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:

Hamas Disarmament and Security Dilemmas

The demilitarization of Hamas remains a central, unresolved issue. US and Israeli insistence on full disarmament is met with resistance, and the lack of clear enforcement mechanisms heightens the risk of renewed conflict, affecting supply chains, insurance costs, and investment planning.

Privatization and SOE Reform Acceleration

The government is fast-tracking privatization of loss-making state-owned enterprises, starting with a 75% stake in PIA and transferring PNSC to military-run NLC. These moves, driven by IMF requirements, aim to reduce fiscal burdens but raise questions about transparency and sectoral efficiency.

EU Accession Progress and Challenges

Ukraine’s path toward EU membership is marked by significant legal and institutional reforms, but faces hurdles from internal politics and EU member state vetoes. The accession process shapes regulatory alignment, market access, and long-term investment prospects.

Fiscal Policy, Debt, and Bond Market Concerns

Germany’s fiscal expansion—over €850 billion in new debt planned this decade—has raised the debt-to-GDP ratio toward 90%. Bond markets are signaling concern, with risk premiums on German Bunds rising and capital shifting to other EU countries, reflecting doubts about long-term fiscal sustainability.

CUSMA Renegotiation and Trade Bloc Realignment

With Canada’s exports to the U.S. at a 30-year low, the upcoming CUSMA renegotiation is pivotal. Outcomes could range from a complete overhaul to no agreement, pushing Canada to accelerate trade diversification with the EU, Asia, and the Global South, impacting long-term investment strategies and supply chain resilience.

Structural Economic and Regulatory Reforms

South Korea’s 2026 economic strategy emphasizes structural reforms, regulatory streamlining, and industrial innovation. These efforts aim to sustain growth, improve the investment climate, and address underlying challenges such as low productivity, labor market rigidity, and demographic shifts.

Digital Finance and Stablecoin Experimentation

Pakistan’s partnership with World Liberty Financial, linked to the Trump family, on a dollar-pegged stablecoin signals a bold shift toward digital finance. The initiative aims to streamline remittances and attract blockchain investment, but raises regulatory, ethical, and geopolitical concerns.

Regulatory Focus on Foreign Investment

Australia is tightening scrutiny of foreign investment, particularly in strategically sensitive sectors like critical minerals. Recent government actions to limit Chinese capital in key projects reflect heightened regulatory risk and a more cautious approach to foreign ownership, impacting cross-border M&A and joint ventures.

Infrastructure and Logistics Modernization

Investment in logistics and infrastructure is accelerating, with Mexico’s 3PL market projected to grow from $14.4 billion in 2024 to $26.8 billion by 2033. Nearshoring, e-commerce, and public works like the Tren Maya drive demand for advanced warehousing, cross-border transport, and digital supply chain solutions.

Sharp Decline in Oil Revenues

Russia’s oil and gas revenues fell 24% in 2025 to 8.48 trillion rubles, the lowest in five years. This revenue slump, driven by sanctions, lower prices, and Ukrainian attacks, undermines fiscal stability and constrains government spending.

Domestic Infrastructure and Talent Pressures

Relocation of manufacturing and increased overseas investment may strain Taiwan’s domestic infrastructure and talent pool, potentially impacting innovation capacity and competitiveness at home, while intensifying the need for workforce development and policy adaptation.

Border Conflict Disrupts Stability

The recent Thai-Cambodian border conflict led to over 100 deaths and half a million displaced, disrupting trade and supply chains. Fragile ceasefires and ongoing tensions threaten cross-border commerce, investor confidence, and regional logistics operations.

Infrastructure Investment and Public Finance

Vietnam is launching a new wave of infrastructure projects, targeting $5.5 billion in foreign loans for 2026 and up to $38 billion by 2030. While these investments aim to support growth and connectivity, persistent disbursement delays, land clearance issues, and public debt management remain key operational risks.

Regional Geopolitical Tensions and Iran’s Role

Iran’s support for Hamas and other non-state actors continues to threaten Israel’s security and regional normalization efforts. The risk of escalation with Iran or its proxies remains high, impacting energy infrastructure, cross-border trade, and investor sentiment.

Major Infrastructure and Digital Expansion

India’s infrastructure financing is integrating with global capital markets, focusing on green, resilient, and tech-enabled projects. Data center capacity doubled in 2025, with projections to triple by 2030, supporting digital transformation and robust supply chain logistics.

US-EU Trade Tensions Escalate

The US has imposed new tariffs of up to 25% on German and European goods, citing geopolitical disputes. This has led to a sharp decline in German exports to the US, especially in automotive and steel, and threatens supply chain stability and investment planning.

Geopolitical Risks in East Asia

Rising military tensions over Taiwan and the Senkaku Islands, with Chinese naval activity and Japanese security commitments, increase the risk of regional conflict. This instability directly affects trade, investment flows, and the strategic calculus of multinational firms operating in Asia.

State Intervention and Subsidy Expansion

The German government, with EU approval, is expanding subsidies for new gas-fired power plants and industrial electricity costs. While aimed at supporting industry, these interventions raise concerns about long-term competitiveness, fiscal sustainability, and potential market distortions within the EU.

Renewable Energy Expansion and Export Plans

Eskom is expanding its renewable energy portfolio, aiming to integrate nuclear and gas by 2030 and sell excess capacity to neighboring countries. This transition supports industrialization, energy security, and new export opportunities for South African businesses.

China-Pakistan Economic Corridor 2.0 Expansion

Pakistan and China are launching CPEC 2.0, prioritizing industry, agriculture, mining, and infrastructure. The initiative aims to boost connectivity and investment, but security threats and regional instability remain significant obstacles to realizing its full economic potential.

Societal Strains: Water, Energy, and Labor

Chronic water shortages, energy mismanagement, and rising unemployment compound Iran’s economic crisis. These systemic issues undermine productivity, increase social risk, and pose long-term challenges for sustainable business operations.

Export Growth and Trade Diplomacy

Turkey targets $410 billion in exports for 2025, with significant growth in both goods and services. The government is actively negotiating with the EU to update the Customs Union, aiming to further integrate with global markets and strengthen trade resilience amid rising global protectionism.

Trade Policy And FTA Leverage

Vietnam actively expands and upgrades FTAs, targeting 8% export growth and a $23 billion trade surplus in 2026. FTAs with the US, EU, CPTPP, and RCEP drive market access, regulatory reforms, and higher standards, fostering export diversification and resilience against global trade tensions.

Sustainability Standards and Market Access

Environmental regulations and sustainability standards are increasingly shaping Brazil’s export competitiveness. The end of the Soy Moratorium raises deforestation concerns, potentially threatening market access, especially in the EU, where new trade deals include strict environmental provisions.

Global Energy Market Realignment

Sanctions, falling oil prices, and Ukrainian attacks have pushed Russian oil exports to their lowest since 2022, with Urals crude dropping below $35 per barrel. Russia’s market share in India and China is shrinking, and clandestine shipping is rising, increasing operational risk for energy traders.

Sanctions and Export Controls Expand

The US has expanded outbound investment regulations and intensified sanctions enforcement, especially targeting technology, energy, and strategic sectors. These measures complicate compliance and restrict market access for international firms.

Currency Volatility and Baht Strength

The Thai baht appreciated over 8% in 2025, harming export competitiveness and squeezing margins for manufacturers. Persistent currency volatility, driven by capital flows and digital assets, complicates pricing, hedging, and investment planning for international businesses operating in Thailand.

US Tariffs and Trade Tensions

The imposition of US tariffs, particularly on automotive and manufactured goods, is straining South Africa’s export sectors. These measures threaten jobs, especially in manufacturing, and create uncertainty for investors reliant on US market access, complicating trade and investment strategies.

Resilience Amid US Tariff Pressures

Despite 50% tariffs imposed by the US in 2024, Brazil’s exports reached a record US$348.7 billion in 2025. Diversification toward China, Argentina, and new markets offset US losses, but ongoing negotiations and potential tariff reimpositions remain a risk for exporters.

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.

Disrupted Grain Export Corridors

Russian attacks on Ukrainian ports have caused a 47% drop in agricultural exports year-on-year, severely impacting global supply chains. The Black Sea corridor remains vital but operates under constant threat, affecting food security and trade flows worldwide.

Infrastructure Bottlenecks and Investment Gaps

Canada’s slow infrastructure planning and delivery, complex regulatory environment, and aging assets hinder competitiveness. The national infrastructure assessment highlights urgent needs in housing, transportation, and energy, affecting business growth and supply chain reliability.

Japan’s Strategic US Alignment Deepens

Amid regional uncertainty, Japan is accelerating defense cooperation and supply chain realignment with the US, including a ¥80 trillion ($550 billion) investment plan. This shift is intended to reduce dependence on China and bolster economic and security resilience.

US Tariffs and Secondary Sanctions Expansion

The US has imposed a 25% tariff on all countries trading with Iran, escalating secondary sanctions. This policy directly threatens global supply chains, deters investment, and forces international companies to reassess exposure to both Iran and its major trading partners.

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.

Asian Markets Dominate Russian Energy

With EU demand collapsing, Russia’s energy exports to China and India surged but now face volatility as India reduces imports under Western pressure and China negotiates deeper discounts. This shift exposes international firms to price swings and evolving regulatory risks in Asian markets.