Mission Grey Daily Brief - December 03, 2024

Summary of the Global Situation for Businesses and Investors

The global situation remains highly volatile, with geopolitical tensions and economic challenges dominating the headlines. The Ukraine-Russia conflict continues to be a major concern, with rising military spending and intensifying hostilities threatening regional stability. Meanwhile, Syria faces escalating violence, displacing thousands and straining humanitarian efforts. In South Sudan, political instability and economic woes persist, undermining development prospects. Additionally, Kosovo-Serbia tensions flare up over a canal blast, raising concerns about regional security. Lastly, Donald Trump's proposed tariffs on BRICS nations threaten global trade dynamics, potentially impacting businesses and investors.

Ukraine-Russia Conflict: Rising Tensions and Military Spending

The Ukraine-Russia conflict remains a key focus for businesses and investors, with rising military spending and intensifying hostilities threatening regional stability. Russian President Vladimir Putin has approved a record defence budget for 2025, allocating 13.5 trillion rubles (over $145 billion) for national defence, up from 28.3% this year. This significant increase in military spending underscores Russia's commitment to prevailing in the war in Ukraine, which has drained resources on both sides.

Kyiv has been receiving billions of dollars in aid from its Western allies, but Russia's forces are bigger and better equipped, and in recent months, the Russian army has been gradually pushing Ukrainian troops backward in eastern areas. Ukrainian President Volodymyr Zelenskyy has suggested that the "hot phase" of the war could end if Ukraine is offered NATO membership. However, doubts remain about what Kyiv can expect from a new US administration led by Donald Trump, who has cast doubt on continuing Washington's vast aid for Ukraine.

European Union officials have visited Kyiv to reaffirm their unwavering support for Ukraine, but concerns persist about the future of US support once Trump assumes office in January. Trump has called on EU countries to do more, and there are fears he could force Kyiv to make painful concessions in pursuit of a quick peace deal.

Syria: Escalating Violence and Humanitarian Crisis

The situation in Syria is rapidly deteriorating, with escalating violence displacing thousands and straining humanitarian efforts. Turkey-backed militants have attacked Syria's Kurds after capturing Aleppo, further exacerbating tensions in the region. OCHA, the UN's humanitarian coordination body, is gravely concerned about the impact of fighting and violence in north-west Syria on civilians along the front line. At least dozens of civilians have been killed and many more injured, including a large number of women and children, according to local authorities. The extent of civilian casualties in many areas remains unclear due to insecurity.

Tens of thousands of people have been displaced by the recent hostilities, particularly in Idleb, Aleppo, and Hama. There are also reports of large numbers of people moving from parts of Aleppo to north-east Syria. The situation remains highly fluid, with priority needs including food, non-food items, cash, and shelter, especially as winter sets in. People's movements have been seriously disrupted due to ongoing security concerns. There are reports of people trying to flee who are trapped in front-line areas.

The UN and humanitarian partners' operations across parts of Aleppo, Idleb, and Hama remain largely suspended due to security concerns. Humanitarian workers are unable to access relief facilities, including warehouses. This has led to severe disruptions in people's ability to access life-saving assistance. The UN remains committed to staying and delivering and is working to carry out assessments and expand humanitarian response efforts as soon as possible.

South Sudan: Political Instability and Economic Woes

South Sudan, the world's newest country, continues to face political instability and economic woes, undermining its development prospects. The country, which declared independence in 2011, has not held a single election in the 13 years since the referendum that led to its secession from Sudan. An election scheduled for this month was cancelled and rescheduled for late 2026, the fourth consecutive postponement, sparking criticism from donors.

Without any prospects of democratic change, some of South Sudan's politicians and military officials are settling their differences in the street. Gunfire erupted in the capital, Juba, on Nov. 21 when security forces clashed with troops loyal to former intelligence chief Akol Kur, a powerful figure who was sacked by President Salva Kiir in October. Four people were killed in a busy central neighbourhood, reportedly the result of a power struggle between the two leaders.

Three days later, heavy gunfire was reported in a state capital, Wau, when local soldiers tried to block the arrival of a new state governor. Mr. Kiir had dismissed the former governor and appointed a new one, but a local military commander opposed the move. Tensions have been heightened by the collapse of South Sudan's oil revenue, the result of damage to an export pipeline that runs through war-ravaged Sudan. The government, which is dependent on oil for 90% of its revenue, has been unable to pay wages to most of its soldiers and civil servants for the past year. Many police and soldiers have walked off the job.

South Sudan's economy is projected to plunge 26% this year, according to the International Monetary Fund, while inflation has climbed to 121%. Three-quarters of the population need humanitarian aid because of acute food insecurity, largely driven by conflict and violence, relief agencies say.

Transparency International, an independent research group, ranks South Sudan as one of the most corrupt countries in the world. Billions of dollars in oil revenue have reportedly disappeared from public coffers. An investigative group, The Sentry, reported last month that Mr. Kiir's family has interests in<co: 1>interests in

Themes around the World:

Horn of Africa Recognition and Geopolitical Expansion

Israel’s recognition of Somaliland signals a strategic push into the Horn of Africa, aiming for access to key maritime corridors and security partnerships. This move risks regional destabilization, affecting trade routes, supply chains, and investment prospects for businesses operating across Africa and the Middle East.

Geopolitical Tensions and Security Risks

Ongoing regional conflicts and security concerns in Israel pose significant risks to international trade and investment. Heightened tensions with neighboring countries can disrupt supply chains and deter foreign direct investment, necessitating robust risk mitigation strategies for businesses operating in or with Israel.

Regulatory Complexity and Reform Pressures

Businesses face mounting regulatory and bureaucratic hurdles, with high labor and energy costs eroding competitiveness. Calls for urgent reforms—especially in tax, labor, and energy policy—are intensifying as Germany’s government struggles to deliver effective change, impacting investment decisions and operational planning.

US Sanctions and Escalating Tariffs

The US has intensified sanctions, imposing a 25% tariff on countries trading with Iran, directly impacting global supply chains and trade flows. These measures raise costs, deter investment, and complicate international partnerships, especially for India, China, and the UAE.

Humanitarian Aid Restrictions and NGO Ban

Israel’s sweeping ban on 37 international humanitarian organizations and new registration requirements have severely restricted aid flows to Gaza. This has heightened reputational and compliance risks for foreign companies and NGOs, and may impact supply chains relying on humanitarian access or local partners.

Labour Market and Immigration Policies

Changes in immigration rules and labour market dynamics post-Brexit affect talent availability and wage pressures. Restrictions on EU workers influence sectors like agriculture, healthcare, and logistics, compelling companies to adjust workforce strategies and potentially increasing operational costs.

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.

Geopolitical Security Concerns

US involvement in global security issues, including defense spending and alliances, affects geopolitical stability. These factors influence risk assessments for international investments and supply chain resilience.

Agricultural Export Reforms and Modernization

The government is implementing a five-year strategy to boost agricultural exports through farmer education, research investment, and compliance with international standards. These reforms target higher yields and value addition, but success depends on overcoming infrastructure and policy bottlenecks.

Political Stability Concerns

Political tensions and governance challenges, including corruption allegations, impact investor confidence. Political uncertainty can lead to policy shifts and social unrest, increasing country risk premiums for international businesses.

Resilience of Ukrainian Supply Chains

Despite ongoing conflict and infrastructure damage, Ukrainian ports and logistics networks have demonstrated resilience, maintaining agricultural exports and trade flows. This adaptability is vital for global supply chains and positions Ukraine as a strategic partner in food and commodities markets.

Digital Transformation Acceleration

Germany's push towards Industry 4.0 and digital infrastructure upgrades accelerates innovation but demands significant capital investment. Companies must adapt to digital workflows and cybersecurity requirements to maintain competitiveness in global markets.

Massive Economic Support and Reconstruction

International partners have agreed on a €682 billion, ten-year economic support package for Ukraine, targeting reconstruction, compensation, and reforms for EU accession. This unprecedented aid will drive infrastructure renewal and attract foreign investment, reshaping Ukraine’s postwar economy.

Environmental Standards and Export Access

Stricter environmental and sustainability requirements in global markets, such as the US ban on Vietnamese seafood, present both risks and opportunities for Thai exporters. Compliance with international standards is increasingly vital for market access and long-term competitiveness.

Nearshoring Drives Supply Chain Shifts

Mexico’s proximity to the US and resilient manufacturing sector have accelerated nearshoring, attracting investment and supply chain reconfiguration. Export growth to the US reached 9% in 2025, positioning Mexico as a strategic alternative amid global trade disruptions and China tariffs.

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.

Geopolitical Frictions and Technology Partnerships

Diplomatic disputes, such as with Taiwan, and South Africa’s assertive foreign policy stance create uncertainty for technology and industrial cooperation. Pragmatic engagement with global tech leaders is essential for advancing digital infrastructure and maintaining competitiveness in advanced manufacturing.

China's Domestic Consumption Growth

Despite external pressures, China's expanding middle class and domestic consumption offer growth opportunities for consumer goods and services sectors, attracting foreign investment focused on the Chinese market.

Infrastructure Development Initiatives

Government-led infrastructure projects aim to improve transport, logistics, and digital connectivity. These initiatives enhance supply chain efficiency and attract foreign direct investment but depend on stable political and economic conditions.

NATO Unity Threatened by US Actions

US threats to annex Greenland challenge the foundation of NATO, risking alliance fragmentation. Denmark’s security guarantees and military posture are under scrutiny, raising uncertainty for international investors and businesses reliant on transatlantic stability and defense cooperation.

AI and Advanced Technology Investments

South Korea is tripling AI spending, aiming to become a top-three global AI power. This government-led push is accelerating innovation, attracting foreign direct investment, and reshaping the tech sector, with significant implications for supply chains and talent acquisition.

USMCA Uncertainty and Tariff Risks

Ongoing US-Canada trade tensions, including Supreme Court decisions and USMCA renegotiations, create volatility for Canadian exporters. Tariff threats on key sectors like furniture and lumber impact supply chains, investment planning, and cross-border business operations.

Digital Economy and Tech Innovation

France's push towards digital transformation, including AI and cybersecurity investments, enhances its competitiveness in the global tech landscape. This fosters opportunities for international tech partnerships and influences cross-border data flows and digital trade regulations.

Trade Relations and Regional Integration

South Africa's role in the African Continental Free Trade Area (AfCFTA) and its trade relations with key partners like China, the EU, and the US shape its trade dynamics. Shifts in trade agreements and tariffs impact market access and supply chain configurations for businesses.

Trade Diversification and Market Access

Brazil opened over 200 new markets for agribusiness in 2025, reducing dependence on traditional partners. Expansion into Southeast Asia, India, and Canada is underway, but success depends on regulatory adaptation and competitive positioning.

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.

Property Sector and Domestic Demand Weakness

Despite robust export performance, China’s domestic economy faces persistent headwinds from a prolonged property slump, weak consumer demand, and local government debt. This structural imbalance may limit growth and affect sectors reliant on domestic sales, with implications for both local and foreign businesses.

Trade Diversification Efforts

Iran is actively seeking to diversify its trade partners beyond traditional Western markets, focusing on Asia and regional neighbors. This shift opens new opportunities but also requires navigating complex regional trade agreements and varying regulatory environments.

Geopolitical Tensions and Regional Stability

Turkey's strategic location between Europe and Asia makes it a focal point for geopolitical tensions, particularly involving Syria, Russia, and the Eastern Mediterranean. These tensions impact trade routes, foreign investment confidence, and regional supply chain stability, necessitating careful risk assessment for businesses operating in or through Turkey.

Energy Infrastructure Under Persistent Attack

Russian missile strikes continue to target Ukraine’s energy grid, causing widespread power outages and threatening industrial operations. The instability in energy supply poses significant risks for manufacturing, logistics, and foreign investment in affected regions.

Economic Volatility and Currency Fluctuations

Turkey faces significant economic volatility characterized by high inflation and a depreciating lira. These factors increase operational costs and complicate financial planning for international investors and companies, affecting pricing strategies, profit margins, and long-term investment decisions.

Rare Earth Export Restrictions

China has imposed bans on rare earth and dual-use exports to Japan, leveraging its dominance in critical minerals for electronics and EVs. These restrictions, triggered by diplomatic disputes over Taiwan, disrupt global supply chains and threaten manufacturing sectors reliant on Chinese materials.

Stagnant Growth and Industrial Decline

Germany's economy grew just 0.2% in 2025 after two years of recession, with industrial output still 14% below 2018 levels. Persistent weakness in manufacturing, especially automotive and machinery, and a record wave of insolvencies are undermining business confidence and investment.

Taiwan's Economic Policy Reforms

Recent reforms aimed at improving business climate and attracting foreign investment enhance Taiwan's competitiveness. These policies impact international investors' decisions and support sustainable economic growth amid regional uncertainties.

Trade Policy Liberalization and Growth

Egypt’s trade reached $107.6 billion in the first ten months of 2025, with a 19% rise in exports and a 16% drop in the trade deficit. Expanded trade agreements and customs incentives are driving export growth, market access, and investment opportunities, especially in non-oil sectors.

Labor Market Stagnation and Wage Pressure

US job growth slowed sharply in late 2025, with only 50,000 jobs added in December and unemployment at 4.4%. Hiring is concentrated in healthcare and leisure, while other sectors stagnate. Wage growth remains moderate at 3.8% annually, raising concerns about economic dynamism, consumer demand, and future cost structures.