Mission Grey Daily Brief - January 01, 2025
Summary of the Global Situation for Businesses and Investors
As we enter 2025, the world is facing a tumultuous year ahead, with political uncertainty in Europe, Donald Trump's second term as US President, and rising tensions in the Middle East. The Ukraine-Russia conflict remains a key issue, with Putin's grip on power seemingly secure and Trump's promise to end the war dismissed by Russia. Hundreds of soldiers have been freed in the latest prisoner exchange, but sanctions and rising prices are taking a toll on Russia's economy. Meanwhile, China's reunification efforts with Taiwan are intensifying, with military presence and sanctions increasing tensions. In Iran, economic strains and potential unrest are looming, as sanctions and geopolitical complexities converge. Lastly, fears of an all-out war between Afghanistan and Pakistan are rising, with deadly strikes and border tensions escalating.
Ukraine-Russia Conflict
The Ukraine-Russia conflict remains a key issue as we enter 2025. Putin's grip on power appears more secure than ever, with Russian forces making progress in the Donbas region and political opposition swept clear following the death of Alexey Navalny. Trump's promise to end the war has been dismissed by Russia, with little progress made towards a negotiated end. However, hundreds of soldiers have been freed in the latest prisoner exchange, with 189 Ukrainian prisoners and 150 Russian soldiers released.
The sanctions brought on by the war are taking a toll on Russia's economy, with soaring inflation and a weaker ruble driving up the cost of imports. Rising food prices and shortages are impacting ordinary Russians, with prices becoming the most pressing concern for many.
China's Reunification Efforts with Taiwan
China's reunification efforts with Taiwan are intensifying, with military presence and sanctions increasing tensions. President Xi Jinping has reiterated that no one can stop China's reunification with Taiwan, sending warships and planes into the waters and airspace around the island. Taiwan, which split from the mainland in 1949, rejects Beijing's claim, saying that only its people can decide their future.
Tensions have remained high throughout the year, with China sanctioning seven companies in response to American weapons sales and aid to Taipei. The Taiwanese president has called for healthy and orderly exchanges with China, but restrictions on Chinese tourists and students are hindering normal interactions.
Iran's Economic Strains and Potential Unrest
In Iran, economic strains and potential unrest are looming, as sanctions and geopolitical complexities converge. Tehran politicians have warned of unrest as the economic crisis deepens, with soaring inflation and a falling value of the rial plaguing the economy. IRGC commanders and Iran's judiciary chief have stated they are prepared to handle potential unrest.
President Pezeshkian faces pressure from reformists and hardliners, with reformists advocating negotiations with the West and hardliners cautioning against trusting the US and its allies. As economic pressures mount and political divisions deepen, Pezeshkian's administration must navigate mounting challenges while addressing growing calls for accountability and decisive action.
Fears of an All-Out War Between Afghanistan and Pakistan
Fears of an all-out war between Afghanistan and Pakistan are rising, with the Afghan Taliban unleashing devastating artillery strikes on Pakistani military checkpoints along the tense border. The Taliban has vowed to stand firm against any retaliatory strike from Pakistan, with Afghanistan's Ministry of Defence on high alert and additional forces poised to reinforce the border.
The Taliban foreign minister has warned Pakistan over the weekend, urging Pakistani authorities not to underestimate their capabilities. The Taliban has vowed to stand firm against any retaliatory strike from Pakistan, with Afghanistan's Ministry of Defence on high alert and additional forces poised to reinforce the border.
The Taliban has vowed to stand firm against any retaliatory strike from Pakistan, with Afghanistan's Ministry of Defence on high alert and additional forces poised to reinforce the border. The Taliban foreign minister has warned Pakistan over the weekend, urging Pakistani authorities not to underestimate their capabilities.
Further Reading:
After a quarter-century in power, Putin faces a new test: The return of Trump - CNN
Russia Dismisses Trump Team’s Bid to End Ukraine War ‘in 24 Hours’ - The Daily Beast
Russia Laughs Off Trump’s Bid to End Ukraine War ‘in 24 Hours’ - The Daily Beast
Tehran politicians warn of unrest as governance crisis deepens - ایران اینترنشنال
Themes around the World:
War-driven fiscal and budget shifts
The 2026 budget prioritizes defense (about NIS 112bn) amid elevated security needs, with deficit targets still high. This can crowd out civilian spending, affect taxes/regulation, shape procurement opportunities, and influence sovereign risk and project pipelines.
Data, privacy and AI compliance
The Data (Use and Access) Act 2025 and wider online safety/AI initiatives reshape UK data governance and enforcement expectations. Multinationals must reassess lawful basis, complaints handling, cross-border data flows and vendor controls, with compliance costs affecting digital service scaling.
Critical minerals reshoring push
Australia is leveraging tax credits, strategic reserves and partner deals to build ex‑China supply chains in lithium and antimony. Closures like Kemerton show cost gaps versus China, shaping investment incentives, offtake contracts, and processing-location decisions.
Supply-chain reorientation away China
Tariffs and security policy are accelerating sourcing shifts: China’s share of U.S. non‑oil imports has reportedly fallen below 10% in 2025 as Mexico and Vietnam gain. Companies face dual-sourcing, rules-of-origin complexity, and higher transition costs but improved geopolitical resilience.
Energy transition financing and municipal arrears
Even with transmission separation, bankability depends on cost-reflective tariffs and fixing municipal payment arrears that undermine revenue certainty. Without a workable revenue model, private grid finance may demand higher returns or sovereign support, raising electricity costs and operational risks for industry.
Plan masivo de infraestructura y energía
El gobierno lanzó un plan 2026‑2030 de MXN 5.6 billones (≈US$323 mil millones) y ~1,500 proyectos, con energía como rubro principal. Puede mejorar logística (puertos, trenes, carreteras) y confiabilidad energética, pero exige marcos “bancables” y certidumbre contractual.
Labour shortages, migration recalibration
Mining, infrastructure and advanced manufacturing face persistent skills shortages; industry is pushing faster skilled-migration pathways while government tightens integrity and conditions in some visa streams. Project schedules, wage costs and compliance burdens are key variables for investors and EPC firms.
Maritime logistics and ZIM uncertainty
A potential sale of ZIM to Hapag-Lloyd and resulting labor action highlight sensitivity around strategic shipping capacity. Any prolonged strike, regulatory intervention via the state’s “golden share,” or ownership change could affect Israel-related capacity, rates, and emergency logistics planning.
Escalating secondary sanctions pressure
The US is tightening “maximum pressure” through new designations on Iran’s oil/petrochemical networks and vessels, plus threats of blanket tariffs on countries trading with Tehran. This raises compliance, banking, and counterparty risks for global firms and intermediaries.
Energy diversification and LNG deals
Germany is locking in alternative LNG and storage partnerships, including agreements for up to 1 million tonnes/year LNG for up to 10 years and up to 2 GW battery storage investments. This supports security but embeds exposure to global LNG price cycles and infrastructure bottlenecks.
Deflation and overcapacity pressures
China’s demand remains soft: January CPI +0.2% y/y and PPI −1.4% y/y, extending multi‑year factory deflation. Firms should expect aggressive price competition, export push to clear capacity, margin compression for suppliers, and higher countervailing‑duty risk abroad.
Disinflation and rate-cut cycle
Inflation has eased into the 1–3% target, with recent readings near 1.8% and markets pricing further Bank of Israel rate cuts. Lower borrowing costs may support demand, but a stronger shekel can squeeze exporters and reshuffle competitiveness across tradable sectors.
Crypto-based payments and enforcement
Sanctions and FX scarcity are accelerating use of crypto and stablecoins for trade settlement and wealth preservation, drawing increased OFAC attention and first-time sanctions on exchanges tied to Iran. This raises AML/KYC burdens and counterparty screening complexity for fintech and traders.
Regulação de dados e compliance LGPD
A Câmara aprovou MP que transforma a ANPD em agência reguladora, com carreira própria e maior capacidade de fiscalização. Isso tende a elevar enforcement, custos de conformidade e exigências contratuais, especialmente em cadeias com compartilhamento internacional de dados.
China engagement and investment scrutiny
Ottawa’s diversification push toward China—alongside signals of openness to Chinese SOE energy stakes—raises national-security review, reputational and sanctions-compliance risk. Businesses should expect tighter due diligence and potential policy reversals amid allied pressure.
Tax policy and capital gains timing
The federal government deferred implementation of higher capital gains inclusion to 2026, creating near-term planning windows for exits, restructurings, and inbound investment. Uncertainty over final rules still affects valuation, deal timing, and compensation design.
Rising resource nationalism enforcement
Pengetatan pengawasan SDA dan penertiban izin meningkatkan ketidakpastian kontrak serta risiko intervensi negara. Pemerintah disebut menyita jutaan hektare aset tambang/perkebunan dan menagih denda besar (mis. potensi denda Weda Bay ~Rp3 triliun). Investor menghadapi risiko perizinan, kepatuhan lingkungan, dan stabilitas aset.
Ports and logistics hub buildout
Egypt is investing to become a regional transit-trade hub via multimodal corridors, dry ports, and major terminal expansions. Damietta’s new terminal targets ~3.3–3.5m TEU capacity with advanced equipment, improving throughput and transshipment competitiveness across the East Med.
Shipping volatility around China routes
Container rates are weakening despite capacity management; heavy blank sailings and shifting Red Sea/Suez routing decisions create schedule unreliability. China exporters and importers face longer lead times, inventory buffering needs, and renegotiation pressure in 2026 freight contracts.
Expansionary fiscal agenda, debt risks
The government’s post-election stimulus and proposed two-year suspension of the 8% food consumption tax heighten concerns over Japan’s already high debt and rising interest costs, potentially lifting JGB yields, tightening credit conditions, and complicating foreign investors’ return and valuation models.
Mining investment incentives scale-up
The Mining Exploration Enablement Program’s third round offers cash incentives up to 25% of eligible exploration spend plus wage support. Combined with aggressive licensing expansion, it accelerates critical minerals supply, raising opportunities in equipment, services, offtake, and local partnerships.
Defense posture and maritime asset protection
Israel is prioritizing protection of Eilat approaches and offshore gas infrastructure, reflected in expanded naval readiness. Persistent maritime threats raise operational continuity and security requirements for ports, energy off-take, subsea cables and critical infrastructure suppliers operating nearby.
Trade rerouting to China
Russia’s export dependence is concentrating on China as India’s intake becomes uncertain and discounts widen (ESPO ~US$9/bbl, Urals ~US$12/bbl vs Brent). This increases buyer power, pricing volatility and settlement complexity, while complicating long-term offtake and investment planning.
Fiscal consolidation and debt trajectory
The IMF urges a clearer debt rule as Treasury projects gross debt near 77.9% of GDP. Prospective tightening to reach primary surpluses may constrain infrastructure spending, affect SOE support, and influence taxes and public procurement—key inputs for investor risk pricing.
Cargo theft and logistics security
Cargo theft remains a material operating risk despite reported declines: industry estimates put 2025 losses above MXN 7 billion, with hotspots in Estado de México and Puebla and key routes like México–Querétaro. High jammer use raises insurance, tracking, and routing costs.
Semiconductor reshoring with conditional relief
New chip policy links tariff relief to US-based capacity buildout, using leading foundries’ domestic investment as leverage. For global manufacturers and hyperscalers, this reshapes procurement and pricing, favors suppliers with US footprints, and increases strategic pressure on Taiwan-centric sourcing models.
Rising electricity cost exposure
A windless cold spell drove Finnish wholesale power prices sharply higher, intensifying scrutiny of energy-hungry data centres. For immersive tech operators, energy hedging, flexible workloads and heat-reuse options become key, affecting total cost of ownership and resilience planning.
Финансы, платежи и валютная волатильность
Ограничения на банки и альтернативные платёжные каналы усиливаются; регулятор удерживает жёсткие условия: ключевая ставка снижена до 15,5% (с сигналом дальнейших шагов), что отражает высокую инфляционную неопределённость. Для бизнеса растут FX‑риски и стоимость капитала.
Governance and tax administration overhaul
An IMF-linked tax reform plan through June 2027 targets FBR audit, IT and exemption simplification, while broader digital governance reforms expand compliance systems. Businesses should expect stronger enforcement, e-invoicing/data requirements, and changing effective tax burdens across sectors.
Ports and rail recovery, still fragile
Transnet reports improving port performance and rail volumes rising toward ~168Mt by March 2026, with private operators gaining route access and Durban Pier 2 run privately. However, general freight corridors lag, bottlenecks persist, and service reliability remains a supply-chain constraint.
Cross‑strait security and blockade risk
Elevated China–Taiwan tensions and recurring PLA exercises keep contingency risk high for Taiwan Strait shipping, aviation routes, and insurance. Businesses should stress-test just‑in‑time models, diversify logistics corridors, and tighten crisis governance for Taiwan-dependent operations.
EU accession fast-track uncertainty
Brussels is debating “membership-lite/reverse enlargement” to bring Ukraine closer by 2027–2028, but unanimity (notably Hungary) and strict acquis alignment remain hurdles. The pathway implies rapid regulatory change across customs, competition, SPS, and rule-of-law safeguards—material for compliance planning.
Regulatory reset and supervisory tightening
US policymakers are reconsidering post-2023 oversight, including “tailored” rules for community banks and changes to examination practices. Regulatory uncertainty complicates strategic planning for foreign entrants, increases compliance variability across charters, and may accelerate risk-based repricing of credit.
Infrastructure works disrupt logistics corridors
Large-scale Deutsche Bahn renewals and signalling upgrades are causing multi-month closures, with wider EU freight impacts on the Scandinavia–Mediterranean corridor. Congestion and modal shifts raise lead times and costs; shippers should diversify routes, build buffers, and lock capacity early.
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.
Property slump and demand uncertainty
Housing remains a key drag on confidence and consumption despite targeted easing. January showed slower month-on-month declines, yet year-on-year weakness persists across most cities. Multinationals should expect uneven regional demand, supplier stress, and heightened counterparty and payment risks.