USMCA Tariffs Here to Stay

Washington has signaled automotive, steel and aluminum tariffs will persist through the 2026 USMCA review. Mexico sent over 2.8 million of 4 million vehicles produced in 2024 to the United States, so enduring duties will materially alter pricing, margins and investment planning.

Logistics Corridor Expansion Advances

Thailand is reviving the 1 trillion baht Land Bridge and accelerating southern double-track rail links with Malaysia, including routes exceeding 100 billion baht. If delivered, these projects could improve redundancy, cross-border freight efficiency, and regional distribution planning.

Investment Climate Improving Rapidly

Foreign direct investment inflows rose from SR28 billion in 2017 to SR133 billion in 2025, with stock reaching SR1.1 trillion. Reforms including wider 100% foreign ownership and streamlined licensing improve entry conditions, though FDI still remains below original Vision targets.

Macro Policy Balancing Act

The RBI is maintaining a data-dependent stance as oil shocks, rupee pressure and inflation risks complicate policy. This cautious approach supports stability, but uncertainty over rates, fuel prices and external balances could affect borrowing costs, investment timing and consumer demand across sectors.

Fuel import vulnerability exposed

Australia’s heavy dependence on imported liquid fuels has become a frontline business risk. China supplied about 30% of jet fuel last year, while Middle East disruption and export curbs threaten aviation, mining logistics, freight continuity and broader commodity exports.

Credit Outlook Supports Capital Inflows

Moody’s upgraded Thailand’s outlook to stable and affirmed its Baa1 rating, citing eased tariff risks, stronger investment momentum and improved political continuity. This should support financing conditions and investor confidence, though rising public debt and weak long-term growth remain constraints.

Tourism Foreign Exchange Buffer

Tourism is providing critical foreign-exchange support despite regional volatility. Revenues reached a record $16.7 billion in FY2024/25, arrivals climbed to 19 million in 2025, and stronger services exports partially offset pressure from shipping losses and energy imports.

Fiscal stabilization supports confidence

Moody’s says government debt may have peaked at 86.8% of GDP in 2025 and could decline to 84.9% by 2028. Narrower deficits and stronger tax collection support macro stability, though high interest costs still limit policy flexibility and public investment.

Renewables and Industrial Transition

Egypt aims to raise renewables to 45% of electricity generation by 2028, adding major wind, solar and battery capacity while promoting local manufacturing. This supports energy security and greener industry, but requires grid upgrades, financing discipline and timely project execution.

Supply-Chain Security Lawfare Expansion

Beijing is expanding legal tools covering anti-sanctions, export controls and industrial supply-chain security, including extraterritorial reach. New powers to investigate foreign entities and counter ‘discriminatory’ restrictions increase operational uncertainty for multinationals, especially around compliance, licensing, data-sharing, and partner due diligence.

PIF-Led Mega Project Demand

The Public Investment Fund’s assets reached about $909.7 billion, supporting giga-projects such as NEOM, Diriyah and Qiddiya. These projects generate major contract pipelines in construction, technology, tourism and services, while also raising execution, workforce and local-content expectations for foreign partners.

Energy Tariff Reforms and Costs

Pakistan has committed to cost-reflective electricity, gas, and fuel pricing under IMF conditions, including subsidy reform and periodic tariff adjustments. This should improve sector viability, but raises operating expenses, squeezes industrial margins, and weakens competitiveness for energy-intensive exporters and manufacturers.

Labor Unrest In Manufacturing

Escalating union disputes at Samsung, Hyundai and other major manufacturers threaten production continuity in semiconductors, autos and shipbuilding. A possible Samsung strike alone could reportedly cause about 30 trillion won in losses, delaying exports, disrupting suppliers, and weakening Korea’s industrial competitiveness.

Weapons Export Policy Opening

Kyiv is preparing controlled arms exports and ‘Drone Deals’ with selected partners while reserving output for domestic military needs first. With surplus capacity reportedly reaching 50% in some segments, exports could generate $1.5-2 billion annually and reshape industrial supply relationships.

Import Dependence on Norway

Declining domestic output is increasing UK reliance on Norwegian pipeline gas and US LNG. Reports indicate the UK may consume about 63 bcm in 2026, with roughly half from Norway, raising exposure to external pricing, infrastructure bottlenecks and geopolitical disruption.

US-Taiwan Supply Chain Realignment

Twenty Taiwanese firms signaled roughly US$35 billion of new U.S. investment, while Taiwan expanded financing guarantees and industrial park planning. The shift deepens U.S.-Taiwan supply-chain integration, but may gradually relocate capacity, talent, and supplier ecosystems away from Taiwan.

Energy and Grid Reconstruction

Energy systems remain strategically exposed but also central to near-term investment. New EU-EIB packages exceeding €600 million target grids, efficiency, and winter resilience, while energy attracted more than a quarter of applications to a US-Ukraine reconstruction fund, highlighting both risk and commercial demand.

Semiconductor Controls Hit Supply

New US restrictions on chip-tool exports to China’s Hua Hong and Huali widen technology controls across advanced manufacturing. Equipment suppliers face potential multibillion-dollar sales losses, while electronics, AI and industrial firms must prepare for tighter licensing, compliance burdens and supply fragmentation.

Skilled Labor and Migration Dependence

Demographic decline and retirements are deepening Germany’s labor shortages across healthcare, logistics, manufacturing, and services. Business groups say the economy needs roughly 300,000 net migrants annually, making immigration policy, integration capacity, and social climate increasingly material to operating continuity and expansion.

Provincial Retaliation and Regulatory Friction

Provincial restrictions on U.S. alcohol sales and disputes over dairy, procurement, and digital rules are becoming bargaining chips in Canada-U.S. talks. This multi-level policy friction increases regulatory unpredictability for consumer goods, agribusiness, technology platforms, and businesses dependent on provincial market access.

Gwadar Logistics Opportunity, Fragile

Gwadar Port cut berthing fees by 25%, transshipment charges by 40% and transit cargo charges by up to 31% to attract traffic. Yet the port’s recent surge appears crisis-driven, while operational bottlenecks, shallow depth, and investor exits limit reliability.

Cyber Rules Raise Compliance

New cyber governance and data localization momentum are reshaping operating requirements for digital businesses. Vietnam ratified the Hanoi Convention, reports thousands of cyberattacks and over 3,000 ransomware-hit enterprises, increasing compliance, security and local infrastructure demands for investors.

Outbound Investment Realignment

South Korea is preparing first projects under its $350 billion US investment pledge, with annual deployment capped at $20 billion and LNG infrastructure under review. The shift channels capital outward, influencing domestic investment allocation, bilateral market access, and supplier localization choices.

Critical Minerals Allied Investment

Australia and Japan expanded critical minerals cooperation with A$1.67 billion in support for mining, refining, and manufacturing projects covering gallium, rare earths, nickel, cobalt, fluorite, and magnesium. This strengthens non-China supply chains and creates opportunities in processing, technology, and long-term offtake agreements.

Industrial Policy Supports Strategic Sectors

Ottawa is using targeted industrial support to cushion trade shocks and anchor strategic manufacturing, including loans, regional funds and critical-mineral financing. This improves near-term liquidity for affected firms, but also signals deeper state involvement in market adjustment and capital allocation.

Commodity and External Shock Exposure

Brazil’s trade outlook remains highly sensitive to oil, fertilizer, and broader commodity volatility linked to external conflicts. Higher energy prices are feeding inflation and freight costs, while commodity dependence simultaneously supports exports, creating mixed implications for supply chains and trade competitiveness.

Rare Earths Export Leverage

China has tightened licensing and controls on heavy rare earths, magnets, and related refining technologies, reinforcing its leverage over critical mineral supply chains. Earlier controls reportedly caused auto-sector shortages within weeks, underscoring serious exposure for electronics, aerospace, automotive, and defense-adjacent industries.

Tax Reform Implementation Uncertainty

The ongoing rollout of Brazil’s consumption tax reform remains a major operational issue for multinationals, with implications for pricing, invoicing, compliance systems and supply-chain design. Transition complexity could generate temporary legal uncertainty, uneven sectoral burdens and adaptation costs.

War-driven fiscal pressure

Rising defense expenditure is straining public finances and may require higher taxes, spending cuts or additional borrowing. Reports cite a roughly $94.5 billion 10-year defense plan, with debt-to-GDP potentially reaching 83% by 2035, increasing medium-term sovereign risk.

War Risk Hits Logistics

Russian strikes continue to disrupt rail, port, and export infrastructure, raising freight costs, transit delays, and insurance burdens. Railway attacks exceeded 1,500 since early 2025, while ports and corridors operate under constant threat, directly affecting trade reliability and supply-chain planning.

Tech And Capital Inflow Resilience

Despite conflict exposure, Israel continues attracting capital linked to technology and security strengths, helping compress the country risk premium and support the currency. For investors, this points to selective resilience in high-value sectors, though valuations and operating assumptions remain highly sensitive to security shocks.

Weak Growth and Tight Financing

Russia’s economy contracted 1.8% in January-February, while the central bank cut rates only to 14.5% amid 5.9% inflation and a weak investment climate. High borrowing costs, volatility and policy uncertainty continue to constrain market entry, expansion plans and domestic demand.

Freight Costs Rise With Conflict

Middle East disruption, elevated oil prices, and persistent Red Sea rerouting are increasing fuel surcharges, tightening trucking capacity, and complicating port forecasts. US container imports rose 12.4% month on month in March, but major ports still reported annual declines, highlighting unstable logistics conditions for importers.

Logistics Corridors Are Reordering

Trade routes linked to Russia are being rerouted by sanctions and wider regional insecurity. Rail freight between China and Europe via Russia, Kazakhstan and Belarus rose 45% year on year in March, offering transit opportunities but carrying elevated legal, payment and reputational risks.

US Tariff and Tax Friction

U.S.-UK trade tensions have intensified around Britain’s 2% digital services tax, with Washington threatening tariffs. Official data show UK goods exports to the U.S. fell 24.7%, or £1.5 billion, after recent tariff measures, raising costs and uncertainty.

Tourism and Services Expansion

Tourism is becoming a major demand engine, with 123 million visitors in 2025 and ambitions to reach 150 million by 2030. Rising pilgrim and leisure flows boost hospitality, transport, retail and aviation, creating opportunities but also capacity and service-delivery pressures.