Localisation and Supplier Upgrade Pressure

FDI firms generated around 80% of Vietnam’s exports in Q1 2026, while domestic companies remain concentrated in lower-value activities. Multinationals increasingly need stronger Vietnamese Tier-1 suppliers, making supplier development, quality systems, and technology transfer more important for resilient operations.

Nickel Quotas Reshape Supply Chains

Indonesia’s tighter RKAB mining quotas and possible 2026 cap near 250 million tons are constraining nickel ore availability against estimated smelter demand of 340-400 million tons, lifting prices, disrupting output, and forcing battery and stainless supply chains to reassess sourcing.

Domestic Political-Regulatory Volatility

Ongoing political sensitivity around security policy, budget priorities, and governance reforms continues to shape Israel’s business climate. While institutions remain functional, abrupt policy shifts tied to wartime pressures can affect taxation, regulation, labor allocation, and long-term investment planning.

Critical Minerals Investment Gains Traction

Ukraine is advancing partnerships around lithium and broader mineral development, including new coordination with Germany and fresh funding for projects in Kirovohrad. Better geological data, digitization, and strategic investor outreach improve long-term resource opportunities, though security and financing risks remain substantial.

Energy Infrastructure Vulnerability

Israel’s offshore gas system has proven exposed to wartime shutdowns. Leviathan and Karish closures cost an estimated NIS 1.5-1.7 billion, lifted power-generation costs by 22%, and disrupted exports to Egypt and Jordan, highlighting material energy-security and industrial input risks.

Egypt as Transit Hub

Cairo is actively repositioning Egypt as a Europe-Gulf logistics bridge through the Damietta-Trieste-Safaga corridor and temporary customs exemptions at key ports. The framework can reduce delays and logistics costs, benefiting time-sensitive sectors and supply-chain diversification strategies.

Nickel Pricing and Downstream Squeeze

Indonesia’s revised nickel benchmark formula, effective 15 April, raises ore reference prices by 100–140% in some cases and increases smelter costs, especially for HPAL plants. This supports miners and royalties but pressures EV battery supply chains, margins, and project economics.

Export Competitiveness Under Pressure

Textile and apparel groups, which represent 56% of exports, warn that taxes, delayed refunds, fragmented regulation and energy costs near Rs75 per unit are eroding competitiveness. This weakens Pakistan’s export reliability, supplier margins and attractiveness for manufacturing diversification.

External Buffers and Debt Management

Foreign reserves rose to $52.83 billion in March, while authorities aim to cut external debt and reduce arrears to foreign energy partners from $6.5 billion to near zero. Stronger buffers improve payment reliability, but refinancing risk still warrants monitoring.

Automotive Investment Repositioning

South Africa’s automotive sector is being reshaped by localisation incentives and new entrants. Mahindra is assessing CKD expansion near Durban, while EV production enjoys a 150% investment allowance, creating opportunities but also intensifying competition from Chinese and Indian manufacturers.

Sanctions Expand Secondary Exposure

Washington is widening Iran-related secondary sanctions to banks, shippers, refiners, and intermediaries, including entities in China, Hong Kong, the UAE, and Oman. Companies now face higher compliance, shipping, insurance, and payment risks if counterparties touch sanctioned energy or logistics networks.

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.

Severe Macroeconomic Instability

Inflation is running near 50% officially, with some warnings of far higher wartime acceleration, while the rial has sharply depreciated. This undermines pricing, wage planning, procurement and demand forecasting, and raises counterparty, payroll and working-capital risks for any business exposure.

Fuel Import Vulnerability Intensifies

Australia remains highly exposed to external fuel shocks as import dependence stays extreme and refining capacity remains limited. Recent disruptions forced emergency diesel procurement from Brunei and South Korea, underscoring risks to transport, mining, aviation, agriculture and manufacturing operations.

FDI Shifts Toward High-Tech

Vietnam attracted US$15.2 billion in registered FDI in Q1, up 42.9% year on year, with US$5.41 billion disbursed. Capital is concentrating in electronics, semiconductors, AI data centers, energy, and green manufacturing, reinforcing Vietnam’s role in higher-value regional supply chains.

Logistics Corridor Expansion Accelerates

Saudi Arabia Railways launched five new freight corridors linking Gulf ports, Red Sea gateways, and inland hubs, while Red Sea ports can handle over 17 million containers annually. This improves rerouting capacity, shortens transit times, and strengthens supply-chain resilience.

Sanctions Evasion Reshapes Trade

Russia is increasingly routing oil and LNG through intermediaries, forged attestations, shadow fleets and ship-to-ship transfers. Reports cite paperwork disguising LNG origin and 150 shadow vessels in March, sharply raising compliance, insurance, banking and reputational risks for international counterparties.

Supply-Chain Diversification Momentum

India’s semiconductor and electronics policy push, combined with active trade negotiations, reinforces its role as a China-plus-one destination. For international firms, India offers greater resilience and market scale, though execution risks remain around regulation, infrastructure readiness, and policy consistency.

Privatization and FDI Pipeline

Egypt is accelerating asset sales, petroleum listings, and foreign investment promotion, targeting $60 billion in FDI by 2030. Reduced arrears to foreign energy firms and faster licensing could improve market entry, though execution risk and state-led policy shifts still warrant caution.

Defense industry internationalization

Ukraine’s defense sector is becoming a major industrial growth area through joint production and technology partnerships with Germany and other partners. New packages include €4 billion in cooperation and drone manufacturing, creating spillovers for advanced manufacturing, electronics, software and dual-use supply networks.

Data Centre Regulatory Tightening

Authorities are moving to reclassify data-centre licences under stricter oversight, with higher fees, tighter monitoring, and possible zoning rules. The framework should improve governance and resource management, but may increase compliance costs and extend project timelines for foreign investors.

Fiscal Reliance Preserves Resource Nationalism

Oil and gas still generate about a quarter of Russian state budget proceeds, reinforcing Moscow’s focus on extracting revenue from producers through tax mechanisms such as the mineral extraction tax. Investors should expect continued intervention, limited transparency, and prioritization of fiscal resilience over market efficiency.

Energy Shock and Import Dependence

Thailand’s heavy reliance on imported crude and fertiliser is amplifying cost pressures across industry. Authorities estimate roughly three months of oil and one month of fertiliser reserves, while prolonged disruption could cut GDP growth to 1.3% or lower and raise inflation.

USMCA Review and Tariff Risk

Mexico’s July USMCA review is the dominant business issue, with Washington pressing tougher rules of origin, possible Section 301 actions and steel, aluminum, auto disputes. Given Mexico sends over 80% of exports to the U.S., compliance costs and uncertainty are rising.

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.

Agricultural export cost pressure

Agriculture remains Ukraine’s main export engine, generating over $22 billion last year, but farmers face severe diesel, fertiliser and logistics pressures. Rising input costs, fuel import dependence and labor shortages could cut output, weaken export volumes and disrupt food-related supply chains.

Execution and Fiscal Risks Persist

Despite reform progress, Saudi growth still depends heavily on state spending, oil income, and project execution. Planned budget deficits, phased delays at major developments, and regional geopolitical shocks could affect payment cycles, investment returns, and the pace of business opportunities.

Sector Tariffs Reshape Supply Chains

Revised Section 232 measures now cover steel, copper, aluminum derivatives, and selected pharmaceuticals, with rates reaching 50% or 100% for some products. These actions will alter procurement economics, favor localization, and raise costs for manufacturers reliant on imported industrial and healthcare inputs.

Semiconductor Controls and Decoupling

U.S. legislation and allied export controls are tightening pressure on China’s chip sector, while Beijing mandates at least 50% domestic equipment for new capacity and excludes foreign AI chips from state-backed data centers, accelerating bifurcated technology ecosystems and supplier displacement.

Critical Minerals Financing Surge

Public and private capital is flowing into battery and graphite supply chains, including a US$633 million package for Nouveau Monde Graphite. These investments support North American industrial resilience, but domestic processing gaps still leave Canada exposed to foreign refiners.

Weak domestic demand persists

China’s headline growth remains supported by exports and infrastructure, but household demand is still fragile. First-quarter GDP rose 5%, while retail sales increased only 2.4%, limiting consumer-facing opportunities and raising the risk of prolonged deflationary pressure on corporate earnings.

War Economy Weakens Growth

Russia’s civilian economy is losing momentum as defense spending distorts resource allocation. GDP fell 1.8% year-on-year in January-February, Q1 contraction is estimated near 1.5%, and the budget deficit reached 4.58 trillion rubles, increasing fiscal and operating risks for businesses.

Fuel And Industrial Shortages

Energy disruption is constraining domestic industry, with reported gasoline deficits reaching 77 million liters daily under war conditions and refinery stress worsening shortages. Businesses face heightened risk of electricity curbs, fuel scarcity, factory stoppages, transport disruption, and delayed local procurement.

Critical Minerals Strategic Interest

Ukraine’s minerals sector is attracting strategic Western interest through U.S. and German partnerships covering lithium, geological data digitization, and investor access. For international business, critical minerals could become a major long-term opportunity, though security and regulatory risks remain elevated.

IMF Program Drives Policy

Pakistan’s IMF programme is shaping the FY2026-27 budget, taxation, procurement, FX liberalisation and energy pricing. With 11 new conditions tied to a $1.2 billion tranche, policy direction remains reform-led but creates near-term uncertainty for investors, exporters and regulated sectors.

Energy Security and Transition

Saudi Arabia remains central to global energy markets while building renewables, hydrogen, and gas capacity. Renewable generation rose from 3 GW to 46 GW by 2025, but regional conflict and shipping chokepoints still create volatility for exporters, manufacturers, and energy-intensive industries.