Nickel tax and quota squeeze

Jakarta is tightening nickel policy through possible export duties, higher benchmark prices and stricter RKAB quotas, lifting ore costs and reshaping global battery and stainless supply chains. Proposed levies on NPI, MHP and matte could compress smelter margins and delay investment.

Broad Cost Pressure Beyond Chips

Despite headline export strength, 12 of 15 sectors in KITA’s Q2 survey remained below 100 on outlook. Rising raw material prices and logistics costs are squeezing margins in appliances, plastics and consumer manufacturing, complicating expansion, sourcing and pricing decisions for foreign businesses.

Export Controls Tighten Technology Flows

US restrictions on advanced semiconductors, investment, and high-tech exports to China are intensifying, while enforcement gaps persist. Companies face stricter licensing, compliance burdens, and customer-screening demands, especially in AI, semiconductor equipment, cloud infrastructure, and dual-use technology supply chains.

Credit Growth Supports Diversification

Saudi bank lending to the private sector and non-financial public entities rose 10% year on year to SAR3.43 trillion in January. Strong domestic credit supports business expansion, though prolonged regional conflict could tighten liquidity, raise inflation and delay external fundraising plans.

Oil Shock Hits Trade Balance

Brent’s jump above $100 a barrel has compounded India’s import burden, widened the merchandise trade deficit and increased inflation risks. Energy-intensive sectors, transport users and import-dependent manufacturers face rising operating costs, while policymakers may trim fiscal and capital spending.

Automotive Transition and Export Risk

The automotive sector, contributing 5.2% of GDP, faces export and competitiveness pressure from US tariffs, poor logistics and uncertain electric-vehicle policy. Output missed masterplan targets, exports fell 22.8% in 2024, and manufacturers warn delayed EV policy could postpone critical investment decisions.

Energy Market Shock Transmission

Disruption around Iran and Hormuz is feeding through to global oil, gas, freight, and inflation dynamics well beyond Iran itself. With around one-fifth of global oil normally transiting Hormuz, sustained instability can reshape sourcing strategies, inventory planning, and hedging costs across multiple industries.

China soybean access uncertainty

Brazil is negotiating soybean phytosanitary rules with China after exporters said stricter weed controls complicated certification. Any easing would support agribusiness shipments, but the episode underlines concentration risk in Brazil-China trade and vulnerability to non-tariff barriers.

Green Industry Overcapacity Frictions

Chinese EV, battery and other clean-tech sectors remain central to global trade tensions, with US investigations focusing on excess industrial capacity and green product barriers. Companies should expect more anti-dumping actions, local-content rules and market-access constraints affecting pricing, sourcing and investment decisions.

Tech Self-Reliance Regulatory Push

China’s new planning framework deepens support for technological self-reliance, advanced manufacturing and strategic minerals, with R&D spending set to rise over 7% annually. Foreign firms may find opportunities in local ecosystems, but also tighter competition, substitution risk, and regulatory sensitivity.

Critical minerals drive strategic investment

Lithium, rare earths, nickel, cobalt, antimony and gallium are becoming central to Australia’s trade strategy, with new EU access, strategic reserve powers, and allied demand supporting upstream mining, downstream processing, offtake deals, and tighter screening of high-risk foreign capital.

Industrial Operations Face Power Curbs

Authorities continue imposing hourly outage schedules and industrial electricity limits, with some restrictions lasting through peak evening demand. Energy-intensive manufacturers, processors, and cold-chain operators face production losses, equipment strain, and rising contingency costs, reinforcing the need for flexible operating models.

China Soy Trade Frictions

Brazil is negotiating soybean phytosanitary rules with China after tighter inspections delayed shipments and raised port costs. March exports still hover near 16.3 million tonnes, but certification bottlenecks and buyer complaints expose agribusiness exporters to compliance, timing, and concentration risks.

Energy Tariffs and Circular Debt

IMF-backed energy reforms require timely tariff adjustments, fewer subsidies, and action on chronic circular debt. For manufacturers and foreign investors, higher electricity and fuel costs could pressure margins, while reforms in transmission, generation privatization, and renewables may gradually improve power reliability.

Strategic US-Japan Investment Linkage

Tokyo is implementing a $550 billion strategic investment pledge tied to tariff reductions and may add another $100 billion in projects. This deepens policy-driven capital flows into energy, manufacturing, and technology, but increases exposure to US political bargaining and compliance conditions.

Security Threats to Logistics Networks

Cargo theft, extortion and federal highway insecurity remain material operating risks for manufacturers and distributors. Business groups are now advocating a parallel security arrangement with the United States, reflecting the direct impact of crime on delivery reliability, insurance costs and workforce safety.

Fiscal Credibility and Risk Premium

Fiscal discipline remains central to Brazil’s risk outlook, with policymakers warning that uncertainty over debt stabilization and reform momentum can sustain higher risk premiums, weaker confidence, and elevated borrowing costs, shaping capital allocation, exchange-rate expectations, and infrastructure financing conditions.

Semiconductor Export Control Tightening

A US$2.5 billion Supermicro-related smuggling case exposed Taiwan’s weak penalties for illegal chip flows to China. Likely regulatory tightening will raise compliance costs, screening, and due-diligence requirements for semiconductor, server, logistics, and re-export businesses operating through Taiwan.

Higher Interest Burden Presses Business

France’s public debt reached €3.46 trillion and interest costs rose by €6.5 billion to 2.2% of GDP. Higher sovereign borrowing costs can tighten financial conditions, crowd out policy flexibility, and indirectly affect corporate financing and public procurement demand.

Grid Constraints Delay Electrification

Slow planning, limited transmission capacity, and constrained connections are delaying offshore wind, solar, and broader electrification. For retrofit and property investors, that means prolonged exposure to volatile gas-linked energy costs, slower heat-pump economics, and higher execution risk for decarbonisation strategies.

US Trade Pressure Escalates

Relations with Washington have become a material trade risk. A Section 301 investigation and prior 30% US tariffs on steel, aluminium and autos threaten AGOA-linked sectors, especially vehicles, agriculture and wine, increasing market-access uncertainty and export diversification pressure.

Cape Route Opportunity, Port Weakness

Middle East shipping disruptions have increased Cape traffic, with reroutings reportedly up 112%, but South Africa’s ports remain among the world’s worst performers. Congestion, outdated infrastructure and weak bunkering capacity mean many vessels bypass local ports, limiting trade and services gains.

AI Growth and Data Centres

The government’s AI-led growth agenda is supporting data-centre and digital investment, including proposed AI Growth Zones. However, planning delays, grid access, funding constraints, and clean-energy availability remain key execution risks for technology investors and commercial real-estate operators.

Reconstruction Fund Opens Pipeline

The U.S.-Ukraine Reconstruction Investment Fund has begun deploying capital, approving its first project and targeting $200 million by year-end. Priority sectors include energy, critical minerals, hydrocarbons, infrastructure, and dual-use manufacturing, creating selective entry opportunities for international investors and suppliers.

NATO Integration Raises Security Priority

Finland’s deeper NATO integration and large Arctic exercises involving 25,000-32,000 personnel strengthen deterrence and infrastructure relevance, but also elevate security sensitivity for operators. Defense spending, procurement, cybersecurity and critical asset protection are becoming more central to business continuity and investment planning.

Reform Needs for Competitiveness

Investors still see Turkey as a strategic manufacturing and transit base, but rising cost-based competitiveness concerns are growing. Business sentiment has improved after FATF gray-list removal, yet foreign investors continue to call for structural reforms to sustain confidence, productivity, and longer-term capital commitments.

Permitting and Infrastructure Bottlenecks

Business opportunities in mining, LNG, and pipelines are increasingly conditioned by approval speed and transport capacity. Industry leaders argue Canada’s multi-year permitting timelines undermine competitiveness, while tighter pipeline capacity and delayed infrastructure decisions risk foregone export and investment gains.

Microgrids Unlock Private Investment

Grid bottlenecks are driving large users toward microgrids, with Dublin hosting Europe’s first live microgrid-powered data centre and up to €5 billion of projects in development. This expands opportunities in distributed energy, storage, controls, and private infrastructure financing linked to industrial sites.

Rule-of-law and security overhang

Investment sentiment is still constrained by insecurity, legal uncertainty, and governance concerns. Business leaders continue to call for stronger rule of law as cartel violence, labor disputes, and policy unpredictability complicate trucking, workforce management, site selection, and insurance costs across operations.

Governance Reform Redirects Capital

Regulators and the Tokyo Stock Exchange are pressing companies to improve capital efficiency, reduce idle cash, and articulate growth plans. This is boosting buybacks and shareholder activism, with implications for M&A pipelines, investment discipline, valuation re-ratings, and foreign investor engagement in Japan.

AI Boom Drives Infrastructure Strain

Rapid AI and advanced-manufacturing expansion is increasing electricity demand, data-center requirements and pressure on grid resilience. For investors and operators, this creates opportunities in power equipment, storage and digital infrastructure, but also heightens utility, land and permitting constraints.

Steel Protectionism Reshapes Inputs

London has pivoted toward industrial protection, cutting steel import quotas 60% from July and imposing 50% tariffs above quota while targeting 50% domestic sourcing. Manufacturers, construction firms and foreign suppliers face higher input costs, procurement shifts and new market-access barriers.

Customs Enforcement and Compliance Costs

New customs and trade-compliance requirements are increasing friction for importers and exporters. U.S. officials criticize Mexico’s 2026 customs-law changes for stricter liability, heavier documentation demands and greater seizure powers, raising border risk, delays and administrative costs.

Middle East Conflict Raises Costs

The Middle East war is lifting oil and gas prices, weakening France’s growth outlook and increasing pressure on exposed sectors such as transport, fishing and chemicals. Businesses face higher input costs, renewed inflation risk, and uncertainty around government emergency support measures.

Automotive Base Faces Strategic Shift

The auto sector remains a major industrial pillar but is under pressure from logistics failures, utility unreliability and EV-policy uncertainty. It contributes 5.2% of GDP, yet 2024 exports fell 22.8%, while output missed masterplan targets by a wide margin.

Political Fragmentation Clouds Policy Execution

The government passed the 2026 budget through a divided parliament after prolonged deadlock, underscoring fragile policymaking capacity. This raises execution risk around fiscal measures, reforms, and sector support, complicating planning for investors and multinational operators in France.