Domestic Economic Instability Deepens

Iran’s economy is under severe pressure from inflation, currency weakness, damaged infrastructure, and fiscal strain. Reports cite food inflation above 100% earlier this year, rial depreciation, and payroll stress, weakening consumer demand, payment reliability, project viability, and business continuity.

Customs Relief and Transit Corridors

Egypt launched a Europe-Gulf transit corridor via Damietta and Safaga and granted a three-month customs exemption from Advance Cargo Information for GCC-bound transit cargo. The measures may reduce delays, lower logistics costs, and improve resilience for food, pharma, and time-sensitive trade.

EU Market Integration Accelerates

Kyiv is advancing EU-aligned legislation on technical regulation, electricity markets and judicial enforcement. New laws supporting the ‘industrial visa-free’ regime should reduce recertification costs, improve product compliance and expand market access for Ukrainian manufacturers trading into the European Union.

European Trade Relationship Pressure

Israel’s access to European markets faces rising political pressure as EU states debate partial suspension of preferential trade terms. With the EU accounting for 32% of Israel’s goods trade in 2024, any tariff changes or restrictions would materially affect exporters and investors.

Energy Security Drives Regional Diplomacy

Australia is using regional diplomacy to secure fuel, fertiliser and energy flows, including arrangements with Singapore, Brunei, Indonesia and China. This reduces near-term disruption risk, but also signals a more interventionist trade posture shaped by geopolitical instability and strategic supply concerns.

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.

Oil Revenues Remain Resilient

Despite G7 price-cap measures, Russia’s fossil-fuel export revenues rebounded strongly as Urals crude reportedly reached $94.5 per barrel in March and monthly export revenues rose 52%. Elevated energy earnings strengthen state finances, complicating sanctions strategy and sustaining external trade leverage.

Macro Growth Masks Fragility

Q1 GDP grew 7.83%, supported by manufacturing, investment, and services, but inflation reached 4.65% in March and Vietnam posted a US$3.6 billion trade deficit as imports surged. External shocks, weaker demand, and higher energy costs could pressure margins and policy flexibility.

Labour shortages and migration policy

Germany’s labour market remains constrained by demographics and weaker immigration, while debate over large-scale Syrian returns risks worsening shortages. Syrians hold more than 266,000 social-insurance jobs, many in shortage occupations, making workforce policy increasingly material for operations and expansion planning.

Petrochemical Restructuring Gains Urgency

Voluntary restructuring in petrochemicals and other sectors facing global overcapacity is accelerating under new policy support. For investors and operators, this may improve long-term efficiency, but it also signals near-term consolidation, asset rationalization and uneven supplier performance across industrial chains.

Macro Reforms and IMF

IMF-linked reforms remain the central business variable as Egypt weighs $1.5-3 billion in extra funding, targets a 6.1% fiscal deficit, and faces privatization demands. Reform execution will shape FX liquidity, taxation, subsidies, interest rates, and investor confidence.

Nickel Policy Tightens Further

Indonesia is raising nickel ore benchmark prices, considering export duties on processed products, and cutting 2026 output quotas to roughly 250–260 million tons from 379 million. This will reshape EV and stainless supply chains, raise smelter costs, and increase regulatory risk.

Cybersecurity standards are tightening

France is imposing a state roadmap toward post-quantum cryptography, requiring sensitive-data inventories by end-2026, technical mapping by 2027, and deployment for classified systems by 2030. This will raise compliance, procurement, and cybersecurity investment requirements across digital ecosystems.

Infrastructure-led growth dependence

Beijing is relying heavily on infrastructure to stabilize activity as consumption and property remain weak. Infrastructure investment rose 8.9% in the first quarter, supporting construction and industrial demand, but also reinforcing uneven growth patterns and dependence on policy-driven capital allocation.

Tourism And Services Vulnerability

Regional conflict is causing booking delays and cancellations in a sector that brought in $65 billion from 64 million visitors last year. Any tourism slowdown would weaken foreign-exchange earnings, pressure the current account and reduce demand across hospitality, retail, transport and real estate.

Sanctions and Dark Fleet Expansion

Restricted transit is benefiting sanctioned and shadow-fleet operators, which account for a large share of recent Hormuz movements. This raises compliance risk for charterers, banks, insurers, and refiners, especially where waivers, false flags, or opaque beneficial ownership complicate due diligence.

Nuclear Talks Drive Policy Volatility

Ceasefire and nuclear negotiations remain fragile, with major gaps over uranium enrichment, sanctions relief, and frozen assets reportedly near $120 billion. Businesses face abrupt shifts in market access, compliance conditions, shipping rules, and political risk depending on whether diplomacy advances or collapses.

UK-EU Trade Reset Momentum

The government is pursuing closer practical cooperation with the EU on food and drink trade, youth mobility, and emissions trading. While core Brexit red lines remain, reduced frictions could improve customs efficiency, labor access, and cross-border investment confidence.

Tariff Volatility and Legal Uncertainty

US trade policy remains highly unpredictable after the Supreme Court struck down broad 2025 tariffs, yet temporary Section 122 and sectoral duties persist. Importers face refund claims near $170-175 billion, shifting effective tariff rates, compliance complexity, pricing pressure, and delayed investment decisions.

Energy Shock Lifts Logistics

Middle East conflict and disruption around the Strait of Hormuz are pushing oil toward $100 per barrel, raising bunker fuel, diesel, and freight costs. U.S. ports report rerouting, surcharge pressure, and weaker import volumes, with broad inflationary spillovers for importers and exporters.

Fragile Asian Buyer Re-engagement

Temporary sanctions waivers have reopened limited discussion of Iranian crude purchases in Asia, but flows remain fragile. A 600,000-barrel cargo initially bound for India rerouted to China, highlighting how payment mechanics, legal ambiguity, and tighter credit terms can abruptly reshape trade patterns.

Steel Trade Protectionism Intensifies

From July, the EU will cut duty-free steel quotas by 47% and raise tariff barriers, putting UK exports at risk. With the EU taking 1.8 million tonnes of UK steel annually, manufacturers face margin pressure, rerouting risks and urgent need for quota arrangements.

War And Security Risk

Russia’s continuing attacks keep Ukraine the region’s highest-risk operating environment, disrupting transport, insurance, workforce mobility and asset security. Businesses face elevated force majeure, higher compliance and security costs, and persistent volatility across industrial, retail and logistics activity.

War Damage Weakens Infrastructure

Strikes on energy, industrial, transport, and banking assets are increasing reconstruction needs and operational fragility. Damage to factories, bridges, railways, petrochemical sites, and payment infrastructure raises outage risk, delivery delays, labor disruption, and capex requirements for businesses with Iran exposure.

Tax, Labour and Social Cost Reforms

A 2027 income-tax reform for lower and middle earners is planned, alongside debates over higher taxes on top earners, labour-market changes and social spending restraint. Potential shifts in payroll burdens, retirement rules and household demand will affect cost structures and consumption.

US Tariff Exposure Escalates

Vietnam’s export model faces sharper US trade risk as new Section 122 surcharges impose a temporary 10% duty and Section 301 probes target overcapacity and labor enforcement, threatening country-specific tariffs, margin compression, compliance costs, and supply-chain redesign for exporters.

Labor and Visa Constraints

Tighter legal immigration rules are reducing inflows of skilled workers, students, and family-based entrants, raising labor-market frictions for sectors reliant on international talent. Reported declines in H-1B petitions and student visas may increase hiring costs, delay projects, and weaken innovation-intensive operations.

Red Sea Shipping Rerouting

Houthi threats and Bab el-Mandeb disruption continue to distort Israel-linked shipping, especially through Eilat. Although first-quarter freight there rose 118% and 11,500 tonnes of vehicles moved via Jordan, businesses still face longer routes, higher freight costs and logistics uncertainty.

Won Volatility Raises Costs

The won’s slide past 1,500 per dollar and oil-driven import inflation are lifting operating costs for energy, materials and foreign-currency liabilities. Currency instability complicates pricing, hedging and capital planning, even as exporters gain some temporary competitiveness from depreciation.

US Metal Tariffs Hit Manufacturing

Revised U.S. Section 232 rules now tax the full value of many metal-intensive goods, sharply increasing costs for Canadian exporters. BRP alone cited over $500 million in tariff impact, while smaller manufacturers face cancelled orders, margin compression, relocations, and layoffs.

Privatisation and Reform Openings

The government is advancing privatisation of major power distribution companies including FESCO, GEPCO and IESCO, while courting over 250 global investors with reform pledges. This may create selective entry opportunities, though tariff uncertainty and execution delays remain material risks.

Strong Growth Faces External Shocks

Vietnam’s Q1 GDP grew 7.83%, but inflation reached 4.65% in March and external risks are intensifying. U.S. trade tensions, higher energy costs, and logistics disruption could squeeze manufacturers, weaken demand visibility, and complicate planning for investors and importers.

US Becomes Top Trade Partner

The United States overtook China and Hong Kong as Taiwan’s largest trading partner in the first quarter, US$78.25 billion versus US$73.80 billion. This shift supports friend-shoring but heightens business sensitivity to US policy, tariffs, export controls, and bilateral negotiations.

Manufacturing Supply Chain Disruption

UK factories faced the fastest input-cost increase since 1992 as shipping rerouted away from the Strait of Hormuz. Delivery delays, higher fuel and freight bills, and contracting output are raising inventory, sourcing, and production planning risks.

Expo 2030 Infrastructure Buildout

Construction has begun at the Expo 2030 Riyadh site, with infrastructure, design, and master-planning work accelerating and more countries confirming participation. The buildout should generate procurement, engineering, mobility, and urban-services opportunities while tightening execution and delivery requirements.

Metals Tariffs Raise Input Costs

New U.S. plans to apply a 25% tariff on finished goods containing imported steel and aluminum, alongside 50% duties on some raw materials, will lift landed costs for manufacturers, complicate product classification, and pressure margins across construction, machinery, and automotive supply chains.