Higher-for-longer rate risk

The RBA has returned to tightening, lifting the cash rate to 3.85% and warning inflation may stay above target for years. Markets price further hikes. Higher funding costs, tighter credit terms, and AUD volatility can influence investment timing, M&A valuations, and capex decisions.

Federal shutdown and fiscal brinkmanship

Recurring U.S. fiscal standoffs are disrupting federal services and increasing macro uncertainty. A partial government shutdown began after Congress missed funding deadlines, with estimates of up to $11B GDP loss if prolonged. Impacts include delayed permits, customs/agency backlogs, contractor payment risks, and market volatility.

China tech controls tighten further

Stricter export controls and licensing conditions on advanced semiconductors (e.g., Nvidia H200) and enforcement actions (e.g., Applied Materials $252m penalty for SMIC-linked exports) raise compliance burdens, restrict China revenue, and accelerate redesign, re-routing, and localization of tech supply chains.

Sanctions escalation and secondary tariffs

U.S. “maximum pressure” is tightening via new designations of tankers/entities and a threatened 25% tariff on countries trading with Iran. This widens compliance exposure beyond Iran-facing firms, raising legal, financing, and market-access risks across global supply chains.

Reforma tributária em transição

A migração para IVA dual (CBS/IBS) cria riscos de implementação, cumulatividade temporária e disputas de créditos, especialmente em cadeias longas e operações interestaduais. Multinacionais devem reavaliar preços, contratos, sistemas fiscais e estruturas de importação/distribuição para evitar custos e autuações.

Sanctions-linked energy procurement risk

U.S. tariff relief is tied to India curbing Russian crude purchases, with monitoring and possible tariff snapback. Refiners face contractual lock-ins and limited alternatives (e.g., Nayara). Energy-intensive sectors should plan for price volatility and sanctions compliance.

Labor localization tightening (Saudization)

New Nitaqat and profession-specific quotas raise Saudi hiring requirements, including 60% Saudization in key sales/marketing roles from April 2026, plus tighter job-title restrictions. Multinationals face higher payroll costs, talent shortages in niche skills, and operational risk if noncompliant.

Post-election policy continuity risks

Bhumjaithai’s strong election showing reduces near-term instability, supporting portfolio inflows, but coalition bargaining and a multi-year constitutional rewrite could still delay budgets and reforms. Foreign investors face execution risk around stimulus, infrastructure procurement, and regulatory priorities.

Energy security: LNG and nuclear

Japan is locking in long-term LNG supply—e.g., JERA’s 27-year, 3 mtpa deal with Qatar from 2028 and deeper US energy-linked investment frameworks—while accelerating reactor restarts. This reshapes fuel procurement, power-price risk, and emissions strategies for heavy industry and data centers.

Labor constraints and mobilization effects

Military mobilization, displacement, and infrastructure damage tighten labor availability and raise wage and retention pressures in key sectors. International firms should expect execution delays, higher HSE and HR costs, and greater reliance on automation, remote operations, and cross-border staffing.

Semiconductor reshoring and tech geopolitics

Washington continues pressing for more Taiwan chip capacity and supply-chain relocation, while Taipei calls large-scale shifts “impossible.” TSMC’s massive US buildout and parallel overseas fabs heighten capex needs, export-control exposure, and dual-footprint operational complexity for suppliers and customers.

China-exposure and strategic asset scrutiny

Beijing warned of potential retaliation over proposals to return Darwin Port from a Chinese lessee, highlighting renewed geopolitics around strategic infrastructure. Firms with China-linked ownership, customers or supply chains face higher political, reputational and contract risks, alongside tighter investment screening.

Green hydrogen export corridors

Projects like ACWA’s Yanbu green hydrogen/ammonia hub (FEED due mid-2026; operations targeted 2030) and planned Saudi–Germany ammonia logistics corridors could create new trade flows. Businesses should assess offtake contracts, certification standards, and port-to-port infrastructure readiness.

Energy supply, pricing, and arrears

Egypt is pressing international oil companies to double output by 2030 and revise contracts as legacy gas pricing becomes uneconomic. Reports of arrears (e.g., >$200m owed to one producer) highlight payment-risk, while new Western Desert finds support medium-term supply.

Sanctions escalation and enforcement

EU’s proposed 20th package expands beyond price caps toward a full maritime-services ban for Russian crude, adds banks and third-country facilitators, and tightens export/import controls. Compliance burdens, secondary-sanctions exposure, and abrupt counterparty cutoffs increase for trade, finance, and logistics.

Consolidation budgétaire et fiscalité

Le budget 2026, adopté via 49.3, comporte des mesures fiscales contestées et sécurisées devant le Conseil constitutionnel. Effets: incertitude sur fiscalité du capital et transmissions, arbitrages d’investissement, pression sur dépenses publiques et commandes.

AI chip export controls to China

Policy oscillation on allowing sales of high-performance AI chips to China creates strategic risk for chipmakers and AI users. Companies must manage compliance, customer screening, and geopolitical backlash, while potential future tightening could disrupt revenue, cloud infrastructure, and global AI deployment plans.

$350bn US investment execution

South Korea’s pledge to invest US$350bn in the United States is shifting from political commitment to project vetting, with new review committees and Washington consultations. Corporate capital allocation, governance, and disclosure expectations will shape deal timing, financing terms, and bilateral leverage.

Wider raw-mineral export bans

Government is considering adding more minerals (e.g., tin) to the raw-export ban list after bauxite, extending the downstreaming model used for nickel. This favors in-country smelter investment but increases policy and contract risk for traders reliant on unprocessed feedstock exports.

China exposure and strategic assets

Australia’s China-linked trade and investment exposure remains a top operational risk. Moves to potentially reclaim Darwin Port from a Chinese lessee, alongside AUKUS posture, raise retaliation risk. Western Australia’s iron ore exports to China near A$100bn underline concentration risk for supply and revenues.

Trade facilitation and digital licensing

Authorities aim to cut investment licensing from ~24 months to under 90 days via a unified digital platform, while reducing customs clearance from 16 days to five (target two) and moving ports to 7-day operations. Execution quality will determine actual savings.

E-commerce law and platform regulation

Vietnam’s Electronic Commerce Law effective July 2026 will require foreign platforms to establish legal presence, strengthen livestream and affiliate oversight, and mandate at least three years of transaction data retention. Cross-border sellers face higher compliance, tax, and takedown risks.

Reforma laboral: semana de 40 horas

Avanza la reforma constitucional para reducir la jornada a 40 horas (implementación gradual 2026‑2030), sin bajar salarios y con cambios en horas extra y registro electrónico. Implica presión de costos, rediseño de turnos y productividad en manufactura, logística y servicios.

Fed easing cycle and dollar swings

Cooling inflation is strengthening expectations for mid‑year Federal Reserve rate cuts, influencing USD direction, funding costs, and risk appetite. International firms should reassess hedging, USD-denominated debt, and pricing strategy, as rate-driven FX and demand conditions can shift quickly.

State asset sales and privatization push

Government signals deeper private-sector role via IPO/asset-sale programs and state ownership policy, highlighted in Davos outreach. Deals such as potential wind-asset sales illustrate momentum. For FDI, opportunity is rising, but governance clarity and equal competition remain key.

Steel and aluminum tariff escalation

Higher US aluminum and steel tariffs are driving record physical premiums and import dislocations, lifting costs for autos, aerospace, construction, and packaging. Firms face increased input inflation, renegotiation of supply contracts, and pressure to qualify domestic or alternative suppliers.

External debt rollovers, FX buffers

Pakistan’s reliance on short-term bilateral rollovers and Chinese commercial loans keeps reserves fragile; a recent $700m repayment cut gross reserves to about $15.5bn. Tight buffers raise devaluation risk, restrict profit repatriation and disrupt import-dependent supply chains.

AML/CTF bar for crypto access

FCA registration milestones (e.g., Blockchain.com) show continued selectivity under UK Money Laundering Regulations. Firms need robust CDD, transaction monitoring, record-keeping and senior-manager accountability, influencing partner bank access and cross-border onboarding scalability.

India trade deals intensify competition

India’s new EU deal and evolving US tariff arrangements reduce Pakistan’s historical preference cushion, especially in textiles and made-ups. European and US buyers may renegotiate prices and lead times, pressuring margins and accelerating shifts toward higher value-add, reliability, and compliance performance.

US trade talks and tariff risk

Vietnam is negotiating a more “reciprocal” trade framework with the US amid tariff pressure and scrutiny of Vietnam’s export surplus. Outcomes could reshape duties, rules-of-origin enforcement and supply-chain routing, affecting apparel, electronics, and China-plus-one strategies.

Property slump and policy easing

Reports indicate easing of “three red lines” developer leverage oversight, signaling stabilization intent after defaults. Yet falling prices and weak confidence constrain growth and local-government revenue, affecting demand forecasts, supplier solvency, and payment/collection risk in China operations.

China trade frictions resurface

Australia’s anti-dumping tariffs on Chinese steel (10% plus earlier 35–113% duties) raise retaliation risks across iron ore, beef and education services. Firms should stress-test China exposure, diversify markets and monitor WTO disputes and safeguard-style measures.

Critical minerals processing incentives

India plans incentives for lithium and nickel processing, including ~15% capex subsidies from April 2026 and capped sales-linked support, initially for four projects. This reshapes EV-battery and clean-tech sourcing, reducing China dependence but requiring partners with technology, ESG compliance, and long lead times.

Coal output controls, export risk

Jakarta is signaling coal production limits for 2026 (proposal: 600m tons vs 790m in 2025), though top miners may be exempt. Annual RKAB approvals create uncertainty, thinning spot liquidity and complicating long-term export contracts for Asia’s import-dependent buyers.

DHS funding instability and disruptions

Recurring DHS funding standoffs and partial shutdowns threaten operational continuity for TSA, FEMA reimbursements, Coast Guard readiness, and CISA cybersecurity deployments, while ICE enforcement remains funded. Businesses should anticipate travel friction, disaster-recovery payment delays, and security-service gaps.

Macroeconomic stagnation and expensive money

Growth is slowing sharply (IMF forecasts around 0.6–0.9%), while inflation and high rates persist alongside tax increases such as VAT to 22%. Tighter credit and weaker demand elevate default risk, constrain working capital, and complicate investment cases and repatriation planning.