Nationwide Protests and Legitimacy Crisis

Iran faces its largest protests in decades, driven by economic collapse, inflation exceeding 40%, and a generational rejection of the ruling system. The unrest, spreading to all provinces, threatens regime stability and disrupts business operations.

Economic Policy Tightening and Growth Outlook

Turkey maintains strict monetary policy to curb inflation, with interest rates at 36–38%. GDP exceeded $1.5 trillion in 2025, with 2026 growth projected at 3.8–4.2%. Policy stability supports investor confidence but may constrain consumer demand and credit access.

Economic Policy Uncertainty Amid Inflation

Rising living costs and a weak yen have made inflation a top public concern. Competing fiscal proposals—including temporary food tax cuts and expanded stimulus—are fueling bond market volatility and raising questions about Japan’s long-term fiscal sustainability.

Danish Defense Policy Hardens

Denmark reaffirmed its Cold War-era policy to defend Greenland militarily against any invasion, including from NATO allies. This stance increases regional tensions and could trigger direct conflict, affecting risk assessments for foreign investment and multinational operations in Denmark.

AI and Technology as Market Drivers Amid Fragmentation

Artificial intelligence and advanced technology investment remain central to US economic growth and global market leadership. However, trade fragmentation, export controls, and valuation risks are prompting more selective investment approaches, with a focus on supply chain security, domestic capacity, and regulatory compliance.

Trade Diversification and New Agreements

Brazil is actively expanding trade ties beyond traditional partners, deepening relations with India, Southeast Asia, and the Middle East. Ongoing negotiations with Canada and the UAE, and the push for new market access, are reshaping Brazil’s international trade landscape and reducing single-market dependence.

Trade Diversification and New Markets

With exports to the US and China declining, Germany is actively pursuing trade agreements with India, Mexico, Australia, and the UAE. This diversification aims to reduce reliance on traditional markets, mitigate geopolitical risks, and unlock new growth opportunities for German exporters.

Renewable Energy Transition Challenges

Australia’s ambitious shift to renewables is marked by rapid project approvals and grid integration successes, but also rising system costs, policy uncertainty, and continued reliance on coal for grid stability. Businesses face evolving regulatory frameworks and investment risks in the energy sector.

Logistics and Port Inefficiencies

Severe congestion and operational failures at major ports, particularly Cape Town and Durban, have led to export delays and substantial losses for key sectors. These structural weaknesses in logistics undermine South Africa’s competitiveness and disrupt global supply chains reliant on South African goods.

Massive Reconstruction and Recovery Plans

Ukraine is negotiating an $800 billion recovery package with the U.S. and EU, aiming to rebuild infrastructure and attract foreign capital postwar. The scale and governance of these funds will define opportunities and risks for international contractors and investors.

Major Infrastructure Bottlenecks and Delays

Canada faces critical infrastructure gaps and slow project approvals, with over $126 billion in housing-enabling infrastructure at risk and complex regulatory hurdles. These delays undermine competitiveness, impede supply chain resilience, and deter both domestic and foreign investment in key sectors.

Sanctions-Driven Economic Contraction

Years of sanctions, renewed UN measures, and loss of foreign investment have led to near-stagnant GDP growth (0.6% in 2025), technological lag, and rising poverty. Structural reforms are absent, worsening the long-term outlook for international business engagement.

India’s Strategic Response to US Trade Pressure

India is recalibrating its economic strategy in response to US tariffs, focusing on boosting domestic manufacturing, attracting FDI, and diversifying export markets. The 2026 Union Budget emphasizes capital expenditure, fiscal discipline, and incentives for manufacturing to position India as a resilient, long-term investment destination.

Sectoral Polarization in Export Competitiveness

While semiconductors and automobiles drive export growth, sectors like steel and machinery are losing ground due to Chinese competition and EU carbon border measures. This polarization challenges Korea’s export diversification and exposes supply chains to regulatory and market risks.

LNG Export Expansion and Energy Policy

US LNG export capacity is expanding, with new projects and regulatory filings, aiming to supply global markets and support allies’ energy security. This growth strengthens US influence in energy geopolitics but raises questions about domestic energy costs and environmental impacts.

Strategic Expansion of Gas Infrastructure

Brazil is investing hundreds of millions of dollars in new pipelines, LNG terminals, and storage to secure domestic gas supply, reduce reliance on imports, and support industrial growth. Projects like TAG, SEAP, and GASOG are critical for energy security, especially amid declining Bolivian imports and rising pre-salt production.

Data Quality and Policy Uncertainty

Conflicting labor market data and survey reliability issues complicate economic policymaking and business planning. Discrepancies in unemployment and participation rates raise concerns about transparency and the accuracy of official statistics, increasing operational uncertainty for international investors.

Privatization and Investment Facilitation Initiatives

The government’s focus on privatizing state assets and the creation of the Special Investment Facilitation Council have attracted over $2 billion in new FDI. However, bureaucratic inefficiencies and inconsistent implementation continue to challenge the business environment.

Strengthened Strategic Partnerships and Trade Alliances

Japan is deepening economic and security ties with partners such as the EU, India, and Italy, focusing on critical minerals, technology, and defense. These alliances support resilient supply chains, market access, and shared innovation, reinforcing Japan’s role as a stable anchor in the Indo-Pacific and global economy.

Legal Uncertainty Deters Investment

Despite wartime resilience, investors cite unpredictable legal and regulatory frameworks as a greater deterrent than conflict itself. Prolonged legal proceedings and lack of transparency undermine trust, limiting foreign direct investment and complicating contract enforcement.

Supply Chain Diversification and Resilience

India is positioning itself as an alternative to China for global supply chains, leveraging policy incentives, infrastructure upgrades, and trade agreements. However, external shocks—such as US tariffs and currency volatility—remain key risks for supply chain stability and export growth.

Critical Uncertainty Over War Settlement

Trilateral talks involving Ukraine, the US, and Russia signal possible movement toward a negotiated end to the conflict. However, the lack of clarity on security guarantees, territorial status, and enforcement mechanisms leaves businesses facing profound uncertainty over the future investment and operating environment.

Renewable Energy and Green Transition

Saudi Arabia is accelerating renewable energy deployment, with solar and wind capacity in the MENA region projected to rise tenfold by 2040. Major joint ventures and new energy facilities, like CATL’s Riyadh center, support the Kingdom’s decarbonization and industrial diversification, creating new investment and supply chain opportunities.

Unprecedented US Climate Policy Retreat

The US withdrawal from the UNFCCC and 65 other global treaties marks a historic retreat from climate leadership. This move isolates the US from global climate frameworks, risks trade retaliation, and may disadvantage US businesses as other economies accelerate clean energy investment and regulatory standards.

Financial Sector Volatility and Shadow Banking

The UK financial sector faces ongoing challenges from declining business volumes and profitability, alongside systemic risks from the booming, largely unregulated $16tn shadow banking sector. Regulatory vigilance and stress testing are crucial to safeguard stability and investor confidence.

Competitive Tensions and Strategic Alliances

Major French automakers, including Renault and Stellantis, are expanding their electrified portfolios but show reluctance to fully align on joint battery ventures. This rivalry shapes the pace of innovation, localization of supply chains, and the scope for international partnerships.

Strategic Partnerships and Economic Diplomacy

Egypt is deepening economic ties with Gulf states, notably Qatar, through multi-billion-dollar investment agreements and energy cooperation. These partnerships diversify Egypt’s capital sources and support resilience amid regional and global economic pressures.

Strategic US-Japan Alliance Coordination

The trade dispute tests US support for Japan, with Tokyo seeking closer coordination with Washington and G7 partners. The evolving alliance dynamics influence regional stability, investment decisions, and the global technology ecosystem.

Energy Sector Reform and Pemex Challenges

Mexico’s energy sector faces structural challenges, with Pemex’s high debt and underperforming refineries limiting energy independence. While international oil firms are negotiating new projects, contract terms and financial risks remain barriers to large-scale foreign investment.

Critical Minerals Supply Chain Resilience

Japan is aggressively diversifying its critical minerals and rare earths supply, launching deep-sea mining projects and forging new partnerships with the EU, Italy, and India. These efforts aim to reduce dependency on China, which controls about 60-70% of global rare earth supply, safeguarding manufacturing and technology sectors.

Escalating Western Sanctions Pressure

The US and EU have intensified sanctions on Russia, targeting energy exports and trade partners. New US legislation could impose tariffs up to 500% on countries buying Russian oil, threatening to disrupt global trade flows and complicate supply chains.

Semiconductor Sector Under Geopolitical Pressure

South Korea’s semiconductor industry faces mounting pressure from US industrial policy, including demands for increased US-based production and threats of tariffs. This creates strategic dilemmas for Korean firms, affecting global supply chains and technology investment decisions.

Resilient Power and Infrastructure Investment

India’s power sector is set for Rs 4.5 lakh crore ($54 billion) investment by 2032, focusing on grid upgrades, renewable integration, and energy storage. Infrastructure development supports long-term demand, supply-chain reliability, and the green transition.

Labor Reforms and Cost Pressures

Mexico’s 2026 labor reforms include a 13% minimum wage increase, mandatory social security for platform workers, and a proposed reduction of the workweek. These changes raise labor costs and compliance requirements, affecting competitiveness and supply chain strategies.

Supply Chain Realignment and Diversification

US businesses are accelerating the shift of supply chains from China to Southeast Asia and other regions. Imports from Indonesia and Thailand rose over 30% in 2025, reflecting a new baseline for global sourcing and increased resilience against geopolitical shocks.

Geopolitical Trade Tensions Escalate

Recent U.S. tariffs on advanced chips and negotiations over tariff exemptions, alongside China’s export controls, are increasing uncertainty for Korean exporters. These developments could disrupt supply chains and require strategic adaptation for international investors and partners.