Renewables and Industrial Transition

Egypt aims to raise renewables to 45% of electricity generation by 2028, adding major wind, solar and battery capacity while promoting local manufacturing. This supports energy security and greener industry, but requires grid upgrades, financing discipline and timely project execution.

Tourism Rules Tighten Amid Slump

Thailand is cutting visa-free stays from 60 to 30 days for travellers from 93 countries as arrivals weaken. Foreign tourist numbers reached 12.4 million through May 10, down 3.43% year on year, affecting hospitality demand, aviation, retail, and labor planning in tourism-linked sectors.

Investment Pipeline and EEC

New investment approvals are supporting Thailand’s medium-term outlook, with first-quarter investment rising 18% to 260 billion baht and applications reaching 1 trillion baht. The Eastern Economic Corridor continues to anchor foreign interest in advanced manufacturing, medical services, digital infrastructure and export platforms.

Regulatory reform and governance

Hanoi is pushing legal reform to attract capital, improve intellectual-property protection and streamline investment, talent visas and digital rules. Yet corruption cases, project delays and uneven local implementation still complicate approvals, procurement and compliance, making execution risk a core consideration for foreign businesses.

Escalating sanctions and enforcement

EU’s 20th sanctions package broadened restrictions across energy, finance, shipping and crypto, while targeting circumvention hubs and 60 entities. Compliance costs, payment friction and legal exposure are rising for firms using Russian counterparties or intermediary routes.

Oil Export Constraints and Revenue Pressure

Iran has begun reducing crude output as exports slow, storage fills near Kharg Island, and seaborne flows face tighter enforcement. Lost oil revenue strains the state budget, weakens payment capacity, and raises counterparty, contract performance, and receivables risks for firms exposed to Iran-linked trade.

Transport Strikes and Rail Disruption

Rail labor tensions are rising, with a nationwide SNCF strike set for June 10 and regional operator disputes already affecting services. Disruptions could hit freight flows, business travel, commuting, and tourism during peak periods, increasing logistics uncertainty for firms operating in France.

Regional Conflict Spillover Risks

The Iran-US-Israel confrontation remains only partially contained, with Lebanon and other regional fronts still vulnerable to escalation. Businesses face persistent risks to staff security, cargo transit, critical infrastructure, and contingency planning across the Gulf, Levant, and adjacent emerging-market trade corridors.

Critical Minerals Financing Push

Government-backed funding and policy support are accelerating rare earths and battery-materials projects, including A$200 million for Arafura’s Nolans development. This strengthens Australia’s role in non-China supply chains, though financing gaps, volatile prices and processing competitiveness still constrain project delivery.

Weak FDI And Rupee Pressure

India’s external position faces strain from weak FDI inflows, a wider current account deficit and rupee depreciation. UBS sees FY27 growth at 6.2% and the rupee at 96 per dollar, increasing import costs and hedging requirements.

Santos Port Capacity Expansion

Brazil is advancing the Tecon Santos 10 mega-terminal auction, requiring over US$1.2 billion in investment and expected to lift Santos container capacity by 50%. The project could ease logistics bottlenecks, but auction delays and concession disputes still cloud timing and execution certainty.

Coalition crisis and election risk

Netanyahu’s coalition is under acute strain as ultra-Orthodox parties push to dissolve the Knesset over conscription exemptions. The prospect of early elections increases policy uncertainty around taxation, regulation, budgets and public spending, delaying business decisions and complicating medium-term market-entry or investment planning.

Election-Driven Policy Volatility

With Brazil nearing the presidential election, economic policy is becoming more tactical and less predictable. Frequent announcements on taxes, subsidies, and credit lines heighten regulatory volatility, complicating scenario planning, hedging decisions, and market-entry timing for foreign investors and multinational operators.

China Beef Quota Shock

China’s 1.106 million-tonne 2026 quota for Brazilian beef is filling rapidly, with 50% already used by May; shipments above quota face a 55% surcharge, threatening export revenues, meatpacker margins, and agribusiness logistics planning across cold-chain supply networks.

Industrial Overcapacity and Trade Pushback

Overcapacity in solar, EV and other cleantech sectors is intensifying global trade tensions. China produces over 80% of solar components, while domestic price wars, anti-involution measures, and foreign tariffs are reshaping investment returns and sourcing strategies.

Taiwan Tensions Raising Contingency Risk

Xi publicly warned mishandling Taiwan could lead to clashes with the United States, underscoring elevated geopolitical risk around a critical shipping and semiconductor corridor. Companies with Asia production, logistics, or sourcing footprints should intensify disruption planning for sanctions, shipping delays, and crisis escalation.

AI Infrastructure and Battery Localization

SoftBank is converting the former Sharp Sakai site into a battery and AI infrastructure hub, targeting roughly 1 GWh annual output and over ¥100 billion domestic battery revenue by FY2030. The project supports data-center growth and strengthens non-China energy-storage supply chains in Japan.

Labor Shortages and Immigration Limits

Chronic labor shortages are intensifying across services and strategic industries, while visa caps and tighter entry rules are constraining foreign-worker supply. Businesses face higher wage bills, recruitment uncertainty, delayed expansion, and operational strain, particularly in hospitality, food service, and labor-intensive activities.

Tax Reform Transition Risks

Brazil’s new CBS and IBS rules start the 2026–2033 transition, reshaping invoicing, tax credits, pricing and compliance. The reform should reduce cascading taxes over time, but near-term implementation complexity, systems upgrades and legal interpretation risks will affect investment planning and operating costs.

Defence Spending Expansion Drive

The government is preparing a major defence spending increase, potentially around £18 billion, after committing to 2.5% of GDP from 2027. This should support aerospace, defence manufacturing and dual-use technologies, while also reshaping procurement priorities and fiscal trade-offs.

Power Grid Investment Cycle

Electricity distributors committed roughly R$130 billion in network investments after 30-year concession renewals, improving resilience, connectivity and industrial power reliability. The buildout supports electrification, data centers and green hydrogen, though execution, tariff regulation and extreme-weather disruptions still warrant attention.

Gas Reservation Rewrites Energy Markets

Canberra will require LNG exporters to reserve 20% of production for domestic users from July 2027, aiming to reduce volatility and avert shortages. The reform may lower local input costs, but raises investor concerns over export economics, contract structures and policy predictability.

Shekel strength hurting exporters

The shekel’s sharp appreciation is undermining export competitiveness by reducing foreign-currency earnings when converted into local costs. Economists warn sustained currency strength could compress margins, delay hiring and investment, and weaken industrial and technology exporters serving US and European markets.

Energy opening improves capacity

Mexico is reopening defined channels for private electricity investment through a 740 billion peso, roughly US$42 billion, plan to add 32 GW by 2030. Faster self-supply permits and mixed CFE-private schemes could ease power bottlenecks constraining manufacturing, logistics hubs, and data-center expansion.

Domestic Confidence Continues Eroding

Business and consumer sentiment weakened again in April, with the chamber’s confidence index falling to 42.2 and consumer confidence to 50.6, an eight-month low. Soft consumption, high household debt, and weaker farm incomes are increasing downside risks for domestic-facing sectors and SMEs.

South China Sea security tensions

Maritime tensions remain a material geopolitical risk for trade and energy routes. Vietnam is pressing UNCLOS-based positions, balancing ties with China and the US, and strengthening defence partnerships, while regional incidents around disputed features could disrupt shipping confidence and raise insurance costs.

Sanctions Enforcement Reshapes Flows

US sanctions policy toward Russian oil and Iran-linked trade remains a major variable for commodity flows, insurers, shippers, and refiners. Frequent waiver changes and tougher enforcement create compliance burdens, alter trade routes, and increase counterparty risk across energy, finance, and maritime sectors.

Gas Supply Gap and Upstream Investment

Daily gas consumption is about 7 billion cubic feet versus domestic production near 4 billion, sustaining import dependence. New discoveries and agreements with Eni, BP and TotalEnergies may improve supply, but near-term manufacturers still face elevated energy-security and pricing risks.

Red Sea Shipping Risk Exposure

Israel-linked trade remains vulnerable to regional maritime insecurity tied to the Gaza war and wider Middle East tensions. Companies routing via the Red Sea and Suez face higher insurance, rerouting costs, longer transit times, and inventory management pressures across Europe-Asia supply chains.

Non-Oil Expansion Momentum

Non-oil sectors now account for about 56% of GDP, up from roughly 40% before Vision 2030. Growth in construction, tourism, AI, digital infrastructure, mining and manufacturing is widening commercial opportunities and reshaping sector exposure for foreign investors.

Energy Grid Expansion Reforms

South Africa’s improved power availability has reduced acute outages, but competitiveness now depends on transmission buildout, tariff reform and wholesale-market implementation. Government’s R6.1bn 2026/27 energy budget and plans for 14,000km of lines will shape industrial investment timing and costs.

Reshoring Falls Short Operationally

Despite aggressive tariff policy and industrial incentives, domestic manufacturing output remains weak in several sectors, while companies continue diversifying within Asia. Capacity constraints, high labor costs, and incomplete supplier ecosystems limit U.S. reshoring, extending dependence on multi-country supply chains.

Banking and Payment Fragmentation

Iran-linked transactions increasingly rely on small local banks, yuan settlement structures, and informal or crypto-adjacent channels as internationally exposed banks pull back. This fragmentation raises transaction costs, delays settlements, weakens transparency, and elevates anti-money-laundering, sanctions, and counterparty risks for foreign firms.

Digital Infrastructure Expands Beyond Java

Indonesia’s digital economy is attracting data-center investment, supported by AI demand, cloud expansion, and personal-data rules emphasizing sovereignty. New projects in eastern Indonesia and Batam aim to improve redundancy, but power availability, connectivity, green energy, and skilled labor remain key operational constraints.

IMF Reforms Shape Market Access

Egypt’s IMF review could unlock $1.6 billion this summer, reinforcing reform momentum on fiscal discipline, subsidies, and exchange-rate flexibility. For investors, continued IMF backing supports external financing access, but reform conditions imply pricing adjustments, tighter state support, and higher operating costs.

Growth Slowdown, Weak Demand

Thailand’s 2026 growth outlook has softened to around 1.5-2.1%, with first-quarter GDP seen at just 2.2% year on year and 0.1% quarter on quarter. High household debt, subdued credit and falling confidence are constraining domestic sales, hiring and expansion plans.