Red Sea and Hormuz disruptions

Conflict-linked threats to the Strait of Hormuz and Bab al-Mandab are raising freight, fuel and insurance costs for Israel-linked trade flows. Shipping rerouting can add roughly 10 days and about $1 million per voyage, disrupting delivery schedules.

Electricity Costs Still Elevated

Although supply has stabilised, tariff affordability is now a central business risk. Government aims to keep future increases in single digits, but electricity prices still pressure manufacturers, miners, and consumers, constraining margins, domestic demand, and competitiveness in energy-intensive export sectors.

Energy Cost Volatility and Reform

Britain remains highly exposed to imported gas and wholesale power volatility, with IMF growth downgraded to 0.8% and inflation seen near 4%. Proposed electricity-market reforms and levy changes could reshape industrial costs, pricing models, and long-term investment decisions.

US Tariffs Reshape Export Flows

Exports to the United States fell 9.1% in March and 18.7% in Q1 after 2025 tariff hikes. With 22% of Brazilian exports still affected, manufacturers and exporters face margin pressure, market diversification costs and weaker North American sales visibility.

Shadow Fleet Compliance Risks Intensify

Russia’s reliance on opaque shipping networks is deepening legal, insurance, and counterparty risks. The EU’s latest package expands shadow-fleet listings beyond 600 vessels, while authorities are targeting ship-to-ship transfers, destination masking, attestation fraud, and tanker resale loopholes used to evade sanctions.

Electricity Stability Improves Significantly

Eskom expects no winter load-shedding under normal conditions after more than 340 consecutive days without cuts, lower unplanned outages, and diesel savings of about R27 billion versus three years ago. Improved power reliability supports manufacturing, mining, and investor confidence.

Export Controls Compliance Fragmentation

Diverging U.S. and EU sanctions and export-control regimes are raising compliance burdens for Korean multinationals. Even indirect exposure through insurers, banks, logistics providers, or third-country suppliers can block transactions, complicating cross-border operations in energy, defense, and technology sectors.

Autos and Industrial Base Pressure

Tariffs and CUSMA tensions are intensifying pressure on Canada’s auto and broader manufacturing base, including steel, lumber, and machinery. Businesses face margin compression, relocation risk, and weakened long-term confidence as North American production rules and industrial policy become more politicized.

Regional War Raises Energy Costs

Middle East conflict has sharply increased Egypt’s gas import bill and fuel costs, pressuring industry, transport, and margins. Officials said monthly natural-gas import costs jumped by $1.1 billion to $1.65 billion, prompting fuel hikes, rationing measures, and project slowdowns.

Infrastructure Execution Imperative

India’s business case is improving, but logistics efficiency still depends on faster execution of industrial land, transport links and utility support. Large visible projects are viewed as necessary to unlock board-level confidence, scale export manufacturing and reduce friction in national supply chains.

Trade Digitization Improves Clearance

Pakistan Single Window has surpassed 100,000 users, processing 1.58 million declarations and 1.02 million permits, while port-community integration is accelerating vessel clearance. Despite broader macro risks, customs digitization is a meaningful positive for compliance efficiency, shipping visibility and cross-border trade execution.

Samsung Labor Unrest Risk

Samsung unions, now representing over 70% of domestic staff, plan a general strike from May 21. Earlier action cut foundry output 58.1% and memory output 18.4%, highlighting material disruption risks for chip supply chains and global customer confidence.

Energy Shock Lifts Logistics

Middle East conflict and disruption around the Strait of Hormuz are pushing oil toward $100 per barrel, raising bunker fuel, diesel, and freight costs. U.S. ports report rerouting, surcharge pressure, and weaker import volumes, with broad inflationary spillovers for importers and exporters.

High Rates, Inflation, Strong Real

Inflation expectations rose to 4.86% for 2026, above the 4.5% ceiling, while markets see Selic at 13.0%. The real strengthened below R$5 per dollar, affecting import costs, export competitiveness, funding conditions, and foreign portfolio allocation decisions.

China Supply Chain Diversification

China-origin U.S. imports fell 6.7% year on year in March, while Vietnam, Thailand, and Indonesia gained share. Businesses are accelerating China-plus-one strategies, but evidence shows alternative production bases remain slower and less complete, requiring careful transition planning, inventory buffers, and dual-sourcing investment.

Russian Oil Sanctions Exposure

India’s energy security and refining economics are increasingly tied to temporary US waivers on Russian crude. Russian oil reached roughly 44.4% of imports in March, raising exposure to sanctions shifts, freight disruption, compliance risks, and volatile fuel input costs.

Weak Demand, Policy Stimulus

Soft domestic demand, weak wage growth, and low consumer confidence are prompting targeted fiscal support for consumption, services, and private investment. While stimulus may stabilize activity, subdued household spending and slower growth still weigh on sales outlooks, pricing power, and investment returns.

Energy Shock Transmission Risks

Middle East conflict and Hormuz-related disruption are pushing up oil, diesel, and shipping costs, with Brent near $95 in reporting. Higher fuel and petrochemical input prices are feeding through to transport, plastics, fertilizer, and aviation, squeezing margins across manufacturing, retail, and trade-intensive sectors.

IMF Program Drives Policy

Pakistan’s IMF programme is shaping the FY2026-27 budget, taxation, procurement, FX liberalisation and energy pricing. With 11 new conditions tied to a $1.2 billion tranche, policy direction remains reform-led but creates near-term uncertainty for investors, exporters and regulated sectors.

Regulatory and Bureaucratic Overload

Complex regulation and slow permitting continue to deter investment and delay execution. Industry groups say the EU adopted roughly 13,000 legal acts from 2019 to 2024, while companies cite weak public-sector digitalization and cumbersome administration as barriers to faster deployment.

Commodity Tax and Royalty Uncertainty

Jakarta is still refining windfall tax, export duty, and royalty options for coal and nickel as it seeks extra fiscal revenue. The delay reduces immediate shock, but ongoing policy uncertainty complicates investment planning, contract pricing, and long-term capital allocation in extractives.

China Trade Stabilisation With Risks

Australia-China ties are improving, with both sides backing expanded trade, investment and possible upgrades to their free trade agreement. Yet dependence on China remains strategically sensitive, especially across LNG, mining and green industries, leaving businesses exposed to policy or geopolitical reversals.

Infrastructure and Logistics Upgrades

Vietnam is accelerating transport and logistics investment to support export growth, including more than 3,000 km of expressways, 306 seaport berths, new rail projects, airport expansion, and proposed direct shipping links. Improved connectivity should lower trade friction but intensify competition for strategic corridors.

Escalating Sanctions and Enforcement

The EU’s 20th package adds 120 listings, bans transactions with 20 more Russian banks, targets 46 additional shadow-fleet vessels and activates anti-circumvention measures against Kyrgyzstan, sharply raising compliance, financing and trade-routing risks for foreign firms dealing with Russia.

South China Sea Security Risk

Maritime tensions remain a material trade and insurance risk. China’s rapid expansion at Antelope Reef in the disputed Paracels heightens uncertainty around one of the world’s most important shipping lanes, even as Hanoi seeks to contain frictions through diplomacy and maritime talks.

Trade Diversification from China

Taiwan is reducing dependence on China as exports to China fell from 40.1% in 2016 to 26.6% in 2025, while outbound investment to China and Hong Kong dropped from 83.8% in 2010 to 4.69% in 2025, reshaping supply-chain geography.

Capital Allocation Shifts Abroad

Taiwanese firms are committing at least US$250 billion to US semiconductor, energy and AI production, with Taiwan’s government offering another US$250 billion in financing support. This outward investment diversifies risk, but may tighten domestic labor, capital and supplier availability for locally based operations.

Supply Chains Face Governance Tightening

Taiwan is moving to restrict imports tied to forced labor and strengthen labor protections through trade-law enforcement and Employment Service Act amendments. Companies sourcing through Taiwan should expect closer due diligence expectations, higher compliance standards, and greater scrutiny of migrant-labor practices.

Energy Security and Power Resilience

Taiwan’s economy remains vulnerable to imported energy shocks. LNG supplies cover only about 11 days, versus roughly 100 days for crude reserves, while gas generates about 47% of power. Diversification, storage expansion, and nuclear restart debates directly affect manufacturing continuity and costs.

Border Bottlenecks Raise Costs

Land trade with the EU still faces costly friction at border crossings. Nearly half of surveyed firms cite queues as the top customs problem, average clearance time rose to 6.9 hours, infrastructure constraints remain acute, and repairs at key Poland crossings risk adding further delays.

Energy Shock and Import Exposure

Turkey’s heavy reliance on imported energy is amplifying geopolitical spillovers. The Iran war pushed oil prices sharply higher, with Brent still about 33% above late-February levels in recent reporting, worsening input costs, inflation risks, transport expenses, and current-account vulnerability across industry.

North American Trade Rules Harden

Ahead of the July 1 USMCA review, Washington is signaling tariffs on autos, steel and aluminum may stay, while pushing stricter rules of origin. That shift challenges regional manufacturing economics, supplier qualification, customs planning and new investment decisions across North America.

Trade corridors depend on recovery

Israel’s trade access is improving unevenly as some foreign airlines and shipping channels resume, but Red Sea and wider Middle East security risks still distort routing. Businesses should expect volatile freight availability, elevated insurance and continued dependence on resilient alternate corridors.

Black Sea Energy Expansion

Turkey is advancing Black Sea gas development and new exploration partnerships, including with TotalEnergies, to reduce import dependence. Sakarya output is expected to double in 2026, improving medium-term energy security, lowering external vulnerability and creating opportunities in infrastructure and services.

Textile Competitiveness Under Pressure

Turkey remains a major textile exporter, but sector performance is weakening under softer EU demand, higher labor and energy costs, financing constraints and imported-input dependence. Fast delivery and sustainability credentials support resilience, yet margins and price competitiveness versus Asian producers are under strain.

Fiscal Austerity and Debt Pressure

France has frozen €6 billion in 2026 spending as growth was cut to 0.9% and inflation raised to 1.9%. Higher debt servicing, about €300 million monthly, increases policy uncertainty, public investment risk, and the likelihood of further tax or spending adjustments.