Security risks hit supply chains

Costa Rica’s role as a key cocaine transshipment point heightens container contamination, customs-control and corruption risks around ports and logistics corridors. For exporters and multinationals, tighter screening, compliance costs and reputational exposure are becoming material operational considerations.

Domestic Operational Disruption Escalation

War damage, internet shutdowns, factory closures and logistics bottlenecks are impairing business continuity inside Iran. Industrial stoppages, import shortages and rising unemployment increase execution risk for suppliers, distributors and investors, especially in manufacturing, retail, construction and digitally dependent services.

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.

Inflation, Rates, Currency Pressure

Turkey’s disinflation path remains fragile as March CPI was 30.87%, producer inflation 28.08%, and the lira trades near record lows around 44.5 per dollar. Tight credit, elevated rates and exchange-rate management raise financing costs and complicate pricing, procurement and investment planning.

Border Frictions and Logistics Bottlenecks

Trade flows with continental Europe remain vulnerable to Dover congestion, Operation Brock disruptions and the EU Entry/Exit System. More than half of UK-mainland Europe goods move through the Short Straits, where up to 16,000 freight vehicles daily face delays and rising compliance costs.

Air connectivity severely constrained

Ben Gurion departures were cut to roughly one flight per hour, with outbound passenger caps near 50 per flight, prompting airlines to slash schedules. About 250,000 Passover tickets were reportedly canceled, complicating executive travel, cargo uplift, workforce mobility, and emergency business continuity.

Extreme Energy Flow Disruption

Hormuz disruption has sharply curtailed rival Gulf exports while Iran’s own shipments continue, largely to China. Reports show Iraqi exports down more than 80 percent, Saudi flows materially lower, and Brent up about 60 percent, creating major sourcing, hedging, and margin risks.

Foreign Capital Flows and Debt Risk

Regional conflict triggered major portfolio outflows, with estimates ranging from $4 billion to $8 billion since late February. Although Moody’s kept Egypt at Caa1 with positive outlook, external financing sensitivity, high yields, and refinancing pressures remain important considerations for investors and lenders.

Delayed Gaza reconstruction pipeline

A proposed eight-month Hamas disarmament process has become the gatekeeper for Gaza reconstruction. With $7 billion reportedly pledged but implementation delayed, construction, engineering, aid logistics, and cross-border commercial opportunities remain frozen and highly contingent on security compliance.

Labor shortages and migration friction

Germany still faces structural labor shortages, yet migration and repatriation debates risk discouraging skilled foreign workers. Tighter rhetoric and administrative frictions could worsen shortages in healthcare, technical trades, and industry, increasing hiring costs and constraining operational scaling.

Russia Sanctions Maritime Enforcement

London has authorized boarding and detention of sanctioned Russian shadow-fleet tankers in British waters. With more than 500 vessels sanctioned and roughly 75% of Russian crude using such ships, shipping, compliance, insurance, and routing risks are rising materially.

Energy Market Liberalisation Progress

Power reliability has improved markedly, supporting production and investor sentiment, but South Africa still faces major generation and grid investment needs. Planned spending exceeds R2 trillion for generation and R440 billion for transmission, creating both opportunity and implementation risk.

Regional conflict and security risk

Israel’s exposure to Gaza and Iran-linked escalation remains the primary business risk. Ceasefire implementation is fragile, Israeli strikes continue, and reconstruction is stalled, sustaining elevated political violence, insurance, compliance, staffing, and operational continuity risks for investors and multinationals.

Sanctions Policy Clouds Energy Flows

Washington’s temporary easing of some Russian oil restrictions, now under political challenge, highlights sanctions unpredictability in energy markets. For importers, traders and refiners, sudden changes in U.S. enforcement can alter crude availability, pricing, shipping routes and compliance risks.

Labor Reforms Increase Industrial Friction

Government labor-market reforms have weakened Finland’s traditional consensus model and previously triggered major union strikes. Although aimed at flexibility, the changes increase uncertainty around industrial relations, wage bargaining and operational continuity, especially for exporters, manufacturers, ports, and logistics-dependent businesses.

Fiscal Reform and Budget Pressure

Berlin faces difficult choices on debt brake reform, taxes, and spending as budget gaps stretch into the next planning cycle. Businesses should expect uncertainty around VAT, corporate taxation, subsidies, and public investment timing, affecting financing conditions and medium-term demand visibility.

Manufacturing Supply Chain Strains

UK factories face the worst supply-chain stress since 2022, with slower delivery times, customs delays, port disruption and material shortages. Input costs are rising at the fastest pace since October 2022, increasing inventory risk, procurement complexity and contract repricing pressure.

Escalating Shipping and Insurance Costs

The regional war has pushed freight and marine insurance costs sharply higher, with Gulf war-risk cover around 1.5% of vessel value and Hormuz premiums at times 10%. Importers, exporters, refiners, and logistics operators face materially higher landed costs.

Fiscal Strain and Growth Slowdown

The IMF expects Japan’s growth to slow to 0.8% in 2026 while urging fiscal prudence amid very high public debt. Rising interest, healthcare and energy-related costs may constrain future support measures, influencing tax, subsidy and public-investment conditions for businesses.

Fuel Export Controls Distort Markets

Refinery outages and domestic supply concerns are prompting tighter fuel export controls. Russia approved a full gasoline export ban until July 31, complicating regional product balances and creating contract, pricing, and availability risks for traders, transport operators, and industrial consumers.

Energy Shock Hits Costs

Middle East conflict has raised fuel shortages, freight costs and inflation risks for Thailand, pressuring exports, tourism and industrial margins. Policymakers are reconsidering subsidies and energy pricing, while businesses face higher logistics expenses, input volatility and tougher budgeting across import-dependent sectors.

Technology Sector Funding Strain

Israel’s export-led tech sector faces a mixed but increasingly fragile environment. Although Q1 funding reached about $3.1 billion, 71% of startups reported fundraising disruption, 87% development delays, and 31% are considering relocating activity abroad if instability persists.

Black Sea Export Corridor

Ukraine’s Black Sea corridor remains vital for grain and broader trade flows, with around 200 cargo ships a month using Odesa routes despite ongoing attacks. Corridor viability shapes freight costs, food supply chains, marine insurance pricing, and export competitiveness across agriculture and commodities.

Oil Export Infrastructure Disruption

Ukrainian drone strikes on Primorsk and Ust-Luga have shut or constrained up to 20-40% of Russia’s oil export capacity, cutting weekly flows by 1.75 million bpd. The disruption raises delivery risk, rerouting costs, insurance premiums, and volatility for energy buyers and shippers.

Defense Spending and Export Liberalization

Record defense outlays, including ¥9.04 trillion in the FY2026 budget, are strengthening aerospace, industrial, and advanced manufacturing demand. Planned easing of arms-export rules could expand overseas sales, deepen allied industrial cooperation, and create new compliance and reputational considerations for suppliers.

High rates, inflation persistence

The Central Bank lifted its 2026 inflation forecast to 3.9%, while market expectations rose to 4.31%, near the 4.5% ceiling. With Selic still at 14.75%, financing remains expensive, pressuring consumption, capex, working capital and credit-sensitive sectors.

Oil Boom Lifts External Accounts

Oil exports to China nearly doubled to US$7.19 billion in Q1, supported by Middle East disruption and pre-salt output. Higher crude revenues strengthen Brazil’s trade balance and FX inflows, but deepen commodity reliance and expose planning to geopolitical price swings.

Selective China Re-engagement Expands Supply

India is cautiously easing post-2020 restrictions on Chinese-linked investment and procurement in strategic manufacturing. The shift can unlock minority capital, faster approvals and critical equipment sourcing, but also creates compliance complexity and geopolitical sensitivity for firms calibrating China-plus-one strategies.

Dual-Chokepoint Maritime Risk

Saudi supply chains face growing exposure to simultaneous disruption at Hormuz and Bab el-Mandeb. Houthi threats to Red Sea shipping could undermine Saudi Arabia’s main bypass corridor, increasing freight delays, war-risk premiums, and delivery uncertainty for exporters, importers, refiners, and industrial operators.

EU Industrial Integration Stakes

Turkey’s integration with European industry remains commercially significant, especially in automotive and advanced manufacturing. Debate over including Turkey in future ‘Made in EU’ incentives could influence supplier positioning, production allocation and long-term investment decisions for firms serving European value chains.

Green Electrification Innovation Push

Finnish machinery leaders are accelerating electrification, automation, AI, and digitalisation. Kalmar’s technology partnership with Tampere University reinforces Finland’s innovation base for sustainable material-handling and mobile equipment, supporting higher-value manufacturing, talent access, and export competitiveness in low-emission machinery segments.

Energy Security and Fuel Exposure

Australia’s acute fuel dependence remains a top operational risk, with roughly 90% of liquid fuels imported and around a quarter sourced from Singapore. Middle East disruption, higher freight costs and government-backed emergency cargoes raise transport, manufacturing and logistics risks.

PIF Opens to Foreign Capital

The Public Investment Fund is shifting from mainly self-funded projects toward mobilizing domestic and international co-investment. That creates new entry points in infrastructure, real estate, data centers, pharmaceuticals, and renewables, while also redistributing execution and financing risks for investors.

Compute, Grid, and Permitting Constraints

France’s AI and industrial expansion is increasing pressure on electricity supply, grid connectivity, and permitting timelines. Large data-center and advanced-manufacturing projects may face execution bottlenecks, affecting site selection, project schedules, operating costs, and infrastructure-linked investment returns.

Autos Localize Amid Policy Risk

Global automakers are planning major U.S. investments to reduce tariff exposure, including Toyota’s $10 billion and Hyundai’s $26 billion commitments, but many decisions remain contingent on clearer trade rules, especially for cross-border North American production.

EU Integration Regulatory Shift

Ukraine is under pressure to pass EU-linked legislation covering energy markets, railways, civil service, and judicial enforcement to unlock up to €4 billion. Progressive alignment with EU standards should improve transparency and market access, but also raises compliance requirements for companies entering early.