China-Pakistan Economic Corridor Acceleration

CPEC Phase 2.0 is being fast-tracked amid global supply chain disruptions and regional security threats. China’s planned $10 billion investment and new infrastructure projects position Pakistan as a pivotal trade gateway, but success hinges on security, regulatory clarity, and regional stability.

Regional Geopolitics Reshape Alliances

China’s trade actions test US support for Japan and seek to drive wedges between regional partners, notably South Korea. These dynamics influence trade policy, investment confidence, and the stability of multinational supply chains in East Asia.

Trade Growth Lagging Global Average

UK trade is projected to grow at 2.3% annually over the next decade, below the global average of 2.5%. Deepening ties with the EU and other rule-based economies is seen as crucial to reversing this trend, as trade with the US and China stagnates due to geopolitical tensions.

Sanctions Pressure and Russian Retaliation

Intensified Western sanctions on Russia target key sectors, reducing Russian revenues and impacting regional supply chains. Russia retaliates with threats and attacks on infrastructure, increasing geopolitical risks for businesses operating in Ukraine and neighboring markets.

Accelerated Push for Energy Imports and Diversification

Facing energy shortages, Ukraine is rapidly increasing electricity imports and seeking alternative energy sources. This shift creates opportunities for foreign energy suppliers and technology providers, but also exposes businesses to price volatility and regulatory changes in the energy sector.

Technology Export Controls and Decoupling

The US maintains and expands technology export controls, particularly targeting China and sensitive sectors like semiconductors and AI. These measures drive supply chain decoupling, compliance complexity, and strategic realignment for technology firms and global investors.

ESG Standards and Green Transition Pressures

Vietnam is developing tailored ESG standards to enhance compliance and transparency, with major cities and industrial projects prioritizing green and high-tech development. ESG adoption is seen as a competitive advantage, but implementation costs, data transparency, and access to green finance remain hurdles for local and foreign businesses.

Labor Market Dynamics and Immigration Policy

The US labor market shows resilience but faces cooling trends, wage pressures, and uneven household financial health. Shifts in immigration policy and demographic changes affect workforce availability, cost structures, and long-term business planning for multinational firms.

China-Australia Trade Tensions Escalate

China’s imposition of a 55% tariff on Australian beef exports exceeding a 205,000-tonne quota threatens up to AU$1 billion in trade, highlighting persistent vulnerability in Australia’s export-dependent sectors and the need for diversified market strategies.

Rising Non-Oil Private Sector Growth

Non-oil private sector activity continues to expand, supported by Vision 2030 reforms and strong domestic demand. The Riyad Bank PMI remains well above 50, with real GDP growth forecast at 4–4.6% in 2026, signaling robust opportunities for international investors in diversified sectors.

Political Uncertainty and Governance Risks

Upcoming municipal elections and potential leadership changes introduce policy unpredictability. While recent reforms and coalition governance have improved sentiment, concerns remain over service delivery, regulatory consistency, and the ability to sustain economic reforms, impacting long-term investment decisions.

China Relations and Trade Diversification

Prime Minister Carney’s upcoming visit to China signals a strategic pivot to repair strained relations and expand market access for Canadian exports, especially in agriculture and energy. Success could mitigate risks from US protectionism and global trade disruptions.

Russia-China Trade Faces Headwinds

Bilateral trade between Russia and China fell 6.5% in 2025, ending five years of growth. Declines in energy and automotive trade, new tariffs, and falling commodity prices have contributed, challenging long-term investment strategies and exposing vulnerabilities in Russia’s pivot to Asian markets.

Geopolitical Tensions and Sanction Risks

US sanctions and new tariffs targeting countries trading with Iran, including Turkey, introduce significant uncertainty for regional trade. These measures could disrupt supply chains, increase compliance risks, and necessitate strategic adjustments for businesses engaged in cross-border operations.

Deepening Turkey–UK and EU Trade Relations

Turkey’s trade with the UK hit $24 billion, with ambitions for $40 billion. EU trade reached $233 billion. Ongoing negotiations to expand free trade agreements into services and investment are set to further integrate Turkey into European supply chains.

Labor Market Challenges and Mobility

Germany’s stagnant labor market and skill shortages are prompting policy reforms and new migration agreements, notably with India. Streamlined visas for healthcare and tech professionals are expected to support business operations and competitiveness.

Surge in Foreign Direct Investment

India attracted $51 billion in FDI over six months and $748 billion over the past 11 years, reflecting strong global investor confidence. Government reforms, manufacturing incentives, and startup support are driving this surge, positioning India as a premier global investment destination.

Strategic Defense Alliances and Regional Security

Turkey is negotiating a tripartite defense pact with Saudi Arabia and Pakistan, and is assuming a leading role in Black Sea naval security. These moves enhance Turkey’s geopolitical influence, but may introduce new risks and compliance considerations for international firms.

Investment Uncertainty and Supply Chain Realignment

Rising trade tensions and unpredictable US policy have slowed German investment flows into the US and prompted companies to reconsider supply chain locations. Prolonged uncertainty could accelerate regionalization, delay capital projects, and weaken Germany’s manufacturing base, with long-term implications for competitiveness and global market access.

Severe Economic Collapse and Hyperinflation

Iran’s economy is in free fall, with the rial trading above 1.4 million to the US dollar and inflation exceeding 40%. This collapse undermines purchasing power, disrupts supply chains, and raises the risk of non-payment or contract frustration for foreign firms.

Regional Funding and Infrastructure Gaps

Persistent underinvestment and complex funding formulas, especially in Wales and the North, continue to hinder infrastructure upgrades. Businesses face challenges in logistics, labour mobility, and regional development, with new government strategies aiming to address disparities.

Regulatory Reforms to Attract Investment

The Korean government is streamlining regulations and enhancing incentives to attract foreign investment, particularly in advanced industries. These reforms aim to improve the business environment, foster innovation, and maintain Korea’s status as a preferred destination for international capital and technology partnerships.

Privatization and State-Owned Enterprise Reform Drive

The government is accelerating privatization of state-owned enterprises (SOEs) to reduce fiscal losses and improve efficiency. Recent sales, including Pakistan International Airlines, signal a shift toward private sector-led growth, but the process faces political, social, and operational challenges.

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.

Fuel Regulation, Security, and Energy Transition

Brazil is intensifying fuel regulation, updating tariffs, and promoting biogas and sustainable aviation fuel. However, fuel theft in pipelines is rising, especially in São Paulo, posing operational and security risks. The energy transition agenda is advancing, but regulatory and enforcement challenges remain.

India-EU Free Trade Agreement Finalization

India is set to finalize a comprehensive FTA with the EU, its largest and most complex trade deal to date. This agreement will reshape trade flows, reduce tariffs, boost exports, attract FDI, and enhance supply-chain resilience, especially amid rising global protectionism.

Geopolitical Fragmentation and Sanctions Complexity

Divergent approaches among Western allies on sanctions enforcement, asset seizures, and military aid create a fragmented regulatory landscape. Businesses face heightened compliance risks and must navigate evolving sanctions regimes, cross-border asset restrictions, and shifting political alliances.

Pivot to High-Value Investment Sectors

Thailand is shifting its economic strategy to attract foreign direct investment in high-tech, green infrastructure, and wellness tourism. This pivot aims to address sluggish growth, but requires legal reforms, transparency, and infrastructure upgrades to succeed.

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.

Retaliatory Tariffs and Regulatory Risks

The EU is considering €93 billion in retaliatory tariffs and regulatory measures targeting US goods and services. Finnish firms operating in or exporting to the US could face new barriers, compliance costs, and restricted market opportunities.

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.

Supply Chain and Infrastructure Modernization

Turkey prioritizes infrastructure upgrades, particularly rail-port connectivity and logistics, to enhance export capacity and supply chain resilience. Investments in renewable energy and agriculture support sustainable operations, while modernization efforts reduce bottlenecks for international business.

Labor Cost Pressures and Wage Policy

Labor unions are pressing for significant wage increases in Jakarta to match the city’s high living costs. Rising labor costs could affect operational budgets, investment decisions, and Indonesia’s competitiveness as a manufacturing and services hub.

Divergent Energy Policies Reshape Markets

US policy now prioritizes fossil fuel expansion, including efforts to control Venezuelan oil, while China accelerates its clean energy transition. This divergence increases geopolitical risk, affects global energy prices, and may shift long-term investment toward regions with stable green policy frameworks.

Real Estate and Infrastructure Investment Dynamics

Security tensions and labor shortages have slowed new construction, causing housing prices to rise. Government incentives and strategic planning in border regions, especially the Gaza Envelope, offer opportunities for foreign investors, but market volatility and regional risks remain high.

Regulatory Focus on Foreign Investment

Australia is tightening scrutiny of foreign investment, particularly in strategically sensitive sectors like critical minerals. Recent government actions to limit Chinese capital in key projects reflect heightened regulatory risk and a more cautious approach to foreign ownership, impacting cross-border M&A and joint ventures.