Shadow fleet maritime risk

Europe is intensifying interceptions and insurance scrutiny of Russia-linked tankers, including vessels using irregular flags. With much Russian oil moving via aging shadow-fleet ships, shipping delays, environmental liabilities, port access restrictions and maritime compliance risks are rising across regional supply chains.

Infrastructure Weakness Disrupts Logistics

Germany’s aging infrastructure is becoming a direct operational risk for businesses. The closure of Bonn’s key Rhine bridge highlights transport fragility, raising delivery times and regional logistics costs, while the government promises accelerated rebuilding and wider investment in roads, rail and digital networks.

Energy Transition Policy Tensions

Tensions are intensifying between net-zero goals, industrial competitiveness and North Sea policy. Disputes over new oil and gas licensing, Rosebank approvals and factory energy costs are raising uncertainty for energy-intensive sectors, long-term capital allocation, and domestic supply security.

Fiscal Slippage Risks Resurface

Brazil’s government is battling congressional measures with estimated fiscal impacts above R$270 billion, while another official tally reached R$111 billion annually. Wider deficits could weaken the real, delay policy easing, raise sovereign-risk premiums, and complicate long-term investment planning.

Immigration Constraints Pressure Operations

Tighter immigration rules and higher visa costs are making US hiring more difficult across agriculture, technology, and skilled services. Employers face longer delays, higher compliance burdens, and labor shortages, raising operating costs and complicating expansion, localization, and project execution plans.

Cambodia Border Dispute Risks

Thailand’s dispute with Cambodia has entered UNCLOS conciliation over a 26,000 sq km overlapping maritime area estimated to hold nearly 12 trillion cubic feet of gas and oil worth about US$300 billion, sustaining border, logistics, and energy-security risks.

Energy price and logistics shock

The Iran war and disruption around the Strait of Hormuz have pushed oil toward roughly $96 per barrel, reviving supply bottlenecks and inflation risks. For Germany’s energy-intensive manufacturers, higher input costs and transport uncertainty threaten margins, delivery schedules and procurement planning.

Downstreaming strategy faces forex strain

Indonesia’s industrial downstreaming remains strategically important, but near-term foreign-exchange generation is lagging investment needs. Export restrictions, profit repatriation, and alleged under-invoicing are intensifying a ‘pre-revenue’ gap, pressuring the balance of payments and complicating imports, procurement, and currency planning for businesses.

Forced-Labour Compliance Tightening

U.S. pressure over forced-labour enforcement has pushed Ottawa toward faster legislative tightening, with a possible additional 10% U.S. tariff threat on non-compliant imports. Importers should prepare for stricter traceability, supplier due diligence and customs scrutiny across global sourcing chains.

China-Schock und EU-Schutzmaßnahmen

Deutschlands Industrie steht durch chinesische Überkapazitäten, Subventionen und Marktverdrängung unter massivem Druck. Schätzungen zufolge gingen 2019 bis 2025 rund 400.000 Industriearbeitsplätze verloren. Mögliche neue EU-Zölle und Derisking-Strategien verändern Preisstrukturen, Beschaffung und Investitionsentscheidungen erheblich.

External Fragility and Remittance Dependence

Pakistan’s external position remains highly sensitive to remittances, oil prices and Gulf stability. Remittances reached a record $4.2 billion in May, with over 300,000 workers leaving for Middle East jobs in January-May, helping support reserves, imports and exchange-rate stability.

Semiconductor capacity investment surge

SK hynix plans to triple wafer production capacity by 2034 as AI memory demand accelerates, reinforcing South Korea’s central role in global chip supply. The expansion supports investment inflows but intensifies execution, power, labor and supplier-capacity pressures across industrial ecosystems.

High Rates, Sticky Inflation

The Central Bank cut the Selic to 14.25%, yet inflation reached 4.72% year-on-year in May, above the 1.5%-4.5% tolerance band. Elevated borrowing costs still constrain credit, consumer demand, and corporate financing, while volatile commodities keep pricing and hedging conditions difficult.

Industrial recession and weak exports

Germany faces renewed recession risk, with 2026 growth cut to 0.5% and exports weakening under US tariffs, Chinese competition, and supply disruptions. Slower demand, rising unemployment, and low productivity are reducing market growth, investment confidence, and cross-border trade volumes.

Energy Security And Power Expansion

Reliable power remains a strategic business issue as Vietnam expands LNG, grid connectivity and regional energy cooperation. Projects such as the over US$2.2 billion Quynh Lap LNG power plant should improve supply, but delays, transmission constraints and demand growth still threaten industrial continuity.

Ports and logistics modernization delays

Port reform remains stalled after the government dropped a substitute bill, leaving labor rules unresolved and reducing chances of a vote this year. Meanwhile, selective investments continue, including a R$2 billion Suape terminal, but wider logistics efficiency gains remain uneven.

Selective Cross-Strait Business Frictions

Tighter scrutiny of mainland Chinese participation in Taiwan trade events and technology ecosystems reflects a harder cross-strait posture. For international firms, this can complicate sourcing meetings, partner access, market intelligence and commercial coordination in hardware and component supply chains.

Rising Militancy In Balochistan

Security conditions deteriorated sharply, with terrorist attacks rising 27% in May to 128 nationwide and Balochistan recording 71 incidents. Highway insecurity, abductions and attacks on transport and businesses threaten staff safety, insurance costs, cargo movement and project execution in strategic corridors.

Platform Work Rules Tighten

After the ILO adopted a treaty covering digital platform workers, Brazil faces renewed pressure to formalize app-based labor affecting roughly 2 million workers. Future regulation could raise labor costs, alter delivery and mobility business models, and impose algorithmic transparency obligations on firms.

Energy Security and Fuel Exposure

Australia remains highly exposed to global fuel shocks, importing more than 90% of transport fuels. Strait of Hormuz disruption triggered panic buying and emergency supply measures, underscoring operational risks for freight, mining, and agriculture, while increasing the strategic value of stockpiles, refining access, and energy diversification.

Resilient Foreign Investment Momentum

Despite regional tensions, foreign firms continue expanding in Saudi Arabia, encouraged by Vision 2030 demand and regulatory facilitation. Swedish exports to the kingdom reached $1.24 billion in 2025, and 77% of Swedish companies there reported profits, signalling sustained investor confidence and localization.

State-led infrastructure spending offset

Public spending on infrastructure and defense is stabilizing investment after years of decline, with forecasts of 0.7% growth in fixed investment in 2026. This offers opportunities in construction, logistics, engineering and public procurement, though fiscal deficits and execution bottlenecks remain significant constraints.

High-Quality FDI Policy Shift

Vietnam is pivoting from volume-led foreign investment attraction toward higher-quality, technology-intensive projects under Politburo Resolution 10, targeting US$200-300 billion in registered FDI during 2026-2030 and stronger R&D, regional headquarters, supplier upgrading, and environmentally compliant industrial investment.

Digital Sovereignty and AI Push

France is accelerating sovereign technology policy, including €655 million in new AI investment, public-sector deployment, and reduced reliance on US providers. This supports domestic innovation but may reshape procurement, data localization expectations, and market access for foreign technology firms.

EU Trade Deal Nears

The Indonesia-EU CEPA is moving toward ratification, with officials expecting entry into force in 2027. Around 98% of tariff lines would gradually fall to zero over 10 years, improving market access, regulatory certainty, and prospects for European manufacturing and services investment.

US Tariff Exposure Rising

Washington’s tariff scrutiny and forced-labour allegations are heightening external trade risk for Thailand’s export sectors. With growth forecast at just 1.6–2.0% in 2026, manufacturers face margin pressure, market-diversion risks, and stronger incentives to diversify sourcing and end-markets.

Nuclear Talks Drive Policy Volatility

Business conditions hinge on fragile U.S.-Iran negotiations over inspections, enrichment and sanctions relief. Conflicting statements from Tehran and the IAEA raise uncertainty over whether interim arrangements will hold, leaving investors exposed to abrupt reversals in sanctions, licensing, and diplomatic risk.

EU Accession Reform Conditionality

EU membership talks are advancing after Hungary lifted its veto, but funding and integration remain tied to rule-of-law, anti-corruption, judiciary, and minority-rights reforms. This improves long-term regulatory convergence while keeping near-term policy execution and compliance risks elevated.

Rupiah Weakness and Tightening

The rupiah briefly broke 18,000 per US dollar in June, while reserves fell to US$144.9 billion and Bank Indonesia lifted rates to 5.50%. Currency volatility, costlier imports, and tighter financing conditions are increasing hedging, pricing, and capital-allocation pressures.

CUSMA Review and Tariff Uncertainty

Canada faces escalating uncertainty ahead of the July 1 CUSMA review, with the United States signalling annual reviews rather than a 16-year renewal. Ongoing Section 232 tariffs on autos, steel, aluminum and lumber complicate investment planning, cross-border sourcing and export competitiveness.

Reform uncertainty and coalition pressure

The Merz coalition is under pressure to deliver reforms on taxes, pensions, health, labor, and energy before key autumn elections. Delays or weak compromises would prolong regulatory uncertainty, complicate workforce planning, and undermine business expectations for competitiveness-enhancing policy changes.

Investment Pipeline Shifts East

Thailand’s investment strategy is increasingly tied to industrial upgrading, including EVs, electronics, semiconductors, and data centers. New BOI-backed approvals and fast-track mechanisms can improve project execution, but investors should watch power availability, localization rules, and competitive pressure from neighboring markets.

Hormuz Disruption and Maritime Risk

Iran’s leverage over the Strait of Hormuz remains the highest business risk, as conflict, mining threats, toll proposals and vessel attacks endanger a route that previously carried about one-fifth of globally traded oil and gas, raising freight, insurance and inventory costs.

Energy Costs Undermine Competitiveness

Persistently high electricity, gas and carbon costs continue to weaken Germany’s industrial base, especially energy-intensive suppliers. One foundry study warned a further 50% decline in domestic casting output could cut value added by about €65 billion and eliminate roughly 588,000 jobs.

Energy security and fuel exposure

South Africa imports around 90% of crude and petroleum products and is moving toward a 60-day strategic stock policy after recent disruptions. Fuel shocks, refinery outages and weak reserves expose transport-intensive sectors to abrupt cost swings, procurement risk and broader inflationary pressure.

US-Japan Trade Pact Anchors

Tokyo and Washington reaffirmed their tariff agreement, keeping US tariffs on Japanese goods at 15% rather than 25% in exchange for $550 billion of Japanese investment. The deal shapes export planning, capital allocation, LNG projects, critical minerals and bilateral industrial strategy.