Localisation and Supplier Upgrade Pressure

FDI firms generated around 80% of Vietnam’s exports in Q1 2026, while domestic companies remain concentrated in lower-value activities. Multinationals increasingly need stronger Vietnamese Tier-1 suppliers, making supplier development, quality systems, and technology transfer more important for resilient operations.

Regulatory Reform and Investment Climate

The new government is advancing an omnibus law and ‘super license’ to consolidate approvals within 180 days and reduce bureaucracy. If implemented effectively, reforms could improve foreign investor entry, shorten project lead times, and partially offset Thailand’s longstanding regulatory complexity.

War Risk Insurance Expands Logistics

New public-backed insurance and reinsurance mechanisms are beginning to cover transport risks including war, terrorism, sabotage, and confiscation. This reduces a major barrier for logistics operators, lowers entry friction for foreign carriers, and could gradually restore cross-border trade and reconstruction activity.

Power Costs Pressure High-Tech Manufacturing

Electricity demand from semiconductors and AI is rising rapidly, with forecasts of 9 billion kWh annual growth through 2033 and TSMC potentially exceeding 11% of Taiwan’s total consumption by 2030. Higher fuel costs and tariff adjustments could gradually erode margins for power-intensive manufacturers.

New Nickel Pricing Rules Bite

A new mineral benchmark pricing formula raises nickel cost assumptions and adds iron, cobalt, and chromium valuation, while shifting to wet-metric-ton pricing. This increases domestic ore costs, reduces arbitrage, and may pressure smelter margins, contract structures, and export pricing.

High Rates, Sticky Inflation

Brazil’s policy rate remains at 14.75%, while 2026 inflation expectations rose to 4.8%, above the 4.5% ceiling. Elevated borrowing costs are constraining investment, raising financing expenses, and pressuring consumer demand, freight, and pricing decisions across sectors.

Skilled Labor Shortages Persist

Germany still had more than 617,000 unfilled jobs at the start of 2026, with official projections showing a 440,000 worker shortfall by 2029. Persistent shortages in transport, construction, healthcare and technical fields raise operating costs and constrain expansion plans.

Defence Buildup Reshaping Industry

Canberra will add A$53 billion to defence over a decade, while AUKUS submarine and infrastructure costs have climbed as high as A$96 billion for ten years. This supports shipbuilding, drones and missiles, but may crowd public finances and tighten skilled-labour markets.

Energy Cost Volatility and Reform

Britain remains highly exposed to imported gas and wholesale power volatility, with IMF growth downgraded to 0.8% and inflation seen near 4%. Proposed electricity-market reforms and levy changes could reshape industrial costs, pricing models, and long-term investment decisions.

Tariff Regime Reconfiguration Expands

After the Supreme Court curtailed IEEPA tariffs, the administration pivoted to Sections 122, 301 and 232. Duties of 25% or 50% now shape steel, aluminum, autos and derivatives, raising landed costs and broadening compliance risk for importers and cross-border manufacturers.

Energy Shock and Import Dependence

Thailand’s heavy reliance on imported crude and fertiliser is amplifying cost pressures across industry. Authorities estimate roughly three months of oil and one month of fertiliser reserves, while prolonged disruption could cut GDP growth to 1.3% or lower and raise inflation.

Semiconductor Ecosystem Expansion

Vietnam is moving up the electronics value chain as Samsung advances discussions on chip testing and packaging and local authorities expand workforce programs. This strengthens diversification beyond China, but execution still depends on power supply, skilled labor, incentives, and policy predictability.

Resilience Gaps Affect Operations

Taiwan’s business environment faces operational risks from civil-defense, cyber, and continuity gaps under crisis conditions. Experts warn that medical readiness, emergency drills, public confidence, and grid protection remain underprepared, raising risks of labor disruption, capital flight, logistics bottlenecks, and corporate evacuation challenges.

Export Surge Amid Cost Pressures

Thailand’s March exports jumped 18.7% year on year to a record US$35.16 billion, but imports rose 35.7%, leaving a US$3.34 billion deficit. Strong external demand supports manufacturers, yet higher logistics, shipping and energy costs threaten margins and supply-chain reliability.

Rare Earths Supply Leverage

China is tightening rare earth licensing and quota enforcement while exploring additional choke points in solar equipment and battery technologies. With over two-thirds of global mine output and dominant refining capacity, disruptions can quickly hit autos, aerospace, electronics, and energy supply chains.

Critical Minerals Supply Potential

Ukraine is positioning itself as a faster-to-market source of critical raw materials for Europe, including lithium, graphite, titanium, tantalum, and rare earths. Planned privatizations and export-credit backing could integrate Ukrainian minerals into European industrial supply chains.

Energy Security and Oil Exposure

Conflict-linked disruption in West Asia and sanctions uncertainty around Russian and Iranian crude keep India exposed to oil-price, freight and inflation shocks. With over 88% import dependence, refiners, manufacturers and logistics operators face volatility in costs, sourcing and margins.

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.

Shadow Finance And Payment Barriers

Iran’s isolation from mainstream banking continues to push trade into yuan settlement, smaller regional banks, shell companies, and barter structures. Payment opacity, higher transaction costs, and enforcement risk complicate receivables, due diligence, treasury operations, and supplier onboarding for foreign firms.

Semiconductor Sovereignty Investment Surge

Tokyo approved an additional ¥631.5 billion for Rapidus, with total support expected to reach about ¥2.6 trillion by March 2027. The push to localize advanced 2-nanometre chip production strengthens supply resilience, but execution, cost and customer risks remain material.

Supply Chains Shift Toward Flexibility

Logistics providers report tariffs are driving nearshoring, delayed procurement decisions, erratic freight volumes, and wider use of bonded and Foreign Trade Zone facilities. Companies are redesigning networks around adaptability rather than stability, boosting demand for modular supply chains, diversified ports, and multi-node North American distribution footprints.

Corporate Governance Reform Deepens

Revisions to Japan’s Corporate Governance Code are expected to push companies to deploy cash more efficiently, improve board oversight, and strengthen accountability. This should support M&A, capex, and shareholder returns, while raising scrutiny on governance quality and underperforming assets.

Foreign Investment Rules Tightening

Australia remains open to strategic capital, especially from trusted partners, but investments in critical minerals, defence-related assets and infrastructure face closer national-interest scrutiny. FIRB review and security conditions can prolong deal timelines, affecting mergers, project financing and cross-border partnership structuring.

Agribusiness Export Resilience

Brazil remains well positioned in global commodities, with strong foreign interest linked to its exporter status and trade surplus support. A firmer real and sustained demand for agricultural and energy exports benefit producers, but can complicate competitiveness for manufacturers.

Autos and Industrial Base Pressure

Tariffs and CUSMA tensions are intensifying pressure on Canada’s auto and broader manufacturing base, including steel, lumber, and machinery. Businesses face margin compression, relocation risk, and weakened long-term confidence as North American production rules and industrial policy become more politicized.

BOJ Tightening and Cost Pressures

The Bank of Japan kept rates at 0.75%, but a 6-3 split and higher inflation forecasts signal further tightening risk. Core CPI for fiscal 2026 was lifted to 2.8%, implying higher borrowing costs, yen volatility, and financing repricing ahead.

Tech Resilience but Capital Selectivity

Israel’s technology sector continues attracting capital, including Iron Nation’s new $60 million fund with $50 million committed and Indiana’s $15 million partnership. Yet war-related reserve duty, funding disruptions and brain-drain concerns mean foreign investors are becoming more selective by stage and sector.

AI Electronics Supply Chain

AI-driven electronics investment is expanding in Thailand, including Doosan's 180 billion won CCL plant and growing high-end PCB capacity. Yet local sourcing remains shallow, with 46% of firms buying under 20% locally, exposing manufacturers to supplier, talent and permitting constraints.

Defense expansion and industrial demand

France plans to add €36 billion to its 2024-2030 military program, taking annual defense spending to roughly €76 billion, or 2.5% of GDP, by 2030. This boosts munitions and sovereign industrial demand, especially in aerospace, electronics, materials and logistics.

Middle East Energy Shock

Conflict-linked disruption around Hormuz is raising oil and LNG costs for an economy importing over 80% of its energy. OECD cut Korea’s 2026 growth forecast to 1.7% from 2.1%, while refiners, petrochemicals, steel and transport face higher operating costs.

Secondary Sanctions Financial Exposure

US warnings of possible secondary sanctions on Chinese banks over Iran-linked transactions underscore rising financial and geopolitical risk. Companies trading through Chinese counterparties face greater scrutiny of payment channels, energy exposure, and sanctions compliance, especially where Middle East trade and shipping are involved.

Industrial Export Hub Development

Egypt is pushing export-oriented manufacturing through investment zones and Suez Canal Economic Zone projects, including a proposed $2 billion aluminium complex in East Port Said. This strengthens regional supply-chain positioning, import substitution, and market access across Africa, Europe, and the Gulf.

China-Centric Oil Export Dependence

China remains the dominant buyer of Iranian crude, reportedly taking around 1.4-1.6 million barrels per day through teapot refiners, yuan payments, and shadow logistics. This concentration sustains Iran’s revenues but increases geopolitical exposure for energy traders and sanctions-sensitive counterparties.

Fiscal Turn Reshapes Demand

Berlin is preparing €196.5 billion of 2027 borrowing, backed by a €500 billion infrastructure fund and looser debt rules. This will support transport, digital, energy, and defense investment, creating procurement opportunities while increasing state influence over industrial priorities and capital allocation.

Macro Stabilization Under Strain

Turkey’s disinflation program remains under pressure from 30.9% March inflation, a 37% policy rate and war-driven energy costs. Higher financing costs, weaker domestic demand and policy uncertainty complicate pricing, investment planning, working capital management and consumer-facing operations across sectors.

Energy Shock Lifts Logistics

Middle East conflict and disruption around the Strait of Hormuz are pushing oil toward $100 per barrel, raising bunker fuel, diesel, and freight costs. U.S. ports report rerouting, surcharge pressure, and weaker import volumes, with broad inflationary spillovers for importers and exporters.