USMCA Renegotiation and Trade Uncertainty

The 2026 review of the US-Mexico-Canada Agreement (USMCA/CUSMA) introduces significant uncertainty for Canadian exporters and investors. Rising US protectionism and threats to terminate the agreement could disrupt North American supply chains and alter market access for key sectors.

Mega-Projects and Infrastructure Investment

Saudi Arabia is reallocating capital from delayed real estate projects to logistics, tourism, and infrastructure, including giga-projects like NEOM and the Red Sea. These initiatives are central to supply chain strategies and offer significant opportunities for foreign contractors, technology firms, and financiers.

Port and Logistics System Weakness

Persistent inefficiencies in South Africa’s ports and railways, especially at Cape Town and Durban, continue to undermine export competitiveness and supply chain reliability. Despite some reforms, structural weaknesses in logistics remain a major constraint for international trade and business operations.

Private Investment Skepticism Toward Megaprojects

Despite government ambitions for nation-building infrastructure, global capital markets remain cautious due to high execution risks, uncertain returns, and climate transition challenges. Investor hesitation threatens the financing and timely delivery of major Canadian projects.

Shadow Fleet Enables Oil Exports

To circumvent sanctions and price caps, Russia employs a 'shadow fleet' of old tankers, shell companies, and non-Western insurers, maintaining oil exports above price caps. This parallel system heightens risks of regulatory breaches, insurance gaps, and environmental incidents for global traders.

Supply Chain Disruptions and Cost Increases

Tariffs and retaliatory measures threaten to disrupt integrated supply chains, particularly in sectors reliant on transatlantic flows. Increased costs, delays, and administrative burdens are expected, affecting competitiveness and profitability for UK exporters and importers.

Sanctions Enforcement and Geopolitical Risk

France has escalated enforcement of Russia-related sanctions, including high-profile maritime interdictions. This raises compliance risks for energy, shipping, and finance sectors, and signals a stricter stance on trade with sanctioned entities, impacting supply chain security.

Labour Market Reforms and Demographic Pressures

Recent labour laws extend protections to contract workers and address declining birth rates. While these reforms improve workforce stability, demographic shifts and talent shortages may constrain long-term growth and raise labour costs for international investors.

Strategic Diversification Away from U.S. Dependence

Canada is actively seeking to double non-U.S. exports by 2035, driven by repeated U.S. tariffs and trade unpredictability. This diversification strategy is reshaping investment priorities, market access, and supply chain decisions for Canadian and international firms operating in the country.

Suez Canal Disruptions and Recovery

The Gaza conflict and Red Sea security threats caused Egypt to lose $9 billion in Suez Canal revenue over two years, severely impacting global supply chains and Egypt’s foreign exchange. Gradual resumption of shipping is underway, but risks remain.

Currency Volatility and Capital Outflow Risks

The Korean won’s depreciation to levels not seen since the 2008 crisis, combined with a $350 billion US investment commitment, heightens capital outflow risks. These currency pressures complicate cross-border investments, impact foreign exchange costs, and add uncertainty to multinational business planning.

Sovereign Wealth Fund and State Enterprise Reform

The Danantara sovereign wealth fund, managing $1 trillion in assets, is positioned to finance future industries and co-invest with global partners. Plans to rationalize state-owned enterprises from 1,044 to 300 aim to enhance efficiency and governance, signaling a more modern and open investment environment.

Energy Infrastructure Under Attack

Sustained Russian strikes on energy facilities have caused widespread blackouts and damaged critical infrastructure. These attacks disrupt industrial operations, increase operational costs, and pose significant risks to supply chain reliability and business continuity.

India’s Strategic Response to US Trade Pressure

India is recalibrating its economic strategy in response to US tariffs, focusing on boosting domestic manufacturing, attracting FDI, and diversifying export markets. The 2026 Union Budget emphasizes capital expenditure, fiscal discipline, and incentives for manufacturing to position India as a resilient, long-term investment destination.

Private Sector Expansion and Economic Reform

Egypt aims for the private sector to account for over 70% of total investment by 2030, up from 65% currently. Structural reforms focus on limiting state spending, enhancing transparency, and fostering a competitive business environment for international investors.

Low Growth Outlook Amid Fiscal Constraints

The IMF forecasts modest GDP growth of 1.4% in 2026, constrained by domestic structural issues and global risks. Fiscal vulnerabilities limit policy response capacity, making South Africa’s recovery fragile and heightening the need for increased investment and productivity improvements.

Regulatory Uncertainty and Compliance Burden

Ambiguous and shifting Chinese export restrictions create compliance challenges for Japanese and multinational firms. Unclear definitions of dual-use items and opaque licensing processes increase operational risks and legal exposure for international business.

New Capital City (IKN) Investment Momentum

The IKN project continues to attract new investors, with recent agreements covering culinary, commercial, and office developments. This signals growing business confidence in IKN’s role as a future economic hub, with implications for real estate, infrastructure, and supporting industries.

Central Bank Independence Under Scrutiny

Concerns over Bank Indonesia’s independence have intensified following the nomination of President Prabowo’s nephew as deputy governor. Market perceptions of political influence are impacting the rupiah and investor confidence, making institutional integrity a critical factor for macroeconomic stability.

Labor Market and Immigration Policy Uncertainty

US labor market tightness and evolving immigration policies continue to affect talent mobility and operational planning. Businesses face challenges in workforce recruitment, retention, and compliance, with implications for productivity and international assignments.

Declining Foreign Investment and Policy Uncertainty

Foreign direct investment dropped 82% year-on-year, reflecting high taxes, inconsistent regulation, and bureaucratic inefficiencies. The Special Investment Facilitation Council (SIFC) aims to streamline approvals, but investor confidence remains fragile, impacting long-term capital flows and supply chain decisions.

Moderate Economic Growth, High Inflation

Brazil’s economy is projected to grow around 1.7% in 2026, with inflation remaining high at 12-12.75%. Fiscal stimulus and strong agriculture support growth, but high interest rates and external risks require cautious planning for investment and supply chain strategies.

Economic Reform and Investment Momentum

Recent reforms, improved energy reliability, and enhanced infrastructure have strengthened South Africa’s economic outlook. The country has exited the FATF grey list and received a credit rating upgrade, attracting renewed interest from global investors and supporting capital inflows.

Agricultural Export Access and Resilience

China’s tariff cuts on canola, peas, and seafood restore access to a market worth billions for Canadian farmers. The agreement alleviates pressure from previous trade disputes, but ongoing geopolitical risks and market concentration remain key concerns for agri-food exporters.

Eastern Economic Corridor Bottlenecks

Land and zoning constraints in the Eastern Economic Corridor (EEC) have delayed major industrial projects, prompting urgent regulatory reforms. The government is also considering opening new regions for investment, which could reshape the industrial landscape and supply chain dynamics.

Activation of EU Anti-Coercion Instrument

France is leading calls to activate the EU’s anti-coercion instrument in response to US economic pressure. This unprecedented move could trigger retaliatory trade measures, restrict US firms’ access to EU markets, and reshape the legal and operational environment for international businesses.

Energy Security and Diversification Drive

Major investments in natural gas, renewables, and nuclear projects are underway, including Sakarya Gas Field expansion and offshore drilling in Somalia. Partnerships with global energy firms and increased domestic production aim to reduce import dependency and stabilize energy costs for industry.

US-China Trade Tensions Escalate

The US has imposed a 25% tariff on countries trading with Iran, directly targeting China, Iran’s largest oil buyer. This move risks reigniting the US-China trade war, disrupting global supply chains, and increasing costs for multinational businesses. China’s response and supply chain rerouting are already evident, with US-China trade down 28-38% in 2025 and Southeast Asia gaining share.

Green Technology and Industrial Innovation Push

Germany is investing in green hydrogen, battery technology, and renewable energy, including a €46 million grant for sodium-chloride battery production. These efforts are designed to support the energy transition, industrial resilience, and supply chain independence, but face challenges from high costs and slow progress.

Gold Reserves Offset Sanctions Impact

Russia’s gold holdings, now 43% of reserves, have surged in value by $216 billion since 2022, offsetting losses from frozen Western assets. This financial buffer supports Russia’s war effort and complicates the effectiveness of sanctions, influencing global reserve management strategies.

Strategic Partnerships and Economic Security

Japan is deepening strategic partnerships with the EU, Italy, and India, focusing on critical minerals, AI, and defense cooperation. These alliances aim to de-risk supply chains, foster innovation, and reinforce Japan’s role in Indo-Pacific and global economic security frameworks, offering new opportunities for international investors.

Selective Openness and Strategic Free Trade Zones

The launch of Hainan as the world’s largest free trade port exemplifies China’s approach to selective openness—attracting global capital and technology while maintaining central control. Such initiatives offer new opportunities but also reinforce the need for careful navigation of regulatory and political boundaries.

Shifting Global Trade Power Dynamics

Despite US tariffs, China posted a record $1.19 trillion trade surplus in 2025 by expanding exports to Africa, Southeast Asia, and Latin America. This shift signals a gradual erosion of US trade dominance and compels international businesses to reassess market access and competitive positioning.

Populism, Protectionism, and Social Strains

Rising energy costs, fragmented grids, and contentious trade policies are fueling protectionist sentiment and social unrest in France. These trends heighten regulatory unpredictability, complicate cross-border operations, and require careful stakeholder engagement for international investors and supply chain managers.

Fed Independence Faces Political Threats

The US Federal Reserve is under unprecedented political pressure, with DOJ subpoenas against Chair Powell amid Trump administration efforts to influence rate policy. Erosion of central bank independence risks market volatility, higher inflation, and diminished investor confidence in US assets.

Energy Transition and Nuclear Expansion

South Korea’s commitment to build two new nuclear reactors by 2038 reflects a strategic pivot toward clean energy and carbon neutrality. This policy shift impacts energy-intensive industries, investment in renewables, and long-term infrastructure planning.