Inflation Moderation and Economic Stability

After peaking at 64% in 2023, inflation is projected to fall below 20% by end-2026. Economic growth continues, with GDP expanding 3.7% in early 2025. Stabilizing inflation and steady growth support a more predictable business environment for international operations and investment planning.

Trade Policy Shifts and Bilateral Agreements

A forthcoming US-Indonesia trade agreement could quadruple bilateral trade, offering tariff exemptions for Indonesian commodities and US access to critical minerals. However, the deal’s structure and alignment with industrial policy will determine whether Indonesia can achieve balanced, sustainable trade growth.

Trade Policy Uncertainty and Tariffs

Ongoing US tariff negotiations and underutilization of free trade agreements (FTAs) create uncertainty for exporters. Only 54% of eligible Thai firms use FTAs, and shifting US policies pose risks for trade-dependent sectors, requiring businesses to diversify markets and adapt strategies.

Geopolitical Uncertainty and Transatlantic Alliances

The UK’s foreign policy is challenged by unpredictable US actions and shifting global alliances. Diplomatic efforts to maintain strong US and EU ties are critical for security and economic stability, but volatility in American policy increases risks for UK business operations and investment.

Sovereign Wealth Fund and State Intervention

The Danantara sovereign wealth fund, managing $1 trillion in assets, is central to President Prabowo’s industrialization and investment agenda. While intended to boost efficiency and co-investment, increased state involvement and leadership changes have raised questions about governance, fiscal discipline, and market independence.

Regulatory Reform and Investment Climate

Recent regulatory reforms, such as risk-based licensing and automatic permit issuance, aim to streamline business processes and boost investor confidence. These changes, involving 18 ministries, are designed to reduce bureaucratic delays and improve Indonesia’s competitiveness for foreign direct investment.

Belt and Road Initiative Intensifies

China’s Belt and Road Initiative signed $213 billion in new deals in 2025, focusing on energy, metals, and infrastructure in Africa and Central Asia. This expansion strengthens China’s global economic reach and creates new opportunities and dependencies for partners.

US-Australia Alliance Deepens Amid Indo-Pacific Shifts

AUKUS and the Pax Silica coalition strengthen Australia's role in critical technology and defense supply chains. As US policy demands greater allied burden-sharing, Australia faces pressure to increase defense spending and self-reliance, influencing investment in advanced manufacturing and security-sensitive sectors.

Tech Sector Expansion Amid Global Demand

Israel’s technology sector, including AI and semiconductor equipment, is experiencing robust growth, attracting major investments like Nvidia’s new campus. This expansion strengthens Israel’s global tech leadership but also strains local infrastructure and raises competition for talent.

Political Volatility Amid Snap Elections

Prime Minister Takaichi’s snap election on February 8, 2026, introduces short-term political uncertainty. The outcome will shape fiscal, trade, and security policy, with potential impacts on regulatory stability, economic stimulus, and Japan’s international posture, affecting investor confidence and business planning.

Regulatory and Economic Reform Momentum

Recent reforms, including public-private partnerships in energy and logistics, have improved investor sentiment. South Africa’s removal from the FATF greylist and credit rating upgrades signal progress, but policy uncertainty and slow execution remain barriers to sustained investment and economic growth.

Robust Foreign Investment Inflows

Brazil attracted record foreign direct investment in 2025, totaling €71.9 billion (3.41% of GDP), driven by strong stock market performance and diversified investor interest. Sustained inflows reinforce Brazil’s position as a key emerging market destination for global capital.

Automotive Sector Faces Major Headwinds

The German automotive industry, highly reliant on US exports and global supply chains, is acutely exposed to new tariffs and trade uncertainty. Stock declines of 3-5% for major automakers reflect investor anxiety, while potential cost increases, investment delays, and supply chain disruptions threaten profitability and employment.

Domestic Reforms and Infrastructure Investment

Canada is fast-tracking $1 trillion in investments across energy, AI, critical minerals, and trade corridors, alongside tax reforms and interprovincial trade liberalization. These initiatives aim to boost competitiveness and supply chain resilience, presenting significant opportunities for global investors.

Geopolitical Risks and Regional Diplomacy

Egypt’s proximity to regional conflicts, especially Gaza and Sudan, creates persistent geopolitical risks. Diplomatic efforts focus on regional stability, but disruptions can impact trade, investment sentiment, and supply chains, especially via the Suez Canal and border regions.

EU Green Deal and CBAM Impact

The EU’s Carbon Border Adjustment Mechanism (CBAM) and green deal policies are reshaping Turkey’s export landscape. Sectors with high carbon intensity face new costs and compliance requirements, affecting competitiveness in key markets and driving urgent green transition needs.

Labor Market and Talent Dynamics

Taiwan’s advanced manufacturing sector is experiencing labor shortages and competition for engineering talent, exacerbated by global expansion. Demographic trends and workforce development are critical factors for sustaining innovation and operational resilience.

Export Competitiveness Polarization

While semiconductors and automobiles drive export growth, Korea’s steel and machinery sectors are losing ground to Chinese competitors and new regulatory barriers. This polarization demands targeted innovation and policy support to sustain balanced export growth.

Cross-border data and security controls

Data security enforcement and national-security framing continue to complicate cross-border transfers, cloud architecture, and vendor selection. Multinationals must design China-specific data stacks, strengthen incident reporting, and anticipate inspections affecting operations, R&D collaboration, and HR systems.

Regulatory Reform and Ease of Doing Business

Recent legal and regulatory reforms, including the repeal of obsolete statutes and streamlined customs and tax processes, are improving India’s business climate. These measures enhance transparency, reduce compliance costs, and support foreign investor confidence in long-term operations.

Food import inspections disrupt logistics

A new food-safety regime (Decree 46) abruptly expanded inspection and certification requirements, stranding 700+ consignments (about 300,000 tonnes) and leaving 1,800+ containers stuck at Cat Lai port. Compliance uncertainty can delay inputs and raise inventory buffers.

Disrupted Oil Exports and Geopolitical Risk

Despite sanctions, Iran remains a major oil exporter, primarily to China. However, unrest, U.S. military threats, and new tariffs have increased the risk of supply disruptions, impacting global energy prices and complicating long-term contracts and logistics for energy buyers.

Export rebound and macro sensitivity

January exports hit a record $65.85bn (+33.9% y/y) and a $8.74bn surplus, led by semiconductors. Strong trade data supports industrial activity, but also increases sensitivity to cyclical tech demand, US trade actions, and won volatility—key for treasury, sourcing, and inventory planning.

Digital Economy and Financial Innovation

Thailand is advancing digital finance, with the SEC set to regulate crypto ETFs and futures, and hosting the 2026 IMF–World Bank Meetings. These moves aim to position Thailand as a regional financial hub, attracting fintech investment but also requiring compliance with evolving regulations.

Critical minerals and rare earth push

India is building rare earth mineral corridors and magnet incentives (₹7,280 crore) to cut reliance on China (over 45% of needs). Tariff cuts on monazite and processing inputs support downstream EV/renewables supply chains, but execution and permitting remain key risks.

Energy security and transition buildout

Vietnam is revising national energy planning and PDP8 assumptions to support 10%+ growth, targeting 120–130m toe final energy demand by 2030 and renewables at 25–30% of primary energy. Grid, LNG, and clean-energy hubs shape site selection and costs.

China-Japan Economic Tensions Escalate

China has imposed new export restrictions on rare earths and dual-use goods to Japan, weaponizing resource dependency amid Taiwan-related tensions. Japanese industries face supply chain disruptions, prompting urgent diversification of critical mineral sources and G7 cooperation.

Regional Integration and Trade Bloc Leverage

South Africa leverages its role in the African Continental Free Trade Area and regional infrastructure to position itself as a gateway to Africa. This enhances supply chain diversification and trade opportunities, but also requires continued investment in logistics and regulatory harmonization.

Russia-China Strategic Economic Partnership

Over $100 billion in joint projects with China span minerals, transport, and military technology. China supplies critical components and payment systems, helping Russia bypass sanctions. This deepening partnership shifts Russia’s trade orientation and impacts global supply chains and investment flows.

Technology and Semiconductor Supply Chain Realignment

Australia's participation in the Pax Silica coalition and rare earths sector expansion positions it as a key player in trusted technology supply chains. This reduces dependence on China, attracts global tech investment, and supports the growth of domestic semiconductor and advanced manufacturing industries.

War-risk insurance and finance scaling

Multilaterals are expanding risk-sharing and investment guarantees (e.g., EBRD record financing and MIGA guarantees), improving bankability for projects despite conflict. Better coverage can unlock FDI, contractor mobilization, and longer-tenor trade finance, though premiums remain high.

CUSMA’s Uncertain Future and Renegotiation

The Canada-US-Mexico Agreement faces an uncertain future, with President Trump calling it ‘irrelevant’ and considering separate bilateral deals. The upcoming review could disrupt established trade flows, regulatory certainty, and investment strategies for firms operating in North America.

Critical minerals and battery supply chains

Canada is positioning itself as a “trusted supplier” of critical minerals, supporting mining, processing and battery ecosystems. This creates opportunities in offtakes and JV processing, but permitting timelines, Indigenous consultation, and infrastructure constraints can delay projects and cashflows.

Energy Security and Infrastructure Deals

A new 15-year gas agreement with Azerbaijan and major investments in natural gas and renewables are central to Turkey’s drive for energy security and reduced import dependency. These moves enhance industrial competitiveness and supply chain resilience.

Rare Earths Sector Expansion and Innovation

Australia’s rare earths industry is witnessing rapid growth, with new projects, ASX listings, and resource discoveries. Advances in processing and integrated extraction are positioning Australia as a key global supplier, attracting investment and reshaping supply chains for high-tech and clean energy.

Canada-China Strategic Trade Pivot

Canada’s new agreement with China lowers tariffs on Chinese EVs and secures reduced Chinese tariffs on Canadian agriculture. This shift diversifies trade but risks US retaliation, reshapes supply chains, and could attract Chinese investment in Canadian manufacturing and energy sectors.