Mission Grey Daily Brief - January 02, 2025
Summary of the Global Situation for Businesses and Investors
The Russia-Ukraine war continues to rage on, with Putin launching a New Year's Day drone attack on Kyiv, North Korean troops joining the fight, and Western countries lifting their ban on Ukraine using long-range missiles to attack targets inside Russia. Meanwhile, Israel is wary of deepening ties between Russia and Iran, which could involve a nuclear program. In Montenegro, several people were killed in a shooting after a bar brawl, and the shooter is still on the run. Thailand's aviation sector is expected to improve in 2025, but the country will need to manage its power supply as the data centre industry grows.
Russia-Ukraine War
The Russia-Ukraine war has been internationalised, with North Korean troops joining the fight and Western countries lifting their ban on Ukraine using long-range missiles to attack targets inside Russia. Russia has been receiving military assistance from Iran and North Korea, while Ukraine has been receiving financial and military assistance from the US, NATO, and the EU. Ukraine has ended a five-year deal that allowed Russian gas to flow to EU states through its pipeline networks, significantly reducing Russian gas imports to the EU. This move will cost Russia billions and impact countries like Moldova, which rely on Russian gas via Ukraine.
Israel-Russia-Iran Relations
Israel is wary of deepening ties between Russia and Iran, which could involve a nuclear program. Russia and Iran have been working together on a nuclear program, and Israel is concerned about the potential implications of this collaboration. Israel has been working to neutralise its enemies, and the deepening ties between Russia and Iran could pose a threat to Israel's security.
Montenegro Shooting
In Montenegro, several people were killed in a shooting after a bar brawl, and the shooter is still on the run. The shooter, identified only by his initials AM, fled the scene armed, and police have dispatched special troops to search for him. The shooting has caused concern among residents, and police have urged them to remain calm and stay indoors.
Thailand's Aviation Sector and Power Supply
Thailand's aviation sector is expected to improve in 2025, but the country will need to manage its power supply as the data centre industry grows. Thailand is seeing a significant increase in power demand as the government pushes the growth of data centres and the cloud service industry. The Board of Investment is supporting investment projects in data centres and cloud services, and Thailand is becoming a regional digital innovation hub. However, data centres are crucial infrastructure for artificial intelligence (AI) technology, and if AI-based tasks continue to grow in Thailand, a huge amount of electricity will be needed to keep the facilities running. One AI-embedded data centre requires between 300 and 1,000 megawatts of electricity, and Thailand will need to find a way to meet this demand while reducing its carbon footprint and ensuring a stable supply.
Further Reading:
Breaking News: Several killed as man opens fire in Montenegro bar - Telangana Today
Consulting the oracles - Bangkok Post
How the wars of 2024 brought together rivals and created enemies - BBC.com
Israel wary as Russia-Iran ties deepen, possibly involving nuclear program - Al-Monitor
Ukraine ends Russian gas pipeline to Europe – but how much will it cost Moscow? - The Independent
Themes around the World:
Semiconductor push targets 2030
Thailand has launched a national semiconductor strategy aiming to build a regional chip hub by 2030 through incentives, foreign investment attraction, workforce development, and stronger R&D, potentially reshaping electronics investment flows and higher-value manufacturing opportunities.
Preferential access largely preserved
Despite new U.S. tariff actions under Section 301, Mexico retained duty-free treatment for roughly 85% of exports that comply with USMCA rules. This preserves a major competitive advantage, but sharply raises the value of origin compliance and documentation discipline.
Corporate insolvency and retail damage
Russian business conditions are worsening: corporate bankruptcies rose 10.8% in the first half, new company registrations fell 23.6%, and drone strikes damaged Wildberries logistics hubs, reportedly affecting 15% of warehouse capacity and causing major losses for e-commerce sellers and suppliers.
Modern Slavery Compliance Tightens
The tariff dispute has accelerated Australia’s tougher anti-modern slavery agenda, with proposed stronger penalties and possible criminal exposure for large companies failing to address supply-chain abuses. Exporters and investors face higher due-diligence costs, stricter reporting, and more rigorous supplier screening.
AI demand drives trade surge
Strong multiyear AI chip demand continues to lift Taiwan’s trade importance and growth outlook. One report said Taiwan became the United States’ third-largest trading partner in 2026, with exports above $116.1 billion in the first five months and GDP growth projected near 9.64%.
Selective DHE exemptions shape flows
Indonesia exempted the US, China, Canada, and Australia from parts of the DHE banking requirements because of bilateral arrangements. The carve-outs may redirect financing and banking choices for commodity exporters, while the policy itself will be reviewed again in mid-September.
Industrial exports and plants hit
The maritime disruption now extends well beyond grain. Iron ore, steel and sunflower oil shipments have been interrupted, with companies including Allseeds and mining operations such as Poltava and Southern GOK reporting stoppages or reduced activity due to blocked export channels.
Critical Minerals Investment Tightens
Canberra stripped Chinese investors of voting rights in Northern Minerals, underscoring tougher scrutiny of strategic assets. The decision signals stricter foreign investment conditions in rare earths and other critical minerals, affecting deal structures, ownership rights, and supply-chain partnerships.
Comercio bilateral sigue indispensable
Pese a la retórica política, la integración económica sigue siendo profunda: México y Canadá representan 29% del comercio estadounidense y 61.3% del comercio de autopartes de EE.UU. Esta interdependencia limita desacoples rápidos, pero mantiene alta exposición empresarial a decisiones políticas.
Conflict-driven energy shockwaves
Brent crude briefly touched $102 a barrel and was still about 35% above July 1 levels, while disruptions around Iran also lifted refined-product and gas prices, threatening higher input costs, supply-chain inflation and sourcing pressure across transport, manufacturing and petrochemical sectors.
China Market Opportunity Persists
Business groups are still urging Australian firms to expand in China, citing China’s 4.7% first-half GDP growth and demand across clean energy, sustainable agriculture, education, tourism, and environmental services. This supports selective growth strategies despite geopolitical and regulatory complications.
Grid and energy network strain
UK energy infrastructure faces mounting pressure from underinvestment and aging networks. Reports cite a need for about £89 billion in grid upgrades by the 2030s, while renewable projects face queue times exceeding 10 years, constraining electrification, industrial expansion and data-center growth.
Turkey-Iraq Trade Deepening
Turkey and Iraq are expanding commercial ties through business roundtables, customs facilitation discussions and higher bilateral trade ambitions. Reported trade reached roughly $17 billion to above $20 billion in 2024, with targets rising toward $30 billion, supporting exporters, contractors and border commerce.
Sectoral export competitiveness shifts
Recent US tariff exemptions protect key Indian sectors including generic pharmaceuticals, smartphones, steel, aluminium and auto parts, but textiles face disadvantage against Asian rivals. This uneven treatment may redirect investment, sourcing and export strategies across India’s manufacturing base.
EU-China trade conflict deepens
Reporting points to a widening structural clash with Europe, including a €360.6 billion EU goods deficit with China in 2025 and existing EV tariffs of 7.8%-35.3%. Companies should prepare for broader trade defenses, diverted exports, and shifting market access conditions.
Winter gas vulnerability exposed
Britain enters winter with exceptionally low gas storage resilience, just three to four days versus around 90 in Germany and over 100 in France. With gas supplying more than one-third of UK energy, price spikes could disrupt households, industry, and operating cost planning.
Outbound investment toward United States
Korean investment stock in the United States exceeded $90 billion in 2024, with major projects in semiconductors, batteries, critical minerals, and steel. This deepens cross-border industrial integration but may redirect capital, management attention, and supply-chain decisions away from the domestic base.
Fuel Security Drives Refining Plans
Canberra and Western Australia funded a $4 million feasibility study for a new refinery as the country imports about 90% of liquid fuels. Middle East conflict and higher petrol and diesel prices are pushing policies aimed at reducing import dependence and supply vulnerability.
Stricter foreign investment screening
France lowered the review threshold for non-European investors in sensitive listed companies from 25% to 10%, covering sectors such as AI, semiconductors, energy and healthcare. The move raises deal uncertainty, lengthens approvals and tightens strategic M&A conditions.
Sector exemptions create uneven exposure
India’s trade exposure to the US is increasingly sector-specific. Pharmaceuticals, smartphones, semiconductors and some energy products remain outside certain additional tariff measures, while engineering goods, textiles, chemicals and machinery have faced higher duties, influencing investment allocation and export strategy.
US Tariff Shock Escalates
Washington’s planned 50% tariffs on about US$20 billion of Canadian goods, effective August 19, would hit products previously protected by CUSMA/USMCA, sharply raising cross-border trade uncertainty and forcing exporters, investors, and manufacturers to reassess North American market exposure.
Tariff advantages remain provisional
Taiwan’s current US tariff treatment is not fully institutionalized and still depends on pending forced-labor and industrial-overcapacity investigations. Businesses should treat today’s preferential access and 2,231-item exemption list as negotiable, not permanent, when planning export strategies.
Inflation and FX risks persist
Despite recent stabilization, the IMF expects inflation to reach about 16.7% in late 2026 due to currency depreciation and energy prices. Businesses in Egypt face continued cost volatility, pricing pressure, and uncertainty around imported inputs and consumer demand.
Alternative Sea Lanes Gain Priority
Japan is financing nautical mapping of five Southeast Asian straits with Indonesia and the Philippines, aiming to diversify routes away from vulnerable chokepoints. The initiative signals longer-term supply-chain rerouting, higher logistics planning demands, and new resilience opportunities for shipping and infrastructure providers.
Semiconductor chokepoint risk rises
Military and grey-zone escalation around the Taiwan Strait threatens a critical semiconductor corridor, with reports citing over 90% of TSMC advanced-chip output exposed. Even limited disruption could raise logistics costs, delay deliveries, and hit automotive, electronics, telecoms, and defense supply chains.
Fuel shortages disrupt logistics
Repeated refinery disruptions triggered domestic fuel shortages, prompting extended diesel and gasoline export bans. Freight costs rose sharply, with some reports showing road cargo prices up 28.8% year on year, undermining delivery reliability, export transport availability and nationwide supply-chain planning.
Tariffs Reshaping Fiscal Markets
Tariffs are increasingly viewed as a meaningful revenue source, with projections of $1.9 trillion over time and roughly $31 billion collected from temporary measures through July 5, tying trade policy more closely to deficit and bond-market considerations.
Tech talent incentives expand
Israel is using time-limited hi-tech tax reforms through end-2026 to attract returning professionals and global skilled workers. The measures address equity compensation and cross-border taxation, aiming to relieve talent shortages in AI, cybersecurity, semiconductors and digital health industries.
Auto sector enters restructuring
Germany’s automotive downturn is intensifying, with BMW cutting 8,000 jobs globally, more than half likely in Germany, while Volkswagen has warned of much larger reductions. Cost pressure, weaker profitability and Chinese competition are forcing restructuring across manufacturing and supplier networks.
Presión sobre acero y aluminio
México mantiene como prioridad reducir aranceles estadounidenses de 25% y hasta 50% sobre acero, aluminio y vehículos. Estas medidas encarecen insumos, erosionan competitividad manufacturera y afectan decisiones de localización industrial, especialmente en cadenas integradas con Estados Unidos y Canadá.
Labour shortages disrupt key sectors
Recent coverage highlights acute labor shortages driven by reservist mobilization and the absence of many Palestinian workers. Construction activity has fallen substantially, unemployment is below 3%, and wages are rising, increasing operating costs and execution risks for projects, contractors, and service businesses.
US-Vietnam negotiations remain tense
Despite an existing trade framework, U.S.-Vietnam negotiations remain deadlocked on transshipment and other non-tariff barriers. The lack of a finalized agreement prolongs policy uncertainty for multinationals, complicating investment timing, sourcing decisions, and long-term planning for factories oriented toward the U.S. market.
IMF-backed reform continuity
The IMF approved roughly $1.8 billion in fresh financing, taking total programme support to about $7.3 billion, while endorsing exchange-rate flexibility, fuel-price adjustments, and fiscal restraint. Continued external support helps reserves and confidence, but keeps policy reform pressure high for businesses.
US Tariff Escalation Risk
Canada faces a potential 50% U.S. tariff on roughly $20-$28 billion of imports from August 19, with talks now on a cliff-edge timetable. The dispute threatens exporters, pricing, cross-border contracts, and investment planning across multiple sectors.
Naval Blockade Chokes Oil Exports
The renewed US naval blockade is sharply constraining Iran’s export capacity, with average oil loadings reportedly dropping from 1.8 million barrels per day to below 500,000 and around 50 laden tankers idling, tightening supply and complicating maritime operations.
US tariff headwinds for Europe
New US tariffs of 10% on EU goods, introduced after a forced-labor investigation, create fresh external pressure on French exporters and multinational supply chains. Additional US probes on overcapacity and pharmaceutical pricing could further widen trade uncertainty for France-based operations.