Investor Confidence Still Fragile

South Africa fell five places to 12th in Kearney’s developing-market investment ranking as concerns persist over governance, infrastructure, logistics, and policy delivery. Large headline pledges contrast with modest realized inflows, reinforcing caution around project execution and medium-term returns.

IMF-Driven Fiscal Tightening

Pakistan’s IMF programme remains the core policy anchor, with budget talks centered on a Rs15.2-15.6 trillion tax target and possible additional IMF funding. Businesses face tighter taxation, subsidy restraint, and slower public spending, shaping demand, pricing, and compliance costs across sectors.

Competitiveness and Investment Leakage

Germany is struggling to retain private capital as firms increasingly invest abroad; reports cite net direct investment outflows above €60 billion in 2024. High regulation, labor costs, and weak returns are undermining domestic expansion, supplier footprints, and international investment confidence.

US Tariffs on Exporters

New US tariff measures are offsetting the usual benefits of a weak yen for Japanese exporters, especially autos, steel and industrial goods. Analysts estimate profits are already under pressure, with investment, hiring and North America supply-chain localization decisions becoming more urgent.

Trade Flows Shift to Third Countries

US import demand is being rerouted from China toward Mexico, Vietnam, Taiwan, India, and other suppliers rather than disappearing. Taiwan alone generated a $21.1 billion February goods deficit with the US, underscoring new concentration risks in semiconductors, electronics, and transshipment-sensitive supply chains.

EU Trade Deal Market Opening

The newly concluded EU-Australia free trade agreement covers €89.2 billion in annual trade and removes tariffs on most goods, including critical minerals. It should improve market access and investment flows, though parliamentary ratification and agricultural sensitivities may delay full business benefits.

Export Competitiveness Under Logistics Strain

Disruption around the Strait of Hormuz and Red Sea is lifting freight, insurance, and inventory costs for Thai exporters. Some reports indicate logistics costs are up more than 30% year on year, with export growth forecasts reduced to 0-1% in 2026.

Non-Oil Export Expansion Accelerates

Saudi non-oil exports reached a record SR624 billion in 2025, up 15%, with their share of total exports rising to 44%. Growth in services, re-exports, machinery, fertilizers, and food signals broader manufacturing and trade diversification opportunities beyond hydrocarbons.

Tourism Access Diversification Improves

Solomon Airlines’ new twice-weekly Brisbane–Santo service and Qantas’ addition of 35,500 seats on Brisbane–Port Vila in 2026 improve visitor access beyond cruise arrivals. Stronger air connectivity supports destination resilience, multi-island packaging, workforce mobility, and recovery in hospitality and tourism supply chains.

Corporate Governance and M&A Shift

Japan’s M&A market is becoming more active, with deal value reportedly reaching $400 billion last year, but new METI guidance may give boards greater latitude to resist bids. This creates both opportunity and uncertainty for foreign investors, private equity, and cross-border acquisitions.

External financing and reform

Ukraine’s fiscal stability remains tightly linked to EU, IMF and World Bank disbursements tied to reforms. Recent legislation unlocked €2.7 billion, but missed benchmarks still threaten billions more, directly affecting sovereign liquidity, public procurement, reconstruction spending and payment reliability.

Household Debt Depresses Demand

Household debt reached 12.72 trillion baht, or 86.7% of GDP, as borrowing shifts toward daily consumption and bank lending contracts. Weak purchasing power, tighter credit, and rising reliance on informal finance will weigh on domestic sales and SME payment capacity.

Energy market integration push

Legislation on electricity-market integration, renewables permits and energy liberalization is advancing Ukraine’s alignment with the European market. This supports future cross-border power trade and investment, but implementation remains vulnerable to war damage, delayed funding and regulatory slippage during accession-linked reforms.

War Economy Weakens Growth

Russia’s civilian economy is losing momentum as defense spending distorts resource allocation. GDP fell 1.8% year-on-year in January-February, Q1 contraction is estimated near 1.5%, and the budget deficit reached 4.58 trillion rubles, increasing fiscal and operating risks for businesses.

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.

External Financing And Reserve Stress

Foreign-exchange pressures remain acute as Pakistan faces roughly $19.4 billion in FY26 external financing needs, a $1.3 billion Eurobond repayment, and repayment of about $3.5 billion to the UAE. Reserve volatility could disrupt import financing, currency stability, and investor confidence.

Export Competitiveness Under Cost Pressure

Rising energy, transport, and financing costs are squeezing Turkish exporters even as exchange-rate management limits abrupt currency adjustment. Businesses using Turkey as a production base should watch margin compression, supplier renegotiations, and sector-specific resilience in price-sensitive industries.

Franco-European Defense Integration Deepens

France is accelerating joint European programs including SAMP/T NG air defense with Italy, while reassessing delayed projects such as the Franco-German tank and Eurodrone. For international suppliers, this means opportunities in European consortia but also procurement complexity and localization demands.

Judicial Reform and Legal Certainty

Judicial reform is undermining confidence in contract enforcement, commercial dispute resolution and regulatory predictability. Lawmakers are already considering corrective changes after concerns that inexperienced judges and shorter procedures weakened business confidence, while surveys show rule-of-law concerns rising among the main obstacles to operating and investing in Mexico.

Domestic Deleveraging Demand Drag

Tighter household debt controls and mortgage renewal restrictions are part of a broader deleveraging push, with authorities targeting household loan growth of 1.5% or less. While improving financial stability, weaker property activity and consumer demand could soften domestic sales, logistics demand, and business sentiment.

Ukrainian Strikes Disrupt Export Infrastructure

Drone attacks on Primorsk, Ust-Luga and other facilities have intermittently halted a large share of Russia’s oil export capacity. Reuters-based estimates put disrupted capacity near 40%, increasing supply-chain volatility, rerouting costs, and uncertainty for buyers, refiners, and logistics providers.

China-Driven Export Dependence

Brazil’s exports to China reached a record US$23.9 billion in Q1 2026, with crude oil exports to China surging 122% and accounting for 57% of Brazil’s oil shipments. Strong demand supports exporters, but concentration raises vulnerability to Chinese policy shifts.

Energy Import Shock Exposure

Pakistan sources up to 90% of its oil from the Gulf, leaving it highly vulnerable to Middle East disruption. Fuel prices have surged, inflation is rising, and imported energy costs threaten manufacturers, freight operators, and trade-intensive sectors through higher input and transport expenses.

China Exposure and Strategic De-risking

German leaders are pushing tougher foreign investment protection, local-content rules and wider trade diversification as dependence on China, Russia and the US is reassessed. Businesses should expect stricter screening, supply-chain reconfiguration and greater emphasis on European sourcing in strategic sectors.

Policy Activism Raises Execution Risk

The government is increasingly using quotas, export duties, subsidy adjustments, and interventionist industrial measures to manage fiscal and strategic pressures. For international businesses, frequent policy recalibration raises compliance burdens, contract uncertainty, and the need for stronger scenario planning and local stakeholder management.

US Metal Tariffs Escalate

New U.S. rules now apply 25% tariffs to the full value of many steel, aluminum, and copper-based products, sharply increasing costs for Canadian manufacturers. Companies report cancelled orders, suspended forecasts, and potential production shifts, undermining cross-border supply chains and investment decisions.

Automotive Base Under Transition

Thailand’s auto industry faces simultaneous disruption from high energy costs, expiring EV schemes, softer bookings, and intense Chinese EV competition. Yet EV and electronics investment remains strategic, making regulatory clarity and supply-chain adaptation critical for manufacturers and component suppliers.

Labor shortages and migration friction

Germany still faces structural labor shortages, yet migration and repatriation debates risk discouraging skilled foreign workers. Tighter rhetoric and administrative frictions could worsen shortages in healthcare, technical trades, and industry, increasing hiring costs and constraining operational scaling.

Rupiah Weakness and Fiscal Strain

The rupiah touched roughly 17,090 per dollar, prompting central bank intervention, while budget pressures from subsidies, debt service, and flagship programs threaten wider deficits. Currency volatility and potential fiscal tightening could raise financing, import, and operating costs for foreign firms.

Port and Freight Strains

U.S. gateways are seeing softer container throughput alongside rising transport friction. February volumes fell 4.2% year on year to 1.95 million TEU, while Southern California ports posted March declines, reflecting tariff uncertainty, fuel surcharges, capacity constraints, and less predictable shipping schedules.

Manufacturing Faces Export Squeeze

Indonesia’s manufacturing PMI fell sharply to 50.1 in March from 53.8 in February as export orders softened, output contracted, and supply disruptions raised costs. International firms should expect pressure on margins, hiring, production schedules, and supplier reliability in trade-exposed sectors.

Export Deregulation and Faster Licensing

New trade regulations effective 1 April simplify export rules for tin, oil and gas, coal, and selected agricultural goods, removing some permit requirements and sanctions. Expanded electronic licensing through the national single window should reduce administrative delays and improve shipment efficiency.

Weak Growth with Sticky Inflation

Mexico faces a weaker macro backdrop as analysts cut 2026 GDP growth expectations toward 1.4%-1.5% while inflation expectations climbed to about 4.2%. Banxico’s surprise rate cut to 6.75% and peso depreciation toward 17.9-18.1 per dollar increase uncertainty for pricing, financing, consumer demand and imported input costs.

Delayed Gaza reconstruction pipeline

A proposed eight-month Hamas disarmament process has become the gatekeeper for Gaza reconstruction. With $7 billion reportedly pledged but implementation delayed, construction, engineering, aid logistics, and cross-border commercial opportunities remain frozen and highly contingent on security compliance.

Energy Import Dependence Risks

Higher oil and gas costs, petroleum import financing needs, and Egypt’s shift toward greater gas import dependence are increasing external vulnerability. Energy-intensive sectors face margin pressure, while manufacturers and logistics operators remain exposed to fuel pricing, power costs, and supply interruptions.

Ports expansion faces legal delays

Brazil is advancing major port investments, including Santos’ STS10 terminal, expected to lift local container capacity to 9 million TEUs annually. Yet auction-model disputes and litigation risk across 12 port projects may delay concessions, complicating trade flows, terminal access and infrastructure planning.