory and pricing risk across global metals supply chains.

Tariff Volatility and Litigation

U.S. tariff policy remains highly disruptive as Section 122 measures, Section 232 metals duties, and court challenges create pricing uncertainty. Importers face higher landed costs, refund complexity, and shifting compliance burdens that complicate sourcing, contract negotiations, and investment planning.

Foreign investment boosting currency

Net foreign investment surged to about $39 billion in 2025 from $25 billion in 2024, reinforcing shekel appreciation and local asset demand. Strong inflows support liquidity and valuations, but intensify currency headwinds for export-oriented business models.

Energy Cost Shock Hits Competitiveness

Persistently high electricity and gas costs remain a major drag on UK industry, with some firms paying up to 50% more than EU peers and over double US levels. This pressures margins, delays investment and raises inflation-sensitive operating risks.

Infrastructure, Energy and Water Gaps

Public and private investment plans are expanding ports, roads, airports and industrial hubs, but infrastructure readiness still trails demand. Energy reliability and water scarcity are especially important for manufacturers, with some new projects requiring electricity loads far above existing local capacity.

US-Taiwan Supply Chain Deepening

The United States became Taiwan’s largest trading partner in the first quarter for the first time in 25 years, while US imports from Taiwan rose US$59.6 billion last year. Deeper bilateral investment and trade integration is reshaping market access, compliance priorities and site-selection decisions.

Energy Cost Volatility Squeezes Industry

The UK remains highly exposed to imported gas shocks despite renewables growth. Gas set power prices about two-thirds of the time in March while providing only 22% of generation; day-ahead gas prices jumped over 60%, undermining industrial competitiveness and investment planning.

Vision 2030 project reprioritization

Fiscal pressure and weaker foreign capital are forcing reviews and scaling adjustments across flagship projects, including Neom and Red Sea developments. Reported war-related losses above $10 billion raise execution risk for contractors, suppliers, investors, and firms targeting Saudi demand linked to megaproject pipelines.

Carbon Border Levy Frictions

France is pressing Brussels to pause the EU carbon border levy on imported fertilisers, but the Commission has resisted. The dispute highlights rising compliance costs for carbon-intensive sectors and uncertainty for agrifood, chemicals, steel, and import-dependent supply chains.

Logistics Recovery Remains Uneven

Bulk exports rose 11.8% year on year in March and 13.4% in the first quarter, but port and rail bottlenecks still constrain mining and industrial supply chains. Transnet’s R125 billion investment plan supports recovery, yet execution risk remains material.

IMF Dependence and External Financing

Pakistan’s macro stability remains anchored to IMF disbursements, with about $1.2 billion pending and possible programme expansion of $2-2.5 billion. Reserve gaps, budget negotiations, and tax reforms directly shape currency stability, sovereign risk, and investor confidence.

Growth Slows Amid Inflation

South Korea faces a tougher macro mix as growth forecasts fell to around 1.92% while inflation expectations rose to 2.63%. The Bank of Korea held rates at 2.5%, leaving businesses exposed to weaker domestic demand, financing uncertainty and stagflation concerns.

Semiconductor Capacity Expansion Race

TSMC’s record Q1 revenue of NT$1.134 trillion, up 35.1%, underscores Taiwan’s central role in advanced-node supply. Heavy capex and tight 3nm capacity support investment inflows, but intensify competition for land, utilities, talent and upstream equipment access.

Energy Security and Industrial Competitiveness

Persistent concerns over gas dependence, storage limitations and elevated industrial power prices are undermining UK competitiveness. Energy-intensive sectors face greater closure or relocation risk, while investors must weigh long-term resilience, decarbonization costs and exposure to volatile wholesale energy markets.

High Rates Mask Financial Fragility

Although the central bank has cut rates to 15%, financing conditions remain restrictive and uneven. More than 60% of Russian banks reportedly saw profit declines or losses in February, while problem corporate debt rose to 11%, tightening credit availability for businesses.

Sanctions Relief Negotiation Uncertainty

US-Iran talks center on sanctions removal, frozen assets, and sequencing of relief versus nuclear concessions. Businesses face unstable compliance conditions, with outcomes ranging from phased easing to renewed pressure, materially affecting trade finance, market entry, and contract enforceability.

Defence Industrial Base Deepens

AUKUS and Japan defence agreements are creating long-horizon industrial opportunities in shipbuilding, maintenance and advanced manufacturing. New supplier qualification programs and warship contracts support local production, but rising defence budgets and execution complexity will affect labour markets, procurement and project delivery.

US Trade Pact Recalibration

India-US trade talks have reset after Washington imposed a temporary 10% tariff on all countries, eroding India’s earlier advantage. Ongoing Section 301 probes add compliance risk, making tariff outcomes and market-access terms critical for exporters, sourcing strategies, and investment planning.

Large Infrastructure Investment Pipeline

Government has budgeted over R1 trillion for infrastructure over three years, including roads, ports, rail, water and digital assets. The scale creates significant project opportunities, but delivery capacity, financing structures and state-owned enterprise execution remain decisive for investors.