Record Export Growth to United States

Mexico’s exports to the US reached historic highs in late 2025, with a 6.7% increase to $48.5 billion in October. This strengthens Mexico’s position as the US’s top trading partner, but exposes it to US protectionist policies and sudden regulatory shifts.

Labor Market Reform Momentum

South Korea is advancing major labor reforms in 2026, including reduced working hours, the right to disconnect, and stricter wage systems. These changes will reshape consulting demand, impact supply chains, and influence international investment strategies.

AI and Advanced Technology Investments

South Korea is tripling AI spending, aiming to become a top-three global AI power. This government-led push is accelerating innovation, attracting foreign direct investment, and reshaping the tech sector, with significant implications for supply chains and talent acquisition.

Labor Market Dynamics

Indonesia's large, young workforce offers a competitive labor pool, but skill mismatches and labor regulations can constrain productivity. Labor unrest and wage inflation in certain sectors may also affect operational costs and investment attractiveness.

Infrastructure Investment Drives Construction Boom

US infrastructure spending, supported by federal and state initiatives, is fueling robust growth in construction and heavy equipment markets. This trend supports supply chain modernization and creates opportunities for global suppliers, though regulatory and environmental uncertainties persist.

Foreign Investment Flows Amid Volatility

Despite rising market volatility and a slight increase in sovereign risk, Indonesia saw Rp1.44 trillion in foreign capital inflows in early January 2026, mainly into equities and securities. Persistent inflows signal continued international investor interest, though bond and currency risks remain.

Energy Transition: Nuclear Expansion and Supply Constraints

France’s €52 billion nuclear program aims to secure energy independence amid global hardware shortages and high copper prices. However, supply chain bottlenecks, reliance on Asian imports, and grid fragmentation pose significant risks for industrial operations and long-term investment planning.

Saudi-UAE Rivalry Disrupts Supply Chains

The intensifying Saudi-UAE competition in Yemen, especially over control of strategic ports and oil-rich regions, risks fragmenting regional alliances and disrupting Red Sea and Gulf supply chains. This rivalry could alter trade flows and increase operational risks for international businesses.

Energy Policy and Decarbonisation Challenges

Western Australia’s bureaucratic hurdles and integration issues threaten the state’s coal phase-out and decarbonisation goals. Organizational reform is critical to ensure policy coherence and attract investment in clean energy and industrial transformation.

Resetting China Relations Amid Tariffs

Prime Minister Carney’s visit to China marks a pivotal attempt to repair bilateral ties after years of diplomatic and tariff disputes. The outcome will impact Canadian agriculture, energy, and manufacturing exporters, but engagement is constrained by ongoing security and human rights concerns.

Regulatory Change and Investment Climate

Major reforms, such as the shift from non-dom to residence-based taxation, are reshaping the UK’s attractiveness for high-net-worth individuals and foreign investors. Policy uncertainty and ongoing reviews could influence capital flows, entrepreneurship, and business location decisions.

Sustainability and Energy Transition Policies

India’s SHANTI Act and nuclear energy reforms enable private and foreign participation in clean energy, supporting long-term sustainability goals. Expanded renewable and nuclear capacity, alongside environmental regulations, create new investment opportunities and future-proof supply chains against climate risks.

Natural Disaster Preparedness and Infrastructure

Japan's vulnerability to earthquakes, tsunamis, and typhoons necessitates robust disaster preparedness and resilient infrastructure. This reality affects insurance costs, supply chain continuity, and investment risk assessments, prompting companies to incorporate disaster risk management into their operational frameworks.

Climate and Energy Policy Uncertainty

US withdrawal from international climate bodies and evolving energy policies create regulatory uncertainty. This affects investment in clean energy and compliance for global firms, while domestic priorities shift toward solar and resilience.

Sanctions Regimes and Regulatory Risk

Expanding US sanctions against Venezuela, China, and other actors create complex compliance challenges and disrupt global supply chains. Firms must navigate evolving enforcement, secondary sanctions, and political unpredictability, increasing operational and reputational risks.

Agricultural Supply Chain Vulnerabilities

Railway grain shipments fell 27.3% in 2025, and wheat exports dropped 25% in December due to Russian strikes on ports and logistics. These disruptions, along with delayed harvests and market competition, threaten Ukraine’s role as a global food supplier and heighten risks for agribusiness investors.

Nearshoring and Supply Chain Shifts

Mexico continues to attract nearshoring investment, especially in manufacturing and AI hardware assembly, as global firms seek resilient supply chains. However, rising wages, regulatory hurdles, and competition from Central America challenge Mexico’s cost advantage and long-term positioning.

Massive Reconstruction and Investment Needs

A €682 billion international support package over ten years is planned for Ukraine’s recovery, focusing on infrastructure, compensation, and economic stability. Reconstruction offers significant opportunities for foreign investors, but success depends on security and regulatory reforms.

Currency Stability and Financial Policies

Vietnam's monetary policies aim to maintain currency stability amid global economic uncertainties. Exchange rate fluctuations and inflation control measures influence investment decisions and cost structures for international businesses operating in Vietnam.

Cartel Violence and Organized Crime Risks

Persistent cartel violence, compounded by potential influxes of Venezuelan criminal groups, continues to threaten security, logistics, and investor confidence. Mexico’s border states remain especially vulnerable, requiring robust risk mitigation for supply chains and personnel.

Nearshoring Drives Supply Chain Shifts

Mexico’s proximity to the US and resilient manufacturing sector have accelerated nearshoring, attracting investment and supply chain reconfiguration. Export growth to the US reached 9% in 2025, positioning Mexico as a strategic alternative amid global trade disruptions and China tariffs.

Supply Chain Adjustments and Resilience

Trade barriers, especially from China and the US, are forcing Brazilian exporters to adapt supply chains, diversify destinations, and invest in logistics. These adjustments are crucial for mitigating risks and maintaining competitiveness in global markets.

EU-Mercosur Trade Deal Turmoil

France’s staunch opposition to the EU-Mercosur free trade agreement, driven by agricultural and environmental concerns, has isolated it within the EU. The deal’s likely ratification despite French protests signals rising trade policy uncertainty and supply chain risks for agri-food and related sectors.

Energy Transition Drives High Costs

Germany’s shift away from Russian energy and nuclear power has resulted in persistently high energy prices and supply insecurity. This undermines industrial competitiveness, deters investment, and increases vulnerability in critical infrastructure, with significant implications for energy-intensive sectors and supply chains.

Geopolitical Tensions and Supply Chain Risks

Turkey’s proximity to regional conflicts, especially the Russia–Ukraine war, and its active role in Black Sea security, heighten supply chain risks. Maritime disruptions and shifting alliances could impact logistics, trade routes, and business continuity for global operators.

Defence Industrial Strategy Delay

The Canadian government’s delay in releasing its Defence Industrial Strategy creates uncertainty for defence contractors and investors. The strategy is expected to guide domestic procurement, innovation, and reduce reliance on U.S. suppliers, impacting future industrial partnerships and supply chain decisions.

Sectoral Shifts In US Employment And Investment

US employment trends show growth in services and construction, but persistent declines in manufacturing and warehousing. Layoff plans have eased, yet hiring remains cautious. These sectoral shifts influence investment strategies, labor costs, and operational planning for international companies.

North Korea Geopolitical Risks

Ongoing tensions with North Korea create security uncertainties that influence investor confidence and regional trade dynamics. Military escalations or diplomatic breakthroughs can significantly alter risk assessments for businesses operating in or through South Korea.

Energy Independence and Transition Initiatives

Indonesia is accelerating its energy transition with new solar projects, waste-to-energy initiatives, and refinery upgrades. The government targets energy independence within five years, which will reduce import reliance and create opportunities for renewable energy and infrastructure investment.

Nuclear Program Escalation And Regional Threats

Iran is recalibrating its nuclear strategy, seeking missile-capable warheads and reportedly developing chemical and biological payloads. These actions heighten regional security risks, provoke international responses, and increase uncertainty for businesses dependent on Middle Eastern stability.

Geopolitical Stability

Regional tensions and Saudi Arabia's involvement in Middle Eastern conflicts affect investor confidence and trade routes. Stability in the kingdom is crucial for maintaining secure supply chains and fostering a favorable business environment for international investors.

Supply Chain Diversification Efforts

Global companies are increasingly diversifying supply chains to Vietnam to mitigate risks from China-centric dependencies. Vietnam's competitive labor costs and improving infrastructure make it a preferred alternative, boosting its role in global manufacturing and logistics networks.

Fiscal Discipline and Tax Reform Challenges

Thailand’s Medium-Term Fiscal Framework targets deficit reduction and public debt control, with phased VAT increases and tax reforms. Political will is crucial; delays or reversals risk credit downgrades, higher funding costs, and reduced fiscal space for crisis response.

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.

AI and Technology Innovation Boom

The US remains the global leader in AI and advanced technology investment, with robust growth in AI-related sectors offsetting broader economic headwinds. Export controls, however, risk isolating US firms from key markets and accelerating foreign competitors’ innovation, impacting long-term competitiveness.

Fiscal Strain and Wartime Economy

Russia’s GDP growth has slowed to 0.1%, with industrial output declining and inflation rising. The government is raising taxes and pushing for economic formalization to offset war-related spending and sanctions-induced budget gaps, impacting domestic and foreign business operations.