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Mission Grey Daily Brief - October 27, 2024

Summary of the Global Situation for Businesses and Investors

The world is stumbling towards a global conflict as tensions in the Middle East and Ukraine threaten to escalate into a wider war. Israel's attack on Iran has drawn the US into the conflict, and Russia's involvement could lead to a direct confrontation with the US and NATO. North Korea's deployment of troops in Russia has signalled a dangerous new phase in the war, and China's military drills around Taiwan have intensified tensions in the region. Migration from Venezuela has surged after Nicolás Maduro's election victory, and Russia's economy is overheating due to high military spending and sanctions failures. The US election will have ramifications for the global economy, with potential changes to corporate tax rates and global tax reforms.

Middle East Conflict

The Middle East is facing increasing uncertainty as regional tensions rise and the threat of military confrontation between Israel and Iran looms large. Saudi Arabia is hosting a major investment summit, but investor appetite is being tested by the region's instability. Deals worth more than $28 billion are expected to be announced, but the regional conflict is weighing on global investor sentiment. Saudi Arabia's focus on technology and AI is attracting prominent names in the industry, but the country's vast oil wealth has limits and its foreign policy is focused on lowering tensions to attract foreign capital and technological know-how.

US Election

The outcome of the US election will have significant implications for the global economy, particularly for Ireland, which has a trade and investment relationship of more than $1 trillion with the US. Corporatesection Corporatesection If Democrat candidate Kamala Harris wins, she plans to increase the US corporate tax rate to 28%, which would raise government revenue from corporate America but has drawn criticism from US businesses. Republican candidate Donald Trump, on the other hand, proposes cutting the corporate tax rate to 15%, which is the same rate that large US multinationals pay in Ireland. Irish businesses must stay agile and informed about potential changes, as US tax policies and global trade dynamics could shift depending on the election result.

Ukraine-Russia War

The Russo-Ukrainian War continues to rage on, with Russian forces suffering record casualty rates and North Korean troops joining the fight. Ukrainian sappers are facing a daunting task as they race against the world's largest minefield, with 3,000 deminers against 180,000 square kilometers of mine-riddled territory. Ukrainian commandos have halted an ambitious Russian attempt to outflank the strategic town of Lyman, and intercepted 44 of 91 Russian drones in an overnight assault, but their air defense success rate has dropped sharply. The EU and G7 members have reached a consensus on $50 billion in financial assistance to Ukraine, and Germany's Rheinmetall has delivered 20 additional Marder infantry fighting vehicles to Ukraine's Armed Forces, strengthening Kyiv's defense capabilities.

China-Taiwan Tensions

China has strongly condemned the latest $2 billion arms sale approved by the US for Taiwan, declaring it a threat to regional peace and promising decisive counter-measures in response. The arms sale includes advanced missile systems intended to bolster Taiwan's air defenses, and Taiwan's defense ministry has expressed confidence that the Nasams will enhance its ability to protect itself against Chinese military manoeuvres. China has intensified its own presence around the island, with military drills simulating the sealing off of key ports and mobilising a record number of forces. Taiwan has reported as many as 153 Chinese aircraft, along with 14 navy vessels and 12 government ships, taking part in the drills, and Chinese officials have characterised these exercises as preparations to "secure the region".


Further Reading:

China promises ‘counter-measures’ after $2bn US arms sale to Taiwan - The Independent

How could the US election affect business in Ireland? - RTÉ News

How the Israeli Attack on Iran Could Seed a New World War - The Intercept

Iran's president warns against further attacks after Israel airstrikes hit military targets - Sky News

Migration from Venezuela surges after Nicolás Maduro snatches election from opposition - Financial Times

Russia can finance war against Ukraine for several more years despite overheating economy – WP - Ukrainska Pravda

Russo-Ukrainian War, day 975: Russian forces suffer record casualty rates as North Korean troops move towards the frontline - Euromaidan Press

Russo-Ukrainian War, day 976: Russian strikes kill civilians across Ukraine as air defense success rate drops - Euromaidan Press

Wall Street and tech royalty fly to Saudi event amid Mideast war - Fortune

Themes around the World:

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Energy Supply Vulnerabilities

Ukraine's reliance on energy imports, particularly natural gas from Russia, exposes it to supply disruptions and price volatility. Energy insecurity affects manufacturing and export sectors, compelling businesses to seek alternative energy sources or invest in energy efficiency.

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US Protectionism and Export Barriers

US tariffs on Canadian goods, including furniture, cabinets, and biofuel feedstocks, challenge Canadian manufacturers and exporters. Delays or increases in tariffs disrupt business planning, employment, and force companies to seek alternative markets and strategies.

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Geopolitical Realignment and Investment Climate

Israel’s expanding influence in the Middle East, including new alliances and recognition of Somaliland, is reshaping regional dynamics. However, persistent instability and election-year politics create uncertainty for investors and complicate long-term strategic planning.

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Regulatory Divergence from EU Standards

The UK’s regulatory divergence from EU frameworks introduces complexities for companies operating cross-border. Variations in product standards, data protection, and financial regulations necessitate enhanced compliance mechanisms, potentially increasing operational costs and affecting market competitiveness internationally.

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Renewable Energy Transition Accelerates

Major infrastructure projects like EnergyConnect and policy grants are driving Australia’s shift toward renewables, aiming for 82% clean energy by 2030. Supply chain, labor, and regulatory challenges remain, but the sector offers significant opportunities for foreign investment.

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Environmental Regulations and Sustainability Initiatives

Growing emphasis on environmental sustainability and renewable energy projects affects industrial practices. Compliance with new regulations influences supply chain management and investment in green technologies, aligning with global ESG trends.

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Trade Policy and Tariff Changes

Shifts in India's trade policies, including tariff adjustments and trade agreements, directly impact import-export dynamics. Businesses need to monitor these changes to optimize sourcing and market entry strategies.

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Political Transition and Governance Reform

The impeachment of President Yoon and election of Lee Jae Myung brought governance reforms, including corporate governance improvements and tax changes. These reforms aim to reduce the 'Korean discount,' boost investor confidence, and enhance South Korea’s business environment.

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Supply Chain Resilience and Diversification

Businesses in the UK are increasingly focusing on supply chain resilience by diversifying suppliers and nearshoring to mitigate disruptions from geopolitical risks and pandemic aftermath. This trend affects sourcing strategies, inventory management, and cost structures across industries.

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Cross-Strait Political Tensions

Ongoing political tensions between Taiwan and China pose significant risks to international trade and investment. Potential military conflicts or diplomatic escalations could disrupt supply chains, particularly in the semiconductor sector, affecting global technology industries and investor confidence.

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Supply Chain Resilience and Infrastructure Growth

Major infrastructure investments, such as Turkish Airlines’ $2.3 billion cargo terminal, are transforming Turkey into a global logistics hub. These developments enhance supply chain resilience for multinationals but also create new dependencies on Turkish regulatory and operational stability.

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Pipeline Urgency and Market Diversification

Canadian officials and industry leaders stress the need for new pipelines to the Pacific and Atlantic coasts to access Asian and European markets. Strategic infrastructure is now critical to offset potential U.S. market losses and maintain competitiveness in a volatile global energy landscape.

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Investment Decline and Industrial Stagnation

Russia’s investment activity is falling, with an 8.7% drop in machinery and equipment imports. Industrial modernization is stalling, and GDP growth has slowed to just 0.1%, signaling recession risks and diminishing prospects for foreign investors.

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Currency Fluctuations and Financial Market Controls

Volatility in the Chinese yuan and government controls on capital flows affect investment returns and repatriation strategies. Firms engaged in China must navigate these financial risks to optimize currency exposure and liquidity management.

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Currency Volatility and Financial Markets

Fluctuations in the Brazilian real and financial market volatility pose risks for international investors and businesses engaged in trade. Currency instability affects pricing, profit margins, and hedging strategies, necessitating careful financial planning and risk management.

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Infrastructure Development

Investments in transport, energy, and digital infrastructure are pivotal for enhancing Thailand's business environment. Improved infrastructure supports efficient supply chains, reduces operational costs, and attracts foreign investment, thereby boosting economic growth.

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100% FDI Liberalization in Insurance

India's new policy allowing 100% foreign direct investment in insurance is expected to attract global capital, boost innovation, and expand market coverage. This reform enhances competition but requires careful regulatory oversight to manage risks and ensure local benefits.

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Forestry Investments Expand Internationally

Interest in Swedish forestry assets is rising, with investors also targeting Finland and Latvia for similar growth at lower prices. This trend reflects the sector’s stability and its role in sustainable supply chains, attracting cross-border capital flows.

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Trade Barriers and Tariff Pressures

Rising U.S. tariffs and the EU’s Carbon Border Adjustment Mechanism are challenging South Korean exporters, especially in steel, auto parts, and electronics. These barriers threaten price competitiveness and require strategic adaptation to evolving global regulatory landscapes.

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Renewable Energy Transition

Australia is accelerating its shift towards renewable energy sources, including solar and wind. This transition presents opportunities for green investments and supply chain realignments but requires substantial infrastructure upgrades and policy support.

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US-Indonesia Trade Agreement Nears

Indonesia and the United States are close to finalizing a trade deal, expected to lower tariffs from 32% to 19%. This agreement will enhance market access, boost exports, and strengthen bilateral trade relations, benefiting manufacturing and technology sectors.

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Labour-Intensive Sector Tax Incentives

The government will cover personal income taxes for workers in labour-intensive industries until 2026, supporting household income and economic stability. This stimulus benefits sectors like textiles, footwear, and tourism, enhancing resilience and competitiveness for international investors.

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Resilient Economic Growth Amid Global Headwinds

Vietnam’s GDP grew by 8% in 2025, outperforming regional peers despite US tariffs and global uncertainties. Export-led growth, manufacturing strength, and political stability underpin robust performance, though high openness leaves the economy vulnerable to external shocks and trade policy changes.

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Regional Conflict and Security Risks

Ongoing hostilities with Gaza, Lebanon, and Iran pose severe risks to Israeli stability and business continuity. The threat of escalation, cross-border attacks, and military operations directly impact supply chains, foreign investment, and operational planning for international firms.

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Youth-Led Political Mobilisation

Generation Z activism and opposition rallies are reshaping the political landscape, challenging established power structures and demanding reforms. This trend increases volatility and may influence policy direction, regulatory enforcement, and the overall business environment.

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Strategic Public-Private Infrastructure Pipeline

The government has unveiled a Rs 17 lakh crore PPP project pipeline, offering early visibility for investors and accelerating infrastructure growth. This initiative strengthens long-term economic prospects and positions India as a major destination for global infrastructure capital.

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Infrastructure Investment and Development

Significant government initiatives to upgrade transport, digital, and energy infrastructure aim to boost economic resilience and attract foreign direct investment. Improved infrastructure supports supply chain efficiency and regional connectivity, enhancing the UK’s appeal as a strategic business hub despite broader geopolitical uncertainties.

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Environmental Regulations

Stricter environmental policies and enforcement impact manufacturing processes and resource utilization. Compliance requirements influence operational costs and corporate social responsibility initiatives, affecting Mexico's attractiveness for sustainable investment.

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Nusantara Capital City Development

The government allocated Rp6 trillion for the new capital, Nusantara, focusing on transparent governance and strategic infrastructure. This project attracts global investors, reshapes regional logistics, and creates new opportunities for construction, services, and technology firms.

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Energy Sector Expansion and Diversification

Egypt's investments in renewable energy and natural gas production enhance energy security and export potential. The development of the East Mediterranean gas fields positions Egypt as a regional energy hub, impacting global energy markets and attracting energy sector investments.

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Complex China-Australia Relationship Persists

Despite trade frictions, China remains Australia’s largest trading partner. Bilateral relations have stabilized post-2022, but strategic tensions over security, critical minerals, and regional influence continue to shape business risk and investment decisions.

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Infrastructure Development Initiatives

Large-scale infrastructure projects, including transport and energy sectors, enhance Egypt's logistics capabilities and regional connectivity. Improved infrastructure supports supply chain efficiency and creates opportunities for foreign direct investment in construction and related industries.

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Geopolitical Tensions with Neighbors

Turkey's ongoing geopolitical tensions, particularly with Greece and Syria, create regional instability affecting trade routes and investment confidence. These conflicts risk disrupting supply chains through the Eastern Mediterranean and complicate Turkey's relations with EU partners, potentially impacting customs and regulatory cooperation essential for international business operations.

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China's Green Energy Push

China's aggressive investment in renewable energy and electric vehicles reshapes global commodity markets and supply chains. This presents opportunities for investors in green technologies but challenges traditional energy sectors.

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Trade Policy and Tariff Uncertainties

Frequent changes in trade policies, tariffs, and import-export regulations create an unpredictable business environment. Such policy volatility disrupts supply chains, complicates compliance, and may lead to increased costs for international traders and investors.

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Inflation Moderation but Persistent Cost Pressures

Annual inflation dropped to 10.3% in December 2025, the lowest in two years, mainly due to falling food prices. Nonetheless, costs for housing, health, and transport continue to rise, influencing wage demands, consumer spending, and operational budgeting for businesses.