Mission Grey Daily Brief - November 18, 2024
Summary of the Global Situation for Businesses and Investors
The G20 summit in Brazil is overshadowed by two major wars and Donald Trump's recent election victory. Heightened global tensions and uncertainty about an incoming Trump administration have tempered any expectations for a strongly worded statement addressing the conflicts in the Middle East and between Russia and Ukraine. Experts instead anticipate a final document focused on social issues like the eradication of hunger — one of Brazil's priorities — even if it aims to include at least a mention of the ongoing wars.
Typhoons in the Philippines have caused tidal surges and displaced massive numbers of people.
Geopolitical tensions simmer as Cop29 heads into its second week in Baku, Azerbaijan. Climate advocates are urging world leaders to commit to a strong finance deal.
Japan and Ukraine have signed a security info-sharing pact to boost cooperation.
Russia-Ukraine War
The Russia-Ukraine war has dragged past its thousandth day, with hundreds of missiles and drones streaking across Kyiv's skies, killing at least two people, leaving a dozen more injured, and damaging the country's already beleaguered energy grid. Russia's relentless aerial bombardment has destroyed half of Ukraine's energy production capacity, according to President Volodymyr Zelensky.
With the harsh Ukrainian winter fast approaching, the country is already suffering from major energy shortfalls, while its outmanned and outgunned forces have been steadily ceding ground to the Kremlin's troops for weeks. Kyiv has implored its Western allies for help to rebuild its energy grid — a hugely expensive undertaking — and to supply its outgunned forces with more aerial defence weapons.
Many in Ukraine fear that Western help will not be as freely given following the imminent return of Trump to the White House in January. The Republican president-elect has frequently questioned the United States' backing for Ukraine, and campaigned with the promise of cutting a quick deal to end the war.
Joe Biden has authorised Ukraine’s use of long-range missiles to strike hundreds of miles inside Russia for the first time, according to reports. The decision marks a major policy shift and comes after Russia warned that Moscow would see the move to allow the use of US-made missiles as an “escalation.” With Biden leaving office in two months, president-elect Donald Trump has indicated he will limit American support for Ukraine and pledged to end the war quickly once he takes office in January.
Ukrainian President Volodymyr Zelensky has campaigned for months to allow Ukraine’s military to use US weapons to hit Russian military targets far from its border, and retains important allies in both parties in Congress. He said Sunday evening that the strikes, if carried out, would "speak for themselves." But he did not confirm the authorization directly.
The Kremlin has said that if the United States allowed Ukraine to use US-made weapons to strike far into Russia, it would lead to a rise in tension and deepen the involvement of the United States in the conflict.
North Korea's Involvement in the Russia-Ukraine War
North Korea may end up sending Putin 100,000 troops for his war, according to people familiar with assessments made by some Group of 20 nations. The analysis is one of several on the evolving partnership between Russian President Vladimir Putin and North Korean leader Kim Jong Un, said the people, speaking on condition of anonymity to talk about private discussions. They stressed that such a move wasn’t imminent and that military support at that scale — if it occurred — would likely happen in batches with troops rotating over time rather than in a single deployment.
Ukraine’s ambassador to South Korea made a similar assessment earlier this month. Dmytro Ponomarenko said in an interview with VOA that Kyiv expected up to 15,000 North Korean troops deployed to fight in Russia’s Kursk region – and possibly in occupied areas of eastern Ukraine – to rotate every few months.
Kim’s decision to send North Korean troops to join Russia’s fight against Ukraine has alarmed Kyiv’s allies, who’ve warned that it risks exacerbating what is already Europe’s largest conflict since World War II. They believe the deepening cooperation between Putin and Kim could also impact the security balance in the Indo-Pacific region, where there’s mounting rivalry between China and the US.
The issue will be raised by several allies at the G-20 Summit in Brazil this week including by German Chancellor Olaf Scholz when he meets Chinese President Xi Jinping, Bloomberg previously reported. Scholz told Putin Friday in a rare phone call that the deployment of North Korean troops was a “grave escalation” of the war against Ukraine.
Scholz will press the Chinese leader at their meeting in Rio on Tuesday to use his influence over Russia and North Korea to avoid further escalation in the war, according to German officials.
The North Korean deployment shows the war is becoming globalized and Scholz and Xi will need to discuss this new dimension of the conflict, the officials said.
Worries were also raised by allies at the APEC gathering in Lima, Peru, this past week, another person said.
Xi has been the biggest benefactor to Putin and Kim in recent years, and sees both leaders as partners in pushing against the US-led world order. But his government has remained silent publicly on the dispatch of North Korean troops to Russia — a sign the Chinese president may be unhappy with the arrangement.
The Kim-Putin partnership risks adding economic pressure on China, just as Xi is bracing for potential disruption from tariffs threatened by US President-elect Donald Trump when he returns to the White House. It also undermines Beijing’s argument that the US shouldn’t have military alliances in the Indo-Pacific region.
China doesn’t “allow conflict and turmoil to happen on the Korean Peninsula” and it won’t “sit idly by when its strategic security and core interests are under threat,” Xi told US President Joe Biden at talks Saturday on the sidelines of the Asia-Pacific Economic Cooperation summit in Lima.
North Korea has so far sent more than 10,000 troops to fight alongside Putin’s army in Russia’s Kursk region, where Ukrainian forces have occupied part of the border territory since a surprise incursion in August. In return, Russia is providing money and helping North Korea increase its capabilities.
South Korea has said there’s a “high chance” that North Korea will seek cutting-edge technology transfers from Russia — including technology related to tactical nuclear weapons, intercontinental ballistic missiles, reconnaissance satellites and ballistic missile submarines.
As well as manpower, North Korea has also sent millions of rounds of artillery ammunition and other weapons to Russia. The Financial Times reported this week, citing Ukrainian intelligence, that Pyongyang has supplied long-range rocket and artillery systems to Russia.
US-China Relations
China’s leader Xi Jinping met for the last time with President Biden on Saturday, but was already looking ahead to President-elect Donald Trump and his "America first" policies, saying Beijing "is ready to work with a new U.S. administration."
During their talks on the sidelines of the annual Asia-Pacific Economic Cooperation summit in Peru, Xi cautioned that a stable China-U.S. relationship was critical not only to the two nations but to the "future and destiny of humanity."
Without mentioning Trump’s name, Xi appeared to signal his concern that the incoming president’s protectionist rhetoric on the campaign trail could send the U.S.-China relationship into another valley.
"China is ready to work with a new U.S. administration to maintain communication, expand cooperation and manage differences so as to strive for a steady transition of the China-U.S. relationship for the benefit of the two peoples," Xi said through an interpreter.
Xi, who is firmly entrenched atop China’s political hierarchy, spoke forcefully in his brief remarks before reporters. Biden, who is winding down more than 50 years of public service, talked in broader brushstrokes about where the relationship between the two countries has gone.
He reflected not just on the past four years but on the decades the two have known each other.
"We haven’t always agreed, but our conversations have always been candid and always been frank. We’ve never kidded one another," Biden said. "These conversations prevent miscalculations, and they ensure the competition between our two countries will not veer into conflict."
Biden urged Xi to dissuade North Korea from further deepening its support for Russia’s war on Ukraine. The leaders, with top aides surrounding them, gathered around a long rectangle of tables in an expansive conference room at a Lima hotel.
They had much to discuss, including China’s indirect support for Russia, human rights issues, technology and Taiwan, the self-ruled democracy that Beijing claims as its own. On artificial intelligence, the two agreed on the need to maintain human control over the decision to use nuclear weapons and more broadly improve safety and international cooperation of the rapidly expanding technology.
There’s much uncertainty about what lies ahead in the U.S.-China relationship under Trump, who campaigned promising to levy 60% tariffs on Chinese imports.
Already, many American companies, including Nike and eyewear retailer Warby Parker, have been diversifying their sourcing away from China. Shoe brand Steve Madden says it plans to cut imports from China by as much as 45% next year.
In a congratulatory message to Trump after his victory over Vice President Kamala Harris, Xi called for the U.S. and China to manage their differences and get along in a new era. In front of cameras Saturday, Xi spoke to Biden — but it was unmistakable that his message was directed at Trump.
"In a major flourishing sci-tech revolution, neither decoupling nor supply chain disruption is a solution," Xi said. "Only mutual, beneficial cooperation can lead to common development. ‘Small yard, high fence’ is not what a major country should pursue."
Biden administration officials have said they would advise the Trump team that managing the intense competition with Beijing will likely be the most significant foreign policy challenge they will face.
On Saturday, White House national security adviser Jake Sullivan said Biden had reinforced to Xi "that these next two months are a time of transition" and that the president would like to pass off the U.S.-China relationship "in stable terms" to the new administration.
Biden has viewed his relationship with Xi as among the most consequential on the international stage and put much effort into cultivating it.
Trump's "America First" Policy
Trump's "America First" policy could shift the Horn of Africa policy and shake up Mideast diplomacy on Iran.
Trump's recent election victory and the imminent return of an America First doctrine may also hamper the diplomatic spirit needed for broad agreement on divisive issues at the G20 summit in Brazil.<co: 11>G20 summit in Brazil.</
Further Reading:
BREAKING NEWS: Japan, Ukraine sign security info-sharing pact to boost cooperation - Kyodo News Plus
Biden approves Ukraine’s use of long-range missiles inside Russia for first time - The Independent
FirstFT: Biden authorises Ukraine to strike Russia with long-range US missiles - Financial Times
Geopolitical tensions simmer as Cop29 heads into second week - The National
North Korea may end up sending Putin 100,000 troops for his war - Fortune
North Korea ‘supplying Russia’ with long-range rocket and artillery systems - Financial Times
Russia launches massive drone, missile attack targeting Ukraine’s power grid - FRANCE 24 English
Trump already shaking up Mideast diplomacy on Iran - Al-Monitor
Themes around the World:
China-Politik zwischen De‑Risking und Pragmatismus
Berlin kalibriert China‑Kurs neu: China war 2025 wieder wichtigster Handelspartner; Importe €170,6 Mrd (+8,8%), Exporte €81,3 Mrd (−9,7%). Trotz Exportkontroll‑ und Abhängigkeitsdebatten steigt Druck zu Kooperation. Relevanz: Marktzugang, JV‑Modelle, Compliance, Lieferkettenrisiken.
Wage Growth Reshapes Cost Base
Spring wage talks delivered an initial 5.26% average increase, the third straight year above 5%. Stronger labor costs support domestic demand, but they also raise operating expenses, compress margins, and accelerate pressure for automation and productivity-enhancing investment.
Market diversification and local content
Thailand is actively shifting export strategy away from concentrated end markets, with over 30% of exports reliant on a few destinations. Officials are pushing India, South Asia, China and the Middle East while promoting higher local content to reduce import dependence.
Offshore Wind Supply Chains Build
Enterprise Ireland’s Propel Ireland initiative aims to strengthen domestic offshore wind innovation and supply chains as the state targets up to 37GW of offshore renewables by 2050. This creates export-oriented openings in engineering, ports, components, and project services for international partners.
Energy Shock and Stagflation
Middle East conflict has hit the UK harder than peers, with OECD cutting 2026 growth to 0.7% and lifting inflation to 4.0%. Rising gas, transport and financing costs are squeezing margins, weakening demand, and complicating pricing, investment, and sourcing decisions.
Industrial Zones and Free Zones Expansion
SCZONE and free zones remain major investment anchors, with Ain Sokhna hosting $33.06 billion of projects and public free-zone exports reaching $9.3 billion. Strong incentives and infrastructure support manufacturing and re-export strategies, but benefits depend on currency stability, energy availability, and uninterrupted trade corridors.
Logistics Shock from Middle East
Middle East tensions are disrupting Vietnam’s trade routes, pushing freight costs sharply higher and extending shipments by 10–14 days or more. Some exporters report logistics costs up 15–25%, undermining delivery reliability, margins, and inventory planning across key export sectors.
Tax and Customs Rules Simplify
Authorities introduced new tax facilitation measures, faster VAT refunds, SME incentives, and exceptional customs treatment for disrupted export shipments. These reforms should ease compliance and clearance burdens, improve liquidity, and support exporters navigating volatile regional shipping conditions and supply-chain interruptions.
China-centric trade dependence and leverage
Sanctions have pushed Iran to route over 80% of exports—especially crude—to China, creating concentrated demand and political leverage. For international firms, this increases exposure to China-linked compliance and pricing dynamics, while limiting Iran’s access to technology, finance and investment needed for stable output.
Critical Minerals Supply Chain Push
Ottawa is accelerating graphite and rare-earth financing to build non-Chinese supply chains for batteries, defence, and advanced manufacturing. Recent public commitments include about C$459 million for Nouveau Monde Graphite and C$175 million for the Strange Lake rare-earth project.
Macroeconomic Pressure from Oil
Higher oil prices are pressuring India’s rupee, inflation outlook, and growth forecasts. Recent estimates suggest every $10 per barrel increase can significantly widen the current account deficit and add inflationary pressure, affecting demand conditions, financing costs, and corporate margins.
Customs Enforcement and Compliance Costs
New customs and trade-compliance requirements are increasing friction for importers and exporters. U.S. officials criticize Mexico’s 2026 customs-law changes for stricter liability, heavier documentation demands and greater seizure powers, raising border risk, delays and administrative costs.
Russia Sanctions Sustain Compliance Risks
The UK will not follow Washington in easing Russian oil sanctions, preserving stricter enforcement despite global energy stress. Firms trading in energy, shipping, insurance, and commodities must maintain robust sanctions screening, as UK-US divergence increases compliance complexity and transaction risk.
Critical Minerals Supply Chain Push
The EU deal eliminates tariffs on Australian critical minerals and hydrogen, strengthening Australia’s position in lithium, rare earths, cobalt, nickel and uranium supply chains. It should attract downstream processing capital, long-term offtake agreements, and strategic diversification away from concentrated suppliers.
Rising shipping and fuel volatility
Middle East conflict has lifted war-risk insurance and emergency surcharges, while Vietnam raised fuel prices twice in three days under new energy-security rules. Higher transport and energy inputs compress margins, disrupt delivery schedules, and complicate fixed-price contracts across supply chains.
China-Centric Export Dependence
China absorbs the overwhelming majority of Iranian crude exports, with several reports placing the share near 90%. This concentration reinforces Iran’s economic dependence on Chinese buyers, yuan settlement and politically mediated logistics, narrowing market transparency while reshaping competitive dynamics for regional suppliers.
Energy sanctions flexibility amid Iran war
Oil-market disruption from the Iran conflict is driving temporary U.S. sanctions waivers affecting Russian and Iranian-linked shipping and crude flows. Energy-intensive manufacturers and shippers face volatile fuel prices, insurance terms, and sanctions-compliance ambiguity across trading partners.
High-Tech FDI Upgrading Manufacturing
Vietnam remains a major diversification destination for electronics and advanced manufacturing, with US$6.03 billion registered FDI in January–February and US$3.21 billion disbursed, up 8.8%. New billion-dollar projects, data centers, semiconductors, and digital infrastructure are reshaping industrial strategy and supplier opportunities.
Inflation And Tight Monetary Conditions
Urban inflation rose to 13.4% in February, while the central bank held rates at 19% for deposits and 20% for lending. Elevated financing costs, fuel-price pass-through, and delayed monetary easing will pressure consumer demand, borrowing, and investment planning.
Wage pressures and labour-market cooling
Unemployment is rising (around 5%+) while pay growth is moderating, but firms still face higher labour costs from minimum-wage increases and prior NI/employment changes. Margin pressure and skills gaps persist, influencing location decisions, automation, and service-delivery models.
Steel Protectionism Reshapes Inputs
London’s new steel strategy cuts tariff-free quotas by 60% from July and imposes 50% duties above quota, while targeting 50% domestic sourcing. Manufacturers, construction firms and importers face higher input costs, sourcing shifts, and tighter UK procurement requirements.
Execution Gap in Infrastructure
Germany’s infrastructure push is constrained less by funding than by implementation delays. Of €24.3 billion borrowed via the infrastructure special fund in 2025, ifo says only €1.3 billion became additional investment, slowing logistics upgrades and crowding business confidence.
Weak Consumption Tempers Market Demand
French household goods consumption fell 1.4% month on month in February, while growth forecasts for the first two quarters were cut to 0.2%. Softer domestic demand raises caution for exporters, retailers, and investors exposed to French consumer markets.
Fiscal Consolidation and Budget Risk
France cut its 2025 public deficit to 5.1% of GDP from 5.8%, but debt still stands at 115.6%. Tight 2026 budgeting, offsetting any new spending with cuts elsewhere, could reshape taxes, subsidies, procurement and public investment conditions.
Shadow Fleet Compliance Risks Intensify
Russian oil exports continue relying on opaque shipping networks, sanctioned intermediaries, and complex maritime services. Reports indicate more than 370 tankers and up to 215 million barrels may have fallen under recent waivers, increasing legal, insurance, payments, and reputational risks for traders and shippers.
Supply Chain Diversification Pressures
Rising geopolitical frictions, export controls and trade investigations are accelerating diversification away from China in sensitive sectors, while many firms remain deeply dependent on Chinese inputs. Businesses need China-plus-one planning, stricter traceability and scenario testing for sanctions, customs and regulatory shocks.
USMCA Review Raises Uncertainty
Negotiations over the $1.6 trillion USMCA framework have begun amid threats of withdrawal, tougher rules of origin, and tighter scrutiny of Chinese investment in Mexico. North American manufacturing, agriculture, automotive flows, and nearshoring strategies face renewed policy risk.
Fuel price intervention and export levies
To contain diesel inflation, Brasília cut PIS/Cofins on diesel (estimated R$20bn revenue loss), introduced subsidies, and imposed temporary export taxes including 12% on crude and 50% on diesel shipments. Measures reshape margins for refiners, traders, and shippers and raise policy unpredictability.
Rules-of-origin pressure in textiles
Textile exports were ~US$46.2bn in 2025 (+~6%) with a 2026 target of ~US$49bn, but firms face higher energy/transport costs and tighter tariff-policy uncertainty. Upgrading domestic weaving/dyeing capacity supports FTA rules-of-origin compliance and reduces import dependence.
Tariff-Hit Manufacturing Under Strain
Prolonged U.S. duties are hurting Canadian steel, lumber, auto parts and wood products, forcing layoffs, lower capacity use and deferred capital spending. Steel exports to the U.S. were down 50% year-on-year in December, while sectors seek safeguards against import surges into Canada.
Growth and Investment Slowdown
The Finance Ministry cut its 2026 growth forecast to 4.7% from 5.2%, citing reserve mobilization, temporary shutdowns, weaker private consumption and uncertainty affecting investment and foreign trade, all of which complicate market-entry timing and capital-allocation decisions.
IMF Program and Fiscal Discipline
Pakistan’s delayed IMF review keeps $1 billion EFF and roughly $200 million climate financing at stake, while tax shortfalls of Rs428 billion and pressure to cut subsidies, spending and state-firm losses shape currency stability, sovereign risk and investor confidence.
Data Centres Face Stricter Conditions
Australia is welcoming digital infrastructure investment but imposing national-interest conditions on data centres, including renewable power procurement, water efficiency, local jobs, and grid-cost sharing. This raises compliance expectations while giving clearer approval signals for AI and cloud investors.
Iran Conflict Raises Spillovers
Turkey’s proximity to Iran and dependence on regional trade and energy routes make the conflict a major business risk. Prolonged instability could disrupt logistics, lift insurance and freight costs, strain border commerce, and increase volatility across manufacturing, retail, and transport sectors.
Border Bottlenecks Pressure Logistics
Western land routes remain critical, yet border friction is materially constraining supply chains. Poland handled 82% of Ukraine’s fuel flows in 2025 and Gdansk about 40% of container traffic, but protests, inspections and customs delays threaten predictability and raise transit costs.
Energy Import Shock Exposure
Turkey’s near-total dependence on imported oil and gas leaves it highly exposed to Middle East disruption. Oil above $100 a barrel threatens inflation, widens the current account deficit, and lifts logistics, manufacturing, and utility costs across trade-exposed sectors and supply chains.