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Mission Grey Daily Brief - January 27, 2025

Summary of the Global Situation for Businesses and Investors

The world is witnessing a new geopolitical era marked by increased government intervention, less free trade, and big-power swagger. US President Donald Trump, in his second term, is dominating discussions at the World Economic Forum in Davos, Switzerland. His protectionist policies and aggressive stance towards China and Russia are shaping global dynamics. Meanwhile, Slovakia's pro-Russian turn is challenged by civil society protests, and political turmoil in South Korea raises questions about its democratic institutions. Greenland's strategic importance in the Arctic Century is highlighted, as powers vie for influence. Lastly, the Ukraine-Russia war continues, with European countries preparing for potential conflict and Trump's commitment to NATO allies under scrutiny.

Trump's Second Term and the New Geopolitical Era

The World Economic Forum in Davos, Switzerland, has been dominated by discussions about US President Donald Trump and his impact on global politics and economics. Trump's protectionist policies, aggressive stance towards China and Russia, and criticism of global elites have shaped the discourse. The Atlantic Council notes that Trump's leverage includes control of Congress, a conservative Supreme Court, and the US's economic dominance, with 25% of global GDP. Nir Bar Dea, CEO of Bridgewater Associates, attributes Trump's influence to unique circumstances and his determination to trigger change.

Political Turmoil in South Korea

South Korea's political turmoil, following the arrest of President Yoon Suk Yeol, has mixed reactions from foreign residents. While some view it as a temporary setback, others see it as a significant blow to the country's reputation and trust in its democratic institutions. Foreign businesses remain committed to the country, with high-level meetings reassuring them of the government's support. However, the polarization of Korean politics and the perceived weakness of its democratic institutions may impact foreign investment and business operations.

Greenland's Strategic Importance in the Arctic Century

Greenland's strategic importance in the Arctic Century is highlighted by Dr Dwayne Ryan Menezes, Founder and Managing Director of the Polar Research and Policy Initiative. As the world becomes more multipolar and connected, Greenland's location and resource potential make it a key player. The US, UK, and EU, seeking to reduce dependence on China for critical minerals, are increasingly interested in Greenland, with its abundant resources and strategic location. Trump's interest in Greenland is not new, but his approach and persistence are surprising. As the US seeks to secure critical minerals and reduce its reliance on China, Greenland's resources and geopolitical significance will likely play a crucial role.

Ukraine-Russia War and European Preparations

The Ukraine-Russia war continues, with European countries preparing for potential conflict. Lithuania is laying mines on bridges to Russia, NATO ships are hunting Russia's "Shadow Fleet", and plans for a missile defense system are underway. European officials and citizens are concerned about an emboldened Kremlin and Trump's isolationist stance. Trump's criticism of Vladimir Putin and demand for European allies to pay 5% of their GDP towards defense have raised tensions. European self-reliance and defense spending are key topics as the continent braces for potential conflict.


Further Reading:

Dispatch from Davos: Trump is both symptom and driver of our new geopolitical era - Atlantic Council

Europe braces for 'most extreme' military scenario as Trump-Putin 2.0 begins - NBC News

From Freedom Square to Europe: Civil Society Rises Against Slovakia’s Pro-Russian Turn - Visegrad Insight

Looking Ahead to the Arctic Century: Greenland as Kingmaker - PRESSENZA – International News Agency

Political turmoil is hit to Korea's image but temporary, say foreign residents - The Korea Herald

Ukraine-Russia latest: Zelensky makes demand for Trump talks to end war as Kyiv shoots down missile attack - The Independent

Ukraine-Russia war live: Putin’s forces claim capture of strategic town in Donetsk - The Independent

Themes around the World:

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Import costs and inflation relief

A stronger shekel is helping reduce imported inflation, lowering local costs for foreign-sourced goods, electronics, and consumer products. This can support retail and input purchasing, but the benefit may be uneven if importers retain savings and if renewed conflict weakens the currency again.

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Defense Buildup and Industrial Policy

Tokyo is revising core security documents and may accelerate defense spending to 2% of GDP by fiscal 2025, with debate extending higher. Expanded defense procurement, drone investment, and export liberalization will create opportunities in aerospace, electronics, cybersecurity, and dual-use manufacturing.

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Energy Diversification Investment Drive

Saudi Arabia is accelerating diversification beyond hydrocarbons through renewables and civilian nuclear development. Targets include 50% renewable electricity by 2030 and net zero by 2060, creating opportunities in grids, engineering, storage, nuclear supply chains, and long-term industrial power demand.

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Transport Strikes Disrupt Logistics

Recent SNCF strikes cut about one-third of TGV services and half of Intercités, with regional networks heavily affected. Ongoing labor tensions around wages, restructuring, and competition increase risks to employee mobility, domestic freight flows, and just-in-time supply chain reliability.

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Competitive Tariff Access Race

New Delhi is seeking preferential US tariff treatment over rivals including Vietnam, Bangladesh, Sri Lanka, Pakistan, Malaysia, and Indonesia. Even small duty differentials could redirect orders, factory siting, and supplier selection in textiles, engineering goods, leather, chemicals, and light manufacturing.

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Cross-Strait Security and Shipping

Chinese military and quasi-civilian maritime pressure near Taiwan is elevating regional security risk for shipping, insurance and contingency planning. Any disruption in the Taiwan Strait or eastern EEZ would affect semiconductor flows, electronics trade lanes and just-in-time manufacturing globally.

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Energy Export Diversification Push

Ottawa is accelerating LNG, oil, electricity and pipeline expansion to diversify beyond the U.S. Prime Minister Carney targets doubling non-U.S. exports this decade, while South Korea plans to raise Canadian crude imports from 4.88 million barrels in 2025 to as much as 16 million in 2026.

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Higher Rates and Fiscal Stabilisation

The Reserve Bank lifted rates 25 basis points to 7%, while Treasury reported a primary surplus of 1.1% of GDP and stabilising debt. Macro credibility supports investor sentiment, but tighter financing conditions raise borrowing costs and may slow private investment and consumer activity.

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Energy Export Channels Under Pressure

Beyond crude, EU discussions now include possible restrictions on LNG vessels, while sanctions may extend to major firms such as Lukoil and Rosneft. Businesses exposed to Russian hydrocarbons face greater contract risk, shipping constraints, asset impairment and accelerated diversification requirements.

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Won Volatility Pressures Operations

The won has weakened sharply despite strong external accounts, prompting Seoul and Washington to coordinate on currency stability. While April posted a $28.29 billion current-account surplus, exchange-rate swings still complicate import costs, treasury planning, hedging decisions and foreign-investor confidence.

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US Tariff Exposure Rising

Thailand faces mounting pressure from US tariff actions and trade investigations, pushing Bangkok to diversify export markets and deepen regional partnerships. Heightened uncertainty is particularly relevant for electronics, autos and intermediate goods producers managing pricing, market access and supply-chain allocation decisions.

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Supply Chain Diversification Advantage

Amid Red Sea and Hormuz disruptions, Turkey’s diversified sourcing and multimodal networks are enhancing its role as an alternative manufacturing and transit base. Businesses serving Europe, the Gulf, and Central Asia may gain from shorter lead times and route diversification.

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Energy price and logistics shock

The Iran war and disruption around the Strait of Hormuz have pushed oil toward roughly $96 per barrel, reviving supply bottlenecks and inflation risks. For Germany’s energy-intensive manufacturers, higher input costs and transport uncertainty threaten margins, delivery schedules and procurement planning.

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Export Concentration and Cyclicality

South Korea’s growth is increasingly concentrated in the AI-driven memory cycle. First-quarter GDP rose 1.8% quarter on quarter and 3.8% annually, yet autos fell 5.9% in May and any slowdown in AI infrastructure spending could quickly weaken exports, earnings, and broader domestic demand.

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Fiscal Slippage Keeps Rates High

Brazil’s fiscal credibility is under pressure from election-year stimulus, subsidized credit and Congress-backed spending bills. With Selic at 14.5% and inflation expectations at 5.11%, financing costs, FX volatility and project hurdle rates remain elevated for investors and operators.

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Energy Supply Diversification Drive

Middle East conflict and Hormuz exposure are pushing Seoul to diversify imports. South Korea plans to more than triple Canadian crude purchases to 16 million barrels in 2026, pursue 3.4 million tons of Canadian LNG, and deepen critical-minerals stockpiling cooperation.

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Energy Security and Fuel Exposure

Australia remains highly exposed to global fuel shocks, importing more than 90% of transport fuels. Strait of Hormuz disruption triggered panic buying and emergency supply measures, underscoring operational risks for freight, mining, and agriculture, while increasing the strategic value of stockpiles, refining access, and energy diversification.

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Tech Regulation and Privacy Risks

Canada’s proposed lawful-access Bill C-22 has triggered warnings from Signal, Apple, Google, Meta and VPN providers that they may limit services or exit. Metadata retention requirements and perceived encryption risks could raise regulatory costs, deter digital investment, and complicate data governance for businesses operating in Canada.

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Higher Rates and Inflation Pressures

The Bank of Korea kept rates at 2.5% but signaled caution as geopolitical energy shocks, a weak won, and firmer inflation build pressure for tightening. Rising borrowing costs could weigh on domestic demand, real estate exposure, and leveraged corporate investment.

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Migration controls and border reform

Government has approved a new migration approach as pressure mounts for tighter border enforcement and port reform. While stronger administration could improve compliance, protests, corruption and policy tightening risk disrupting transport, cross-border labour mobility, SADC trade corridors and investor sentiment in consumer-facing sectors.

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War Damage to Industrial Capacity

Airstrikes, blockade pressure and infrastructure disruption have damaged Iranian businesses and parts of the oil sector, while tax revenues are weakening. International firms should expect unreliable production, delayed deliveries, degraded logistics and higher reconstruction or replacement costs across exposed sectors.

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Energy Infrastructure Vulnerability

Russia continues targeting power and gas assets, including Naftogaz facilities and DTEK infrastructure, after destroying 9 GW of generation last winter. Blackouts across Kyiv and multiple regions increase production stoppage, backup-power costs, and operational uncertainty ahead of winter.

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Tariff Regime Volatility Intensifies

Washington is expanding tariff use through Section 301 and revised Section 232 actions, including proposed 10% to 12.5% duties on 60 economies and altered metal tariffs. Import costs, sourcing models, customs exposure, and pricing strategies are becoming materially less predictable.

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Resilient Growth Amid Regional Conflict

Despite regional war spillovers, Saudi Arabia is still expected to grow about 3.1% in 2026, outperforming most Gulf peers. Low public debt, ample reserves, inflation below 2%, and strong banking liquidity support business continuity, though medium-term investment confidence remains vulnerable.

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Energy policy clouds investment

Mexico’s state-favoring energy policies remain a major bilateral dispute, with U.S. industry alleging Pemex benefits at private investors’ expense. Uncertainty over market access, electricity availability, and dispute resolution continues to weigh on industrial projects, operating costs, and long-term capital allocation.

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Regulatory Reform Versus Bureaucracy

Hanoi is streamlining licensing, customs and digital governance to improve the business climate, yet investors still face overlapping rules, uneven provincial enforcement and opaque implementation. This gap between policy ambition and administrative reality continues to raise compliance costs and complicate expansion planning.

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Climate volatility threatens farm logistics

Expectations of a strong El Niño and uneven rainfall raise risks to harvests, food prices, hydrology, and transport reliability. Even localized crop losses can disrupt planting and collection schedules, affecting export volumes, inland logistics, inventory planning, and agribusiness processing operations.

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Maritime flashpoint disruption risk

Rising tensions in the South China Sea and around Taiwan increase operational uncertainty for shipping, insurance, and contingency planning. Recent incidents near Scarborough Shoal and east of Taiwan highlight growing gray-zone pressure that could disrupt logistics and raise geopolitical risk premiums.

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War Spending Straining Finances

Russia’s war expenditures are running at least 2 trillion rubles above plan this year, with the budget deficit already at 5.9 trillion rubles by April. Rising fiscal pressure increases risks of taxation changes, spending cuts, delayed payments and macroeconomic instability affecting operating conditions.

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Tech Controls and Retaliation

Semiconductors and advanced manufacturing equipment remain a central fault line. Additional Western restrictions on chips or lithography tools could trigger calibrated Chinese retaliation across minerals, components or market access, increasing uncertainty for electronics, industrial technology and cross-border investment decisions.

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Auto Sector Rules Rewiring

Canada’s auto industry faces mounting pressure from possible tighter North American content rules and U.S.-specific sourcing thresholds. With over 90% of Canadian vehicle production sold into the U.S., any rules-of-origin shift would reshape manufacturing footprints, supplier contracts and future EV investment decisions.

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B50 Mandate Reshapes Energy

Indonesia will implement B50 biodiesel from 1 July 2026, aiming to cut diesel imports and save Rp157.28 trillion in foreign exchange. The policy strengthens energy security and palm oil demand, but may tighten feedstock availability, raise land-use pressures, and alter logistics and cost structures.

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Macro Volatility and Rate Risk

Canadian businesses face a difficult macro backdrop of weak growth, trade uncertainty and renewed inflation pressure from higher energy prices. With inflation near 2.8%, over 37,000 insolvency filings in the first quarter and shifting rate expectations, financing conditions and consumer demand remain fragile.

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Balochistan Security Disruptions

Worsening insecurity in Balochistan is directly disrupting business operations, cargo flows, and investor confidence. Province-wide strikes, blocked highways, truck attacks, extortion, and militant threats around Gwadar and CPEC routes are raising logistics costs, delaying shipments, and increasing protection requirements.

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Single Export Window Disruption

Indonesia launched a Danantara-controlled single export framework for strategic commodities including palm oil, coal, and ferroalloys from June 1. The policy may curb revenue leakage, but it introduces compliance changes, governance questions, and potential WTO scrutiny that could disrupt contracts and buyer confidence.

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Severe Inflation And Rial Collapse

Iran’s domestic economy is under acute strain, with May consumer inflation at 77.2% year on year and essential items up 113.8%. The rial has weakened from 32,000 per dollar in 2015 to over 1.7 million, distorting pricing and procurement.