Energy resilience and gas exports

Israel is strengthening domestic energy security through planned gas storage while preserving regional export relevance. Repeated shutdowns at Leviathan and Karish exposed supply vulnerabilities, but expanding gas production and exports to Egypt continue to support industrial demand, fiscal revenues and wider Eastern Mediterranean energy integration.

Hormuz Disruption Energy Shock

Strait of Hormuz disruption is the most immediate business risk. Aramco says about 1 billion barrels have been lost, with 100 million barrels a week affected, lifting freight, insurance and input costs across transport, petrochemicals, agriculture and manufacturing.

War-Risk Insurance Bottleneck

Affordable risk cover remains insufficient for most investors and borrowers, limiting capital deployment despite strong reconstruction interest. Local policies often cover only Hr 10–20 million, while new EBRD-backed debt-relief pilots and state schemes are beginning to ease financing constraints.

Judicial reform uncertainty persists

Judicial reform remains a material deterrent to capital deployment after low-turnout court elections and proposed redesigns. Investors continue to flag weaker legal predictability, politicization risks, and slower dispute resolution, raising contract-enforcement, compliance, and transaction-structuring costs for foreign businesses.

Power Reliability Versus Decarbonization

Brazil’s push to become a regional digital infrastructure hub is exposing tension between renewable-only energy rules and the need for firm power. This matters for data centers, advanced manufacturing, and large industrial loads seeking reliable electricity, lower risk, and competitive long-term energy contracts.

Sanctions and Compliance Fragmentation

US sanctions, especially on Chinese refiners tied to Iranian oil, are colliding with Beijing’s anti-sanctions rules. Multinationals now face conflicting legal obligations across banking, shipping, insurance, and procurement, increasing the need for parallel compliance structures and more cautious transaction screening.

US-Japan Economic Security Alignment

Tokyo and Washington are accelerating cooperation on strategic investment, critical minerals, supply chains and investment screening. Talks build on Japan’s roughly $550 billion US strategic investment pledge, improving bilateral resilience but tightening compliance expectations for firms in sensitive sectors and cross-border deals.

Energy Shock Hits Macrostability

Higher oil prices and West Asia disruption are pressuring India’s rupee, inflation and current account. India imports about 85-90% of its oil, with major exposure through Hormuz, raising freight, insurance and input costs for manufacturers, logistics operators and import-dependent sectors.

US-China Managed Trade Reset

Washington and Beijing are extending a fragile trade truce and discussing a managed-trade mechanism covering roughly $30-50 billion of non-sensitive goods. Bilateral goods trade fell 29% to $415 billion in 2025, sustaining tariff uncertainty and accelerating supply-chain diversification across Asia.

Security Resilience and Diplomacy

Saudi Arabia is pairing stronger infrastructure protection with active regional diplomacy to contain escalation with Iran. This supports investor confidence and operational continuity, but businesses should still plan for intermittent airspace, shipping and border disruptions across the Gulf.

Macro Stability Amid Wartime Pressures

Inflation remains contained at 1.9%, supported by shekel strength and domestic gas supply, sustaining expectations of rate cuts. However, growth has slowed, fiscal pressures remain elevated, and wartime uncertainty complicates credit conditions, corporate planning, and long-term capital allocation into Israel.

Electricity access for nearshoring

Power availability is becoming a central determinant of industrial competitiveness. Mexico launched a MXN740 billion, roughly US$42 billion, electricity expansion plan targeting 32 GW by 2030, including faster self-supply permits, but grid bottlenecks still threaten manufacturing, data-center, and logistics investments.

Tech Sector Mobility and Investment Choices

Israel’s technology sector still attracts capital and drives more than half of exports, yet currency strength and prolonged conflict are prompting some firms to hire abroad or reconsider expansion. For investors, innovation upside remains strong, but location, talent retention, and continuity risks are rising.

Samsung Labor Risk Threatens Output

A planned 18-day Samsung Electronics strike could disrupt global memory and AI-chip supply chains. More than 40,000 workers may participate, with analysts warning losses near 1 trillion won per day and potential delivery delays, price volatility and procurement uncertainty.

Logistics hub expansion accelerates

Saudi Arabia is deepening its role as a regional logistics platform through ports, transit services and industrial hubs. ASMO’s 1.4 million sq m SPARK facility and 19 new shipping services should improve warehousing, multimodal resilience and in-Kingdom supply-chain efficiency.

Aramco Fiscal Anchor Role

Aramco’s Q1 net profit rose 25% to $32.5 billion on $115.49 billion revenue, with a $21.9 billion dividend. Its cash generation remains central to Saudi fiscal stability, public investment execution and payment conditions affecting contractors and suppliers.

Energy Security and Gas Resilience

Repeated shutdowns at Leviathan and Karish during regional hostilities exposed vulnerabilities in Israel’s gas-dependent power and industrial system. The government is now studying storage capacity above 2 Bcm, highlighting both resilience efforts and ongoing risks to energy-intensive manufacturing and regional supply commitments.

Coalition Reform Uncertainty Persists

The Merz coalition remains divided on taxes, pensions, labor rules, and business reforms, delaying clearer policy signals. With growth forecast cut to 0.5%, weak polls, and repeated disputes, companies face uncertainty over regulation, labor costs, incentives, and implementation timelines.

Weak Demand and Property Stress

China’s prolonged property downturn, weak domestic consumption and soft labor market continue to weigh on growth. For international firms, this means slower demand recovery, more cautious consumer spending, pricing pressure and heightened counterparty risk across construction-linked and discretionary sectors.

China Beef Quota Shock

China’s 1.106 million-tonne 2026 quota for Brazilian beef is filling rapidly, with 50% already used by May; shipments above quota face a 55% surcharge, threatening export revenues, meatpacker margins, and agribusiness logistics planning across cold-chain supply networks.

Digital and Infrastructure Outages

Extended internet blackouts and broader infrastructure damage are undermining logistics and the domestic digital economy. Reported connectivity losses of $30 million-$80 million per day hinder e-commerce, communications, customs coordination, and enterprise operations, increasing execution risk for businesses dependent on real-time systems.

Security Threats to Logistics

Cargo theft, extortion, organized crime and border-route disruptions are materially raising operating costs across Mexico’s trade corridors. Companies moving goods to the United States face higher insurance, tighter risk-management requirements, and greater continuity risks for just-in-time supply chains.

War Damages Export Infrastructure

Ukrainian drone strikes on ports, refineries and pipelines are disrupting Russian logistics and raising operating costs. Seaborne crude volumes fell 24% month on month in April after attacks, while product exports from facilities such as Tuapse have suffered sustained losses.

Foreign Investment Pipeline Accelerates

First-quarter 2026 investment applications exceeded 1 trillion baht, about 2.4 times year-earlier levels, led by digital, electronics, clean energy, food processing, and logistics. The surge signals stronger medium-term opportunities, but also tighter competition for land, utilities, labor, and incentives.

China-Centric Trade Reorientation

Brazil’s trade surplus is being increasingly driven by China, with April exports there up 32.5% to US$11.61 billion, while shipments to the US fell 11.3%. Exporters and suppliers face concentration risk, changing bargaining power and deeper exposure to Sino-global demand cycles.

National Security Tightens Investment Rules

The Port of Darwin dispute, after Landbridge launched ICSID proceedings over a proposed forced divestment, highlights sharper national-security scrutiny of strategic assets. Foreign investors, especially in ports, telecoms, energy and minerals, face higher political, regulatory and treaty-enforcement risk.

Power Reliability Becomes Critical

Authorities are preparing for 2026 dry-season electricity shortages as demand could rise 8.5% in the base case and 14.1% in stress scenarios. Power reliability now directly affects factories, industrial parks, data centres and high-tech investors evaluating Vietnam’s operating resilience.

Arbitrary State Asset Seizures

Property-rights risk is intensifying as wartime nationalisations expand beyond overt Kremlin opponents. Prosecutors launched nearly 70 confiscation cases in 2025, and targeted assets since early 2022 exceeded RUB 4.99 trillion, undermining investor confidence, deal security and exit planning.

Interest Rate And Rand Risk

The central bank remains cautious as inflation rose to 3.1% in March and fuel-led pressures threaten further increases. With the policy rate at 6.75%, businesses face uncertainty over borrowing costs, currency volatility and consumer demand as external energy shocks feed through.

Semiconductor Controls and AI Rivalry

US export controls on advanced chips and equipment continue to constrain China, while Beijing accelerates domestic substitutes. The contest is reshaping technology supply chains, capex planning and compliance risks for chipmakers, cloud providers, electronics manufacturers and AI-dependent industries.

China Tensions and Economic Security

Worsening Japan-China relations are disrupting business confidence, tourism, and industrial planning. China has tightened export controls on rare earths and dual-use goods, while Tokyo is accelerating de-risking, creating procurement uncertainty and compliance pressure for firms exposed to China-linked supply chains.

Semiconductor Supercycle Drives Trade

AI-led semiconductor demand is powering South Korea’s export engine, with April chip exports reaching $31.9 billion, up 173.5% year on year. The boom lifts growth, investment and trade surpluses, but increases concentration risk for suppliers, investors and industrial customers.

Energy Import Exposure Intensifies

Egypt raised its FY2026/27 fuel import budget to $5.5 billion, up 37.5%, reflecting vulnerability to regional energy shocks. Higher diesel, LPG, and gasoline costs increase inflation, pressure foreign-exchange needs, and raise production, logistics, and utility expenses for trade-exposed businesses.

LNG Diversification and Power Resilience

Taiwan is diversifying energy sources through a US$15 billion, 25-year LNG contract with Cheniere, with deliveries starting in June and 1.2 million tonnes annually from 2027. This supports power security, though businesses still face elevated fuel and electricity risk.

Inflation and cost pressures

Israel is facing renewed price pressures in fuel, food, rent and air travel, with forecasts putting annual inflation around 2.3% to 2.5%. Rising consumer and input costs may keep interest rates elevated, constrain household demand and increase operating expenses across retail, logistics and services.

Supply Chain and Logistics Strain

Middle East disruption and tighter fuel markets are lengthening supplier lead times, raising freight and aviation cost risks. UK firms are bringing forward purchases to hedge disruption, increasing working-capital pressure and exposing import-dependent supply chains to further volatility.