Mission Grey Daily Brief - October 11, 2024
Summary of the Global Situation for Businesses and Investors
The global situation remains volatile, with rising tensions in the Middle East and Eastern Europe threatening global energy supplies and regional stability. Oil prices have soared 9% since Iran's missile attack on Israel on October 1, with 30% of the global oil supply coming from the Middle East. Western sanctions on Russia have disrupted the diamond trade in India, leading to job losses and financial hardship. In North Korea, the government has announced plans to permanently seal its border with South Korea, escalating tensions on the Korean peninsula. These developments have raised concerns about the impact on the global economy, trade, and consumer spending.
Escalating Tensions in the Middle East
The Middle East is witnessing heightened tensions with Israel and Iran at the forefront. Iran's missile attack on Israel on October 1 has increased the prospect of an all-out war, threatening global energy supplies and regional stability. Richard Doornbosch, President of the Central Bank of Curaçao and Sint Maarten (CBCS), warned that the escalating situation could have far-reaching consequences for the global economy, particularly in relation to oil prices. Experts caution that a full-scale conflict between Israel and Iran could upend the international energy supply and send shockwaves throughout the global economy.
Western Sanctions on Russia and the Diamond Trade in India
Western sanctions on Russia have disrupted the diamond trade in India, particularly in the city of Surat, which has long been a global hub for diamond polishing. The European Union and G7 have banned Russian diamonds, severely impacting the supply of rough diamonds to India's industry. This has led to job losses and financial hardship for thousands of workers in Surat, with factories shutting down or reducing their workforce. The sanctions have wiped out nearly one-third of India's diamond trade revenue, plunging families into financial hardship.
North Korea's Border Closure with South Korea
North Korea has announced plans to permanently seal its border with South Korea, escalating tensions on the Korean peninsula. The North Korean government has stated that the border closure is a self-defensive measure to inhibit war and defend its security. However, analysts remain uncertain about the impact on relations with South Korea, given that travel and exchanges across the border have been suspended for years. The South Korean government has vowed to punish any provocation from the North, further escalating tensions in the region.
The Impact of Middle East Tensions on Global Energy Supplies
The Middle East is a critical hub for global oil supplies, with around 30% of the world's oil supply coming from the region. Escalating tensions between Israel and Iran have raised concerns about the potential disruption to oil and gas exports, which could have a significant impact on the global economy. Experts warn that a full-scale conflict between Israel and Iran could upend the international energy supply and send shockwaves throughout the global economy. Farzan Sabet, senior research associate at the Geneva Graduate Institute, emphasizes that a "major disruption of regional oil and gas exports is likely to have a material impact on the global economy."
Iran has threatened to block the Strait of Hormuz, a strategic waterway through which a fifth of the world's oil supply flows. Neil Quilliam, an energy policy and geopolitics expert at Chatham House, underscores the importance of the Strait of Hormuz to the global economy. Qatar, one of the world's biggest producers of natural gas, also relies on the Strait of Hormuz for its exports.
Sabet predicts that a major disruption to the flow of oil and gas from the Middle East would have an "outsized effect" on the Chinese economy, as Beijing imports an estimated 1.5 million barrels of oil a day from Iran, accounting for 15% of its oil imports from the region. Increased energy prices for China would "filter through the supply chain to the manufactured goods the country exports to the United States, Europe, and other regions."
Sabet believes that even a major disruption to the flow of oil and gas from the Middle East would not cause the global economy to spiral out of control, largely due to the rise of the United States as a major oil and gas supplier and the decreasing global reliance on fossil fuels. However, Western consumers would "feel the price hike at the pump", although it would be "much less than it might have been in a previous era."
Further Reading:
Central Bank President expresses concerns over Middle East Turmoil - Curacao Chronicle
North Korea says it will permanently ‘shut off’ border with South - The Independent
Oil Prices Continue to Climb Amidst Israel-Iran Saber-Rattling - OilPrice.com
The Ukraine War is Driving a Wave of Suicides in India’s Surat - Inkstick
Themes around the World:
Trade Agreements and Regional Integration
Vietnam's participation in multiple free trade agreements (FTAs), such as CPTPP and RCEP, enhances market access and reduces tariffs. These agreements incentivize foreign investment and integrate Vietnam deeper into regional supply chains, promoting export diversification and economic resilience.
Monetary Policy and Inflation Management
Turkey has reduced inflation from over 42% to just above 30% in 2025, with further declines targeted for 2026. Tight monetary policy and structural reforms have stabilized the economy, but high inflation and currency volatility remain key risks for investors and supply chain planners.
Currency Controls and Ruble Weakness
Reduced oil revenues and lower central bank FX sales are weakening the ruble. Currency controls and capital restrictions complicate cross-border transactions, profit repatriation, and risk management for foreign enterprises operating in Russia.
Rising Non-Oil Private Sector Growth
Non-oil private sector activity continues to expand, supported by Vision 2030 reforms and strong domestic demand. The Riyad Bank PMI remains well above 50, with real GDP growth forecast at 4–4.6% in 2026, signaling robust opportunities for international investors in diversified sectors.
Foreign Investment and Regulatory Dynamics
Taiwan continues to attract foreign investment, especially in high-tech sectors, but faces regulatory scrutiny and operational risks due to cross-Strait tensions, export controls, and evolving US-China policies. Investors must navigate shifting compliance requirements and heightened geopolitical uncertainty.
Full Foreign Market Access Reform
Saudi Arabia’s stock market will open to all foreign investors in February 2026, removing previous restrictions. This reform is expected to unlock $9–10 billion in inflows, boost liquidity, and increase global index weightings, transforming market accessibility and investment strategies.
Political Stability and Governance
Indonesia maintains relative political stability, but regional autonomy and local elections can introduce policy uncertainties. Political dynamics influence regulatory consistency and can impact long-term investment planning and risk assessments for international businesses.
Geopolitical Risks and Strategic Autonomy
Heightened US-China tensions and US assertiveness in Latin America create uncertainty for Brazil’s trade and investment environment. Brazil’s strategy of balancing relations with both powers, while leveraging its energy and mineral resources, is critical for business resilience.
Regulatory and Business Environment Reforms
Efforts to improve the ease of doing business through regulatory reforms, including streamlined licensing and tax incentives, enhance Egypt's attractiveness to foreign investors. These reforms impact market entry strategies and operational compliance for multinational enterprises.
Energy Transition Challenges
South Korea faces challenges transitioning to renewable energy while maintaining industrial competitiveness. Energy security concerns and investments in green technologies impact operational costs and attract foreign investors focused on sustainable practices, influencing long-term business planning.
Political and Regional Security Instability
Ongoing political uncertainty and regional security risks, particularly regarding Afghanistan and Kashmir, affect investor confidence. Pakistan and China are urging verifiable action against terrorism in Afghanistan, while regional disputes continue to pose operational and reputational risks.
Supply Chain Realignment and Diversification
Geopolitical fragmentation and Brexit have forced UK businesses to reassess supply chains, with increased complexity and a push for diversification away from high-dependency markets like the US and China. Strategic adaptation is required to maintain resilience and access to key inputs and markets.
UK Trade Growth Lagging Global Average
UK trade growth is forecast at 2.3% annually, below the global average of 2.5%, due to slow expansion with the US and China. Deepening ties with the EU and other rule-based economies is seen as crucial for exporters and supply chain resilience.
Foreign Investment Surge and Partnerships
Egypt is witnessing robust foreign investment inflows, notably from the UAE and Qatar, with deals exceeding $29 billion in real estate and $7.5 billion in industrial sectors. These partnerships boost capital availability, technology transfer, and export growth, reinforcing Egypt’s attractiveness for international investors.
Political Instability and Budget Uncertainty
France entered 2026 without an approved budget, causing delays in public investment, recruitment, and project launches. This uncertainty increases borrowing costs, weakens investor confidence, and risks slowing economic growth and business operations.
Corruption And Governance Challenges
President Pezeshkian has pledged anti-corruption reforms, but rent-seeking, smuggling, and bribery remain entrenched. Lack of transparency and regulatory unpredictability undermine investor confidence and complicate compliance for multinational firms operating in Iran.
AI and Data Center Infrastructure Expansion
Driven by global hyperscaler investment, South Korea is rapidly expanding AI and data center infrastructure. Government plans to triple AI spending and attract major tech firms are accelerating sector growth, supporting innovation but also intensifying competition for talent and resources.
Japanese Yen Volatility and Monetary Policy
The yen’s volatility, driven by cautious Bank of Japan tightening and external shocks, impacts trade competitiveness and investment returns. Currency fluctuations and rising bond yields require international firms to hedge exposures and monitor policy signals closely.
Labor Market Dynamics
Thailand's labor market is characterized by a skilled yet aging workforce, with implications for productivity and wage trends. Labor regulations and availability influence operational costs and investment decisions, particularly in labor-intensive industries.
Infrastructure Development
Investments in transport, energy, and digital infrastructure are pivotal for enhancing Thailand's business environment. Improved infrastructure supports efficient supply chains, reduces operational costs, and attracts foreign investment, thereby boosting economic growth.
Resilience and Diversification of Supply Chains
Recent disruptions, including Chinese trade restrictions, have prompted Australian industries—especially agriculture and mining—to diversify export markets and strengthen supply chain resilience. This strategic shift reduces overdependence on single markets and enhances long-term business stability.
Geopolitical Tensions and Trade Policies
Rising geopolitical tensions, particularly with Russia and China, influence Germany's trade policies and export controls. Sanctions and regulatory changes impact key industries such as automotive and machinery, necessitating strategic realignments in sourcing and market focus to navigate evolving international trade landscapes.
Foreign Portfolio Investment Volatility
After record FPI outflows of USD 17.5 billion in 2025, foreign investors are expected to return in 2026 amid improved earnings and macro stability. However, India’s limited AI production capacity may divert global capital to more AI-exposed markets, affecting sectoral investment flows.
Labor Market Reforms and Social Unrest
Recent labor reforms in France have sparked widespread protests and strikes, disrupting transportation and manufacturing sectors. These social tensions pose risks to supply chain reliability and investor confidence, potentially affecting foreign direct investment and operational continuity for multinational companies.
Labor Market Dynamics and Wage Inflation
Rising wages and labor shortages in key industrial regions challenge Vietnam's cost competitiveness. While improving living standards, these trends may prompt companies to automate or relocate certain operations, impacting investment strategies and necessitating adjustments in supply chain planning to maintain profitability.
SME Vulnerability and Regulatory Shifts
SMEs, contributing 35% of GDP, face challenges from new trade regulations, sustainability rules, and limited access to technology. Support for digitalization, green finance, and regional integration is essential to strengthen SME resilience and global supply chain participation.
Supply Chain Diversification Gains
Southeast Asia, including Thailand, is capturing sourcing share as global supply chains shift away from China due to tariffs and trade tensions. Thailand’s imports to the U.S. rose 28% in 2025, positioning the country as a key alternative for international supply chain strategies.
Technological Innovation and Digital Economy
Canada's emphasis on technological innovation fosters growth in digital sectors, including AI, fintech, and clean tech. Government incentives and investments attract international capital and partnerships. This trend enhances competitiveness but requires adaptation to cybersecurity and data privacy regulations.
Cybersecurity Threat Landscape
As a global cybersecurity hub, Israel faces sophisticated cyber threats that can disrupt business operations and supply chains. Proactive cybersecurity measures and public-private partnerships are critical to safeguarding assets and maintaining investor trust in the digital economy.
Suez Canal Disruptions and Security
Geopolitical tensions and attacks in the Red Sea have led to a sharp decline in Suez Canal traffic, with tonnage operating at 70% below 2023 averages. This has increased shipping costs, rerouted global supply chains, and significantly reduced Egypt’s canal revenues.
Currency Volatility and Financial Stability
The Ukrainian hryvnia experiences significant volatility amid economic uncertainty, affecting cost predictability for businesses and investors. Financial instability can deter foreign direct investment and complicate international trade financing.
France’s Opposition to EU-Mercosur Deal
France’s rejection of the EU-Mercosur trade agreement, driven by agricultural sector protests and concerns over unfair competition, highlights deep domestic resistance to further market opening. This stance risks isolating France within the EU and complicates supply chain diversification for international businesses.
Energy Supply and Diversification
Turkey's energy sector is marked by efforts to diversify sources amid regional conflicts and global energy price fluctuations. Energy security concerns influence industrial costs and investment in energy-intensive sectors, affecting operational continuity and competitiveness.
Indigenous Inclusion and Project Legitimacy
Indigenous partnership is increasingly central to resource and infrastructure development. Legal challenges, demands for meaningful consent, and environmental stewardship shape project viability, requiring businesses to prioritize Indigenous engagement for operational certainty and social license.
Regulatory and Business Environment Reforms
Ongoing reforms aim to improve Vietnam's regulatory framework, enhance transparency, and reduce bureaucratic hurdles. These changes foster a more conducive environment for foreign investment and ease of doing business, though implementation consistency remains a concern.
Labor Market and Immigration Policies
Evolving immigration policies and labor market dynamics affect talent availability in key industries. Skilled labor shortages and policy reforms impact sectors like technology, healthcare, and manufacturing. Businesses must strategize workforce planning and leverage immigration pathways to sustain growth and innovation.