Mission Grey Daily Brief - December 13, 2024
Summary of the Global Situation for Businesses and Investors
The global economy is facing multiple challenges that could impact businesses and investors. Escalating tensions between the US and China are threatening regional stability and disrupting global supply chains. In Russia, the US is considering further sanctions on energy exports, which could impact the global oil market. Myanmar's economy is expected to contract due to floods and ongoing conflict, while South Korea's political crisis has raised concerns about regional stability. These developments highlight the need for businesses and investors to closely monitor geopolitical risks and adapt their strategies accordingly.
US-China Trade Tensions and the Impact on Global Supply Chains
The rising tensions between the US and China are disrupting global supply chains and threatening regional stability. China's restrictions on the sale of vital drone components to companies in the US and the EU that supply parts to Ukraine could hinder Ukraine's war effort. This move is seen as a response to US restrictions on the sale of high-bandwidth memory chips and semiconductor equipment to China. The broader reach of these laws enables China to potentially choke global access to critical components, including materials like rare earths and lithium that are essential for various industries.
Namibia, which relies heavily on China and South Africa for trade, investment, and macroeconomic stability, is particularly vulnerable to these disruptions. A slowdown in Chinese export momentum due to US tariffs could dampen demand for Namibian commodities, leading to reduced export revenues and increased commodity price volatility. South Africa's exposure to weaker Chinese demand could also have indirect consequences for Namibia.
Myanmar's Economic Challenges
Myanmar's economy is expected to contract by 1% in the current fiscal year, according to the World Bank. This downgrade is due to severe floods and the ongoing conflict that has disrupted production and supply chains. The manufacturing and services sectors are projected to contract, and agricultural production is likely to drop due to flooding. Inflation is expected to remain high, and food prices have increased significantly.
The expanding civil war has engulfed more than half of Myanmar's townships and forced millions of people from their homes. The UN special envoy for Myanmar has warned that the country is in crisis, with escalating conflict, out-of-control criminal networks, and unprecedented levels of human suffering.
South Korea's Political Crisis and Regional Stability
South Korea's political crisis, triggered by President Yoon Suk Yeol's botched attempt to impose martial law, has raised concerns about regional stability. North Korea, which regularly targets the South Korean government in its state media, has broken its silence on the crisis, accusing Yoon of a "fascist dictatorship" and suggesting that North Korea was the reason behind Yoon's alarming action.
The short-lived martial law has plunged Asia's fourth-largest economy into political chaos, sending shockwaves through diplomatic and economic fronts. Yoon is being investigated for insurrection, a crime that carries the death penalty. The power vacuum in the country and uncertainty over who is in charge of the army have raised concerns that North Korea might try to exploit the situation.
Potential Sanctions on Russian Energy Exports and the Global Oil Market
The US is considering further sanctions on Russian energy exports, which could significantly impact the global oil market. The US Treasury Secretary, Janet Yellen, has signalled that the US is eyeing new restrictions on Russian energy exports, which have been a key revenue source for the Kremlin's war chest.
The global oil market is well-supplied, with low prices and reduced demand. Analysts at Macquarie are forecasting a "heavy surplus" next year due to non-OPEC supply growth and below-trend demand growth. This softness in the global oil market creates an opportunity for the US to take further action against Russia without significantly impacting global oil prices.
In response to the potential new oil sanctions, a Kremlin spokesman, Dmitry Peskov, has stated that the outgoing Biden administration will leave a "difficult legacy" in US-Russia relations. The US has been tightening its noose on Russian energy revenues, with the sanctioning of Gazprombank, the last major Russian financial institution exempt from such restrictions.
These developments highlight the complex interplay between geopolitical tensions, energy markets, and global supply chains. Businesses and investors should closely monitor these developments and assess their potential impact on their operations and investments.
Further Reading:
A key pillar of Russia's wartime economy could soon be taking another hit - Business Insider
Myanmar's economy to shrink as floods compound crisis, says World Bank By Reuters - Investing.com
North Korea breaks silence on South Korean martial law crisis - The Independent US
Taiwan demands that China end its military activity in nearby waters - The Independent
Themes around the World:
US–Taiwan security funding uncertainty
Taiwan’s proposed multi‑year defence budget and large US arms purchases face domestic legislative bottlenecks, risking delivery delays. For investors, this increases tail-risk volatility, influences sovereign and counterparty risk pricing, and may affect project timelines in strategic sectors.
Energy transition: nuclear plus renewables
Seoul plans two new nuclear reactors by 2038 alongside renewables to cut coal/LNG reliance, responding to strong public support. This reshapes power-price trajectories and grid investment needs, influencing energy-intensive manufacturing costs and long-term decarbonization compliance.
EU market access with green compliance
An India–EU FTA conclusion and stricter EU climate/traceability tools (e.g., CBAM-type reporting) increase both access and compliance burdens for exporters in steel, aluminum, chemicals and textiles. Firms should invest in emissions data, auditing, and supplier traceability.
Water security and municipal failures
Urban and industrial water reliability is deteriorating amid aging infrastructure and governance gaps. Non-revenue water is about 47.4% (leaks ~40.8%); the rehabilitation backlog is estimated near R400bn versus a ~R26bn 2025/26 budget, disrupting production, hygiene, and workforce continuity.
Dunkirk “Battery Valley” logistics advantage
Northern France is consolidating a “Battery Valley” around Dunkirk/Bourbourg with port and multimodal links, plus grid access near Gravelines nuclear plant. This can lower inbound materials and outbound cell transport costs, influencing site selection and supply-chain routing.
Digital trade and data transfer rules
Kesepakatan transfer data lintas negara RI–AS dalam ART menegaskan aliran data dengan perlindungan UU PDP No.27/2022, larangan pemaksaan alih teknologi/kode sumber, serta komitmen moratorium bea transmisi elektronik. Ini mempengaruhi strategi cloud, penempatan data sensitif, audit kepatuhan, dan negosiasi vendor TI global.
Cyber resilience as supply-chain risk
Recent disruption highlighted by the Jaguar Land Rover cyber incident continues to shape operational risk expectations. Firms operating in the UK should strengthen vendor security, incident response, and business continuity to protect manufacturing output, logistics flows, and customer delivery commitments.
Ports upgrades and maritime competitiveness
Karachi launched modern bunkering with Vitol, targeting 500k–600k tons annually and 70–100 operations monthly, improving turnaround. Gwadar airport/free-zone incentives and highways expand options. Benefits depend on security and governance, but could lower logistics friction.
FX liquidity and rupee volatility
External debt servicing and episodic reserve drawdowns keep FX liquidity tight, raising risks of delayed import payments, profit repatriation frictions and higher hedging costs. Firms should stress-test PKR moves, secure confirmed LCs, and diversify funding sources and invoicing currencies.
Mega logistics buildout: Land Bridge
The THB990bn ‘Land Bridge’/Southern Economic Corridor plan could tender within four years under a PPP Net Cost model, linking Andaman and Gulf ports plus rail/motorway. If executed, it reshapes regional routing, distribution footprints and industrial-site valuations across Thailand.
Logistics and labor disruption risk
US port throughput remains vulnerable to labor negotiations and regulatory constraints, amplifying shipment lead-time uncertainty. Any East/Gulf or West Coast disruptions would quickly cascade into inland transport, retail inventories, and just-in-time manufacturing, raising safety-stock and premium freight costs.
EU integration regulatory convergence
EU accession-driven reforms continue to reshape regulation, competition policy, and compliance expectations. For investors, convergence improves long-term market access and standards alignment, but adds near-term legal change risk, documentation burdens, and stricter enforcement in regulated sectors.
US–China trade realignment pressure
South Africa is navigating rising US trade frictions, including 30% tariffs on some exports and lingering sanctions risk, while deepening China ties via a framework/early-harvest deal promising duty-free access. Firms should plan for rules-of-origin, retaliation and market diversification.
MSCI downgrade and market access
MSCI flagged Indonesia’s equity market “investability” risks, freezing index changes and threatening a downgrade. Authorities raised minimum free float to 15% and discussed disclosure reforms. Persistent volatility can raise funding costs, complicate exits, and deter portfolio and FDI inflows.
Volatilité budgétaire et dette
Après l’adoption d’un budget par décret, le déficit 2026 est projeté autour de 5,4% du PIB, avec objectifs de consolidation contestés. Pour les entreprises, cela augmente l’incertitude fiscale, la pression sur dépenses publiques et les risques de volatilité des taux.
Weak growth, high leverage constraints
Thailand’s macro backdrop remains soft: IMF/AMRO/World Bank sources point to ~1.6–1.9% 2026 growth after ~2% in 2025, with heavy household debt and limited policy space. Demand uncertainty affects retail, autos, credit availability, and capex timing.
Secondary sanctions via tariffs
New executive authority threatens ~25% additional tariffs on imports from countries trading with Iran, alongside expanded “shadow fleet” designations. This blurs sanctions and trade policy, raising counterparty screening demands, shipping/insurance costs, and retaliation risk for firms operating across US-linked markets.
Auto sector restructuring under tariffs
U.S. auto tariffs and plant adjustments (including shift cuts and layoffs) are reshaping North American production footprints. Canada is introducing tariff-credit relief and incentives to retain assembly and parts capacity. Suppliers face demand volatility, localization pressures and renegotiated contracts.
Energy tariffs and circular debt
Power-sector reforms, including proposed tariff revisions and circular-debt containment, remain central to macro stabilization. Tariff resets can lift inflation but may reduce industrial cross-subsidies. For investors, the key risks are energy cost predictability, outages, and contract enforcement.
Rail recovery and open-access shift
Transnet reports improving rail volumes from a 149.5 Mt low (2022/23) toward 160.1 Mt (2024/25) and a 250 Mt target, alongside reforms enabling 11 private operators. Better rail reliability lowers inland logistics costs but transition risks remain during access-agreement rollout.
Oil exports via shadow fleet
Iran sustains crude exports through opaque “dark fleet” logistics, ship-to-ship transfers, and transponder manipulation, with China absorbing most volumes. Intensifying interdictions and seizures increase freight, insurance, and counterparty risk, threatening sudden disruption for traders, refiners, and shippers.
Industrial decarbonisation subsidy wave
Paris is deploying large-scale state aid to keep energy‑intensive industry in France: €1.6bn over 15 years for seven sites, targeting ~3.8 Mt CO2/year abatement (~1% of national emissions). Subsidy conditionality and EU state‑aid scrutiny affect project bankability.
Electricity grid reform uncertainty
Eskom’s revised unbundling keeps transmission assets inside Eskom, limiting the new TSO’s ability to raise capital for urgent grid expansion. Business warns this policy “U-turn” could prolong grid constraints, delay renewables connections, and revive supply insecurity for operations.
Trade compliance and reputational exposure
Scrutiny of settlement-linked trade and corporate due diligence is intensifying, including EU labeling and potential restrictions. Companies face heightened sanctions, customs, and reputational risks across logistics, retail, and manufacturing, requiring enhanced screening, traceability, and legal review.
Critical minerals supply-chain buildout
Government funding, tax incentives and US partnership are accelerating Australian mining-to-processing capacity (e.g., strategic reserve, new prospectus projects, antimony output). This reshapes EV, semiconductor and defence inputs, and raises permitting, ESG and offtake-competition dynamics.
Sanctions spillovers and compliance
Tightening EU and allied Russia sanctions raise compliance obligations for firms trading regionally, especially in maritime services, finance, and dual-use goods. Enforcement is increasingly focused on circumvention routes through third countries, raising KYC, end-use, and counterpart diligence costs.
Hormuz maritime security volatility
Escalating U.S.–Iran tensions include tanker seizures and discussion of maritime interdictions. Any incident near the Strait of Hormuz can spike energy prices, delay shipments, and raise war-risk premiums. Businesses should stress-test logistics, bunker costs, and force-majeure exposures.
Vision 2030 recalibration, capex shift
Saudi Arabia is rescoping and deferring flagship giga-projects as oil revenues tighten, while redirecting capital toward AI, mining, logistics, and advanced manufacturing. This reshapes EPC pipelines, demand forecasts, and counterparty risk for suppliers, lenders, and investors.
Tech investment sentiment and resilience
Israel’s innovation ecosystem remains a core investment draw, but conflict-linked volatility and talent constraints influence funding conditions and valuations. Companies should stress-test R&D continuity, cyber risk, and cross-border collaboration, while watching for policy incentives supporting strategic sectors.
Gargalos logísticos no Porto
O megaterminal Tecon Santos 10 enfrenta atrasos e controvérsias sobre elegibilidade no leilão, elevando risco de judicialização. Exportadores reportaram perdas: no café, R$ 66,1 milhões e 1.824 contêineres/mês não embarcados, com US$ 2,64 bilhões em divisas perdidas em 2025.
Rail-border bottlenecks and gauge mismatch
Efforts to integrate Ukraine’s rail with EU networks highlight structural constraints: different track gauges require transshipment at borders, creating durable chokepoints. Any surge in exports or reconstruction imports can overwhelm terminals, extending lead times and pushing firms to diversify routing via Danube and road.
US–Indonesia trade pact obligations
Perjanjian ART RI–AS menetapkan tarif 19% pada sebagian besar ekspor RI, dengan pembebasan untuk >1.800 komoditas dan kuota tekstil 0%. Indonesia berkomitmen belanja US$33 miliar dari AS serta menghapus hambatan nontarif, memengaruhi strategi ekspor, input impor, dan kepatuhan digital.
AI-led boom, labor and wage pressure
AI-driven export demand is lifting activity and wages; regular wages rose 3.09% in 2025 to NT$47,884, beating 1.66% inflation, while electronics overtime hit 27.9 hours. Businesses should expect tighter talent markets, higher labor costs, and capacity strain in electronics supply chains.
Ports, corridors, and logistics buildout
Cairo is rolling out seven multimodal trade corridors, 70 km of new deep-water berths, and a network targeting 33 dry ports. New financing such as the $200m Safaga terminal (with $115m arranged) supports capacity, inland clearance, and supply-chain resilience.
Energy exports shifting to gas
Aramco’s $100bn Jafurah unconventional gas project has begun condensate exports (4–6 cargoes/month, ~500k barrels each), aiming for 2 Bcf/d gas by 2030. Gas-for-power could free ~1 mb/d crude for export, reshaping feedstock costs and regional supply balances.
Macroeconomic strain and FX pressure
Logistics disruptions and energy damage are weighing on growth and export receipts. The central bank cut the policy rate to 15% as inflation eased, but expects renewed price pressure and slower disinflation; port attacks may reduce Q1 export earnings by roughly $1 billion, stressing FX markets.