EU Customs Union Modernization Urgency

Turkey faces mounting pressure to modernize its Customs Union with the EU as new EU trade deals with India and MERCOSUR threaten to erode Turkey's competitive position. Outdated agreements expose Turkish exporters to increased competition and regulatory barriers, impacting trade flows and investment decisions.

Energy Transition: Nuclear and Renewables

South Korea is advancing its energy transition by planning two new nuclear reactors by 2038 and emphasizing renewables to meet carbon neutrality goals. This shift will influence industrial energy costs, supply chain sustainability, and investment in green technology sectors.

Export rebound and macro sensitivity

January exports hit a record $65.85bn (+33.9% y/y) and a $8.74bn surplus, led by semiconductors. Strong trade data supports industrial activity, but also increases sensitivity to cyclical tech demand, US trade actions, and won volatility—key for treasury, sourcing, and inventory planning.

US-UK Tariff Tensions Escalate

President Trump’s imposition of 10–25% tariffs on UK exports over the Greenland dispute threatens to cost UK businesses £6–15bn and risks recession. The uncertainty disrupts trade, supply chains, and investment planning, with sectors like manufacturing and chemicals most exposed.

Energy Geopolitics and Trade Deals

U.S. trade negotiations increasingly bundle energy commitments and geopolitical conditions, as seen in tariff relief tied to partners’ changes in Russian oil purchases. This links market access to energy sourcing, complicating procurement strategies and increasing political risk in long-term offtake contracts.

US-Israel Policy Divergence on Reconstruction

Tensions between the US and Israel over the pace and conditions of Gaza’s reconstruction and demilitarization are intensifying. Divergent priorities—US emphasis on rapid rebuilding versus Israel’s insistence on security preconditions—create policy uncertainty, complicating the operating environment for international businesses.

Water infrastructure failure risk

Water and sanitation systems face an estimated R400 billion rehabilitation backlog, with many municipalities rated “poor” or “critical.” Recent Gauteng outages affected up to 10 million people after power trips. Operational disruption risks include plant shutdowns, hygiene, and industrial downtime.

Agricultural Export Resilience and Vulnerability

Despite war, Ukraine’s maritime corridor has shipped 100 million tons of grain since 2023, but attacks on ports have slashed agricultural exports by 47% year-on-year. This volatility threatens global food security and the stability of agri-business supply chains.

Geopolitical Risks and Regulatory Tensions

US-South Korea trade frictions are compounded by regulatory disputes, such as perceived discrimination against US tech firms operating in Korea. These tensions risk retaliatory measures, complicate compliance for multinationals, and may spill over into other sectors, including digital services.

Port attacks disrupt Black Sea

Repeated strikes on Odesa-area ports and logistics assets are cutting export earnings by about US$1bn in early 2026 and reducing grain shipment capacity by 20–30%. Higher freight, insurance, and rerouting to rail constrain metals and agrifood supply chains.

Political-Military Influence on Policy

Military leadership’s direct involvement in economic negotiations and investment decisions signals institutional fragility. This dynamic introduces unpredictability in regulatory enforcement and business climate, impacting long-term planning and foreign investor confidence.

Transport infrastructure funding shift

Une loi-cadre transports vise 1,5 Md€ annuels supplémentaires pour régénérer le rail (objectif 4,5 Md€/an en 2028) et recourt davantage aux PPP. Discussions sur hausse/ indexation des tarifs et recettes autoroutières accroissent l’incertitude coûts logistiques et mobilité salariés.

Energy transition meets grid constraints

Renewables are growing rapidly, yet Brazil curtailed roughly 20% of wind/solar output in 2025 with estimated losses around BRL 6.5bn, reflecting grid bottlenecks. Investors must factor transmission availability, curtailment clauses and regulatory responses into projects and PPAs.

Record Trade Surplus Fuels Expansion

China’s 2025 trade surplus hit $1.2 trillion, driven by export growth to Africa, ASEAN, Latin America, and the EU, offsetting US declines. This export reliance boosts global influence but risks long-term structural imbalances and protectionist backlash.

Energy balance: gas, power reliability

Declining domestic gas output and seasonal demand spikes raise LNG import needs and elevate power-supply stress. Businesses face risks of higher tariffs, intermittent load management, and input-cost volatility for energy-intensive manufacturing. Energy contracts, backup generation, and efficiency investments are increasingly material.

Supply Chain Stability Improves, Risks Remain

Only 7.5% of German firms report supply chain difficulties, a significant improvement from previous years. The auto sector especially benefits, but ongoing geopolitical tensions and critical dependencies—such as on semiconductors—require continued vigilance and risk management for international businesses.

Labor Reform and Compliance Pressures

Sweeping labor reforms—including a reduced 40-hour workweek, higher minimum wages, and stricter inspections—are reshaping Mexico’s labor market. These changes increase compliance costs and operational complexity, particularly for manufacturing, logistics, and digital platform employers, with direct implications for competitiveness and labor relations.

USMCA review and tariff risk

Washington and Mexico have begun talks on USMCA reforms ahead of the July 1 joint review, with stricter rules of origin, anti-dumping measures and critical-minerals cooperation. Uncertainty raises pricing, compliance and investment risk for export manufacturers, especially autos and electronics.

Undersea cable and cyber resilience

Taiwan’s connectivity relies heavily on subsea cables and faces recurrent cyber pressure. New initiatives to harden cables and telecoms signal operational risk for cloud, finance, and BPO services; companies should diversify routes, enhance redundancy, and test incident response.

Energy Crisis and Industrial Competitiveness

Pakistan’s energy sector faces high tariffs, under-utilized capacity, and inefficient contracts, which act as a tax on industry and exports. Efforts to privatize distribution and reform generation contracts are ongoing, but structural inefficiencies remain a major constraint on manufacturing and supply chains.

Trade Diversification and New Markets

With exports to the US and China declining, Germany is actively pursuing trade agreements with India, Mexico, Australia, and the UAE. This diversification aims to reduce reliance on traditional markets, mitigate geopolitical risks, and unlock new growth opportunities for German exporters.

Ports labor negotiations and logistics fragility

Ongoing labor-contract uncertainty at key U.S. East and Gulf Coast ports heightens strike and congestion tail risks. Importers should diversify gateways, build inventory buffers, and stress-test inland transport capacity to avoid repeat disruptions and demurrage spikes.

Energy Transition and Power Reliability

South Africa’s energy sector is undergoing a complex transition, with regulatory uncertainty slowing offshore oil and gas exploration and the rollout of renewables. Power supply remains fragile, impacting industrial output, investment planning, and long-term business operations.

Mass Protests and Political Instability

Widespread protests since late 2025, met with violent crackdowns and internet blackouts, have resulted in thousands of deaths and tens of thousands of arrests. The unrest reflects deep societal grievances, undermines regime legitimacy, and creates unpredictable risks for business continuity and investment.

$350 Billion Investment Pact Stalled

A $350 billion South Korean investment commitment in the US, central to a new trade deal, faces delays due to parliamentary gridlock and currency concerns. The uncertainty undermines investor confidence and complicates cross-border business planning in key sectors such as technology and manufacturing.

Energy Policy and Power Grid Strain

Explosive AI-driven demand is straining the US power grid, prompting urgent investment in nuclear and grid infrastructure. Regulatory reforms and public-private partnerships are accelerating, but energy reliability and cost volatility will remain key concerns for industrial and tech sectors.

Industrial policy reshoring incentives

CHIPS/IRA-style subsidies, procurement preferences, and accelerated permitting are steering investment toward U.S. manufacturing, energy, and AI infrastructure. Multinationals must optimize site selection, local-content strategies, and subsidy compliance while anticipating partner-country countermeasures.

Geopolitical Realignment and Supply Chain Security

Saudi Arabia is deepening ties with China, the US, and regional partners, while pursuing new defense and economic alliances. These shifts impact energy flows, supply chain resilience, and market access, requiring international businesses to closely monitor evolving geopolitical risks.

Supply Chain Risks and Opportunities in Battery Reuse

The shift to a circular battery economy introduces new risks—such as validation, logistics, and regulatory compliance—but also rewards. Companies that master traceability, recycling, and second-life applications can secure supply, reduce costs, and enhance ESG performance.

PPP privatization pipeline expansion

A new National Privatization Strategy targets 220+ PPP contracts by 2030 and over $64bn (SAR240bn) private capex across transport, water, health, education and airports. This expands investable infrastructure, but requires tight bid compliance, local partners, and long-term risk pricing.

Trade Policy Uncertainty and Legal Risks

US trade policy remains volatile, with the Supreme Court set to rule on the legality of broad tariffs. The outcome could reshape tariff regimes and inject further uncertainty into global trade, affecting investment strategies and long-term business planning.

Juros altos e virada monetária

A Selic foi mantida em 15% e o BC sinaliza cortes a partir de março, condicionados a inflação e credibilidade fiscal. Volatilidade eleitoral e pass-through cambial podem atrasar a flexibilização, afetando financiamento, consumo e valuation de ativos.

Energy Sector Expansion and Export Infrastructure

Israel’s energy sector is expanding, with new gas contracts, export pipelines to Egypt, and increased production. Long-term contracts and infrastructure investments support revenue stability, but regional geopolitical tensions pose ongoing risks to supply and capital allocation.

Escalating tariffs and legal risk

Wide-ranging import tariffs—especially on China—are lifting input costs and retail prices, while Supreme Court review of IEEPA authorities adds reversal risk. Companies should stress-test pricing, customs bonds, and contract clauses for sudden duty changes.

Tighter sanctions enforcement playbook

Expanded U.S. sanctions targeting Iranian officials and digital-asset channels signal heightened enforcement, including against evasion networks. Firms in finance, shipping, commodities, and tech face greater due-diligence burdens, heightened penalties risk, and potential disruptions to cross-border payments and insurance.

Fiscal Policy Uncertainty and Election Risks

Debates over tax cuts and fiscal sustainability dominate Japan’s political agenda ahead of elections. Uncertainty around consumption tax reforms and social security funding could affect market confidence, currency stability, and the broader investment climate for international businesses.