Foreign Direct Investment Growth

Indonesia recorded a significant increase in foreign direct investment (FDI), reaching $24 billion in 2024, driven by sectors like mineral processing, energy, and data centers. This trend reflects growing investor confidence despite geopolitical uncertainties, offering opportunities for economic expansion and infrastructure development.

Fiscal Strains and Political Uncertainty Impacting Markets

Brazil’s B3 stock index faces pressure from global geopolitical shocks, rising public debt (79.8% of GDP), and political doubts, including President Lula’s potential fourth term. High short-term debt exposure amid 14.75% Selic rates raises refinancing risks. Market volatility is heightened by stalled fiscal reforms and populist policies, affecting investor confidence and export-driven sectors.

Impact of Middle East Conflict on Oil Prices

Escalating conflicts in the Middle East, particularly involving Iran and the US, have led to surging oil prices and fears of supply disruptions via the Strait of Hormuz. This volatility threatens UK energy costs, inflation, and business operating expenses, prompting government calls for de-escalation and policies to shield energy-intensive sectors from price shocks.

Geopolitical Risks Affecting Supply Chains

Potential disruptions in the Strait of Hormuz and Middle East instability pose risks to global shipping routes critical for raw materials, electronics, and consumer goods imports into France. Increased insurance premiums and shipping costs elevate supply chain expenses, causing delays and uncertainty. Businesses must adapt strategies to mitigate risks from geopolitical shocks affecting procurement and distribution.

Security Challenges and Crime Impact

South Africa faces significant security challenges, including violent crime, mass shootings, and police operations arresting hundreds for serious offenses. High crime rates disrupt business operations, increase security costs, and deter foreign investment. Persistent insecurity undermines supply chain reliability and raises risks for international companies operating in the country.

Automotive Industry Production Recovery

Despite trade tensions and tariff uncertainties, Mexico’s automotive sector rebounded in June 2025 with record vehicle production and export growth. This resilience underscores Mexico’s critical role in North American supply chains but also highlights vulnerability to geopolitical and trade policy shifts.

Risks from Nuclear Threats and Infrastructure Vulnerability

The UK faces heightened risks from nuclear threats, with critical military and industrial sites identified as potential targets. The possibility of nuclear conflict or attacks on infrastructure like undersea cables poses severe risks to national security, economic stability, and continuity of business operations.

Trade Negotiations and Uncertainty

Ongoing trade negotiations with countries such as China, Vietnam, the UK, and Indonesia remain fluid and uncertain. The looming tariff deadlines create a volatile environment for businesses, with partial agreements and ambiguous terms fueling market anxiety. This uncertainty undermines investment confidence, complicates supply chain planning, and risks prolonged trade disruptions.

Energy Sector Expansion and Export Capacity

The commencement of natural gas exports from the South Pars Phase 14 refinery’s third processing train marks a strategic advancement in Iran’s energy sector. This expansion enhances Iran’s role as a key energy supplier, offering opportunities for international trade and investment despite geopolitical challenges, while contributing to global energy market dynamics.

China's Domestic Market and Competition Regulation

China's leadership is addressing 'disorderly low-price competition' to curb damaging price wars that hinder innovation and industrial upgrading. Regulatory efforts aim to stabilize sectors like automotive and e-commerce, influencing domestic market dynamics, foreign investment attractiveness, and the sustainability of China's manufacturing ecosystem.

Geopolitical Risks from Middle East Conflicts

Escalating tensions between Iran and Israel threaten critical trade routes like the Strait of Hormuz, through which 20% of global oil and gas flows. China’s energy imports and supply chain security face risks from potential blockades or disruptions, prompting Beijing to call for de-escalation and engage diplomatically to safeguard global economic stability.

Geopolitical Risks to Global Trade Routes

The Strait of Hormuz blockade threat poses severe risks to global maritime trade, including French imports of raw materials and consumer goods. Increased insurance costs and shipping delays could disrupt supply chains, elevate operational costs for French businesses, and necessitate strategic adjustments in logistics and sourcing to mitigate trade interruptions.

Cross-Border Organized Crime and Scams

Thailand confronts growing threats from organized crime linked to Cambodia, including large-scale online scams and money laundering facilitated by criminal networks protected by Cambodian authorities. Recent arrests of Western nationals involved in AU$80 million bond fraud highlight the sophistication of illicit operations. These activities undermine Thailand’s financial integrity, investor trust, and complicate bilateral security cooperation.

Economic Recovery and Default Risk Reduction

Pakistan leads emerging markets in reducing sovereign default risk, with a significant decline in default probability from 59% to 47%. This improvement is driven by macroeconomic stabilization, structural reforms, IMF engagement, and timely debt repayments. Enhanced credit outlooks signal renewed investor confidence, potentially attracting foreign capital and improving financing conditions for businesses.

Security and Safety Concerns

Turkey ranks low on global safety indices due to internal security challenges, including terrorism threats, political violence, and social unrest. Such conditions elevate operational risks for businesses, complicate logistics, and increase insurance and compliance costs. The fragile security environment necessitates heightened risk management for international trade and investment.

Climate and Water Resource Variability

Unusually heavy rainfall in June brought drought relief but also flooding in Mexico City and other regions, highlighting climate volatility. Water reservoir levels remain below historical averages in key areas, posing risks to agriculture, manufacturing, and urban infrastructure, which can disrupt supply chains and increase operational risks.

Japan's Rare Earth Ambitions Amid Supply Constraints

Japan aims to become a rare earth materials powerhouse as China tightens control over global supply chains. Despite a recent U.S.-China agreement, supply constraints persist, creating uncertainty for Japanese manufacturers reliant on these critical materials. This theme highlights strategic efforts to secure supply chains vital for high-tech industries and international trade.

Human Rights and Judicial Independence

Turkey faces significant international scrutiny over human rights violations and erosion of judicial independence. Reports highlight systematic disregard for European Court of Human Rights rulings, political interference in judiciary, mass detentions of opposition figures, and suppression of freedom of expression. These issues risk straining Turkey's diplomatic relations, impacting foreign investment confidence, and complicating trade partnerships due to reputational and regulatory risks.

Regional Cooperation on Migration

The South African Human Rights Commission is initiating dialogue with SADC countries to address illegal immigration and border management. This regional cooperation aims to share responsibilities for migrants and improve border security, which is critical for stabilizing labor markets, reducing social tensions, and fostering a conducive environment for trade and investment.

Germany's Evolving Ukraine Policy

Chancellor Friedrich Merz's announcement of removing range restrictions on weapons supplied to Ukraine signals a significant shift in Germany's foreign and defense policy. This development impacts international security dynamics, arms supply chains, and Germany's relations with NATO allies and Russia, influencing investment and trade risks linked to geopolitical tensions.

China-Iran Strategic Economic Ties

China's deepening economic partnership with Iran, including a $400 billion 25-year cooperation agreement and the new China-Iran rail corridor, enhances China's Belt and Road Initiative reach. However, ongoing Middle East conflicts and US sanctions pose significant risks to trade routes, energy security, and supply chain stability, impacting China's global trade and investment strategies.

External Financing and Debt Sustainability

Pakistan faces substantial medium-term gross financing needs exceeding $100 billion through 2030, compounded by limited IMF SDR allocations and climate-induced economic shocks. Persistent trade deficits and import dependency strain foreign exchange reserves, challenging debt sustainability. Without enhanced multilateral support and export growth, Pakistan risks exacerbated debt distress, impacting fiscal space and investor confidence.

Geopolitical Risks in Central Asia

Instability risks in Central Asia, exacerbated by potential fallout from Middle East conflicts and Iran's political trajectory, pose direct national security concerns for Russia. Disruptions in this strategic region could affect supply routes, regional cooperation, and investment climates, necessitating heightened geopolitical risk management for businesses operating in or through Russia.

Aviation and Direct US Flight Expansion

Thailand’s government plans to establish direct flights to the United States supported by regulatory reforms and safety upgrades following FAA Category 1 status restoration. This initiative aims to boost tourism, trade, and investment, positioning Thailand as a regional aviation hub and enhancing connectivity with a key economic partner.

Environmental Risks from Extreme Rainfall

Mexico City experienced its rainiest June in 21 years, with widespread flooding and infrastructure strain. Such extreme weather events pose risks to urban operations, supply chains, and infrastructure resilience, emphasizing the need for adaptive strategies in business continuity planning amid climate variability.

Political Polarization and Conservative Surge

Brazil’s political landscape is sharply divided, with Bolsonarist conservatives matching Lula’s supporters at 35%. The rise of conservative and evangelical influence shapes policy debates, potentially affecting deregulation, social programs, and trade relations. This polarization increases political volatility, complicates governance, and introduces uncertainty for long-term business planning.

US Sanctions on Mexican Banks

The US Treasury sanctioned three major Mexican financial institutions—CIBanco, Intercam, and Vector Casa de Bolsa—for laundering millions of dollars linked to drug cartels, particularly related to fentanyl trafficking. These sanctions restrict transactions with US banks, disrupting cross-border financial flows and raising concerns about compliance risks and reputational damage for Mexico's banking sector.

Climate Risks as Systemic Economic Threats

The Bank of Russia identifies climate-related physical and transition risks as systemic threats to the Russian economy and financial sector. Without proactive measures, up to one-third of companies could face financial instability by the mid-2030s. However, climate challenges also present opportunities, such as increased demand for critical minerals and nuclear energy development, influencing investment strategies and economic modernization.

China's Strategic Belt and Road Expansion

China is deepening geopolitical and economic ties through infrastructure projects like the China-Iran rail corridor, enhancing trade routes that bypass maritime chokepoints such as the Strait of Malacca. These initiatives bolster China’s energy security, regional influence, and resilience against Western sanctions, while also exposing supply chains to geopolitical risks from regional conflicts.

Political Polarization and Conservative Resurgence

Bolsonarist conservatives have reached parity with Lula supporters, reflecting a global trend of rising nationalism and skepticism toward globalization. Evangelical political influence is growing, shaping policy debates on social issues. This polarization introduces policy volatility, complicates reform prospects, and creates an unpredictable environment for business and investment strategies in Brazil.

Stock Market Performance and Investor Confidence

The Nikkei stock index recently surpassed 40,000 points for the first time in months, reflecting improved business sentiment and investor confidence. This bullish market environment supports capital inflows and investment activities, influencing corporate financing and international investor strategies focused on Japan’s equity markets.

Transatlantic Political Relations

Chancellor Merz's visit to the US highlights the fragile yet crucial transatlantic relationship amid political unpredictability. The visit underscores the importance of diplomatic gestures and maintaining dialogue with the US administration, which directly impacts bilateral trade, investment confidence, and geopolitical stability affecting German businesses operating internationally.

Energy Subsidy Pressures

Rising global oil prices due to Middle East tensions significantly strain Indonesia’s state budget through increased energy subsidies. With subsidized fuel prices fixed below economic levels, escalating crude prices inflate subsidy burdens, risking fiscal deficits, weakening the rupiah, and forcing government budget adjustments that affect public spending and economic stability.

Geopolitical Tensions Impacting Trade

Escalating Iran-Israel conflict and Middle East tensions threaten India's trade routes, especially through the Strait of Hormuz, a critical passage for 60-65% of India's crude imports. This raises risks of supply chain disruptions, increased shipping and insurance costs, inflationary pressures, and challenges to energy security, affecting exports, imports, and overall trade stability with West Asia.

Expansion of Domestic Manufacturing Ecosystems

The launch of HMZ Group’s Joint furniture manufacturing arm with $4m investment exemplifies Egypt’s growing industrial capacity and supply chain integration. The project aims to meet rising domestic demand, reduce import reliance, and expand exports to regional and global markets. This reflects broader trends of industrial modernization and value chain localization aligned with Egypt Vision 2030.

US Political Uncertainty Impacting China Relations

The unpredictability of US political leadership, exemplified by Trump’s erratic policies and public disputes, fosters Chinese caution in negotiations. This uncertainty complicates bilateral trade and investment agreements, prompting China to adopt a 'trust but verify' approach, affecting global economic stability and strategic planning.