Energy Sector Reform and Investment

Mexico is negotiating with global oil majors to revive hydrocarbon production and attract private capital, while expanding renewable energy and gas infrastructure. Regulatory reforms aim to balance state control with investment incentives, but contract risks and policy shifts remain a concern.

Suez Canal Economic Zone Expansion

The Suez Canal Economic Zone reported 55% revenue growth in 2025 and attracted $14.2 billion in investments across 383 projects. Industrial and port developments are transforming the zone into a regional logistics and manufacturing hub, boosting Egypt’s appeal for foreign direct investment and supply chain integration.

Labor Market and Regulatory Evolution

Mexico’s labor market is adapting to increased demand from nearshoring and supply chain shifts, but regulatory changes, workforce development, and compliance remain critical. Evolving labor standards and business regulations will shape operational costs and investment strategies.

Labor Market and Social Model Reforms Debate

Political debate is intensifying over labor market and welfare reforms, including proposals to end the 35-hour workweek and tighten unemployment benefits. Such reforms could reshape labor costs, productivity, and the attractiveness of France for foreign investors, but also risk social unrest.

Stagnant Growth and Industrial Decline

Germany's economy grew just 0.2% in 2025 after two years of recession, with industrial output still 14% below 2018 levels. Persistent weakness in manufacturing, especially automotive and machinery, and a record wave of insolvencies are undermining business confidence and investment.

Currency Volatility and Monetary Policy

The Brazilian real is forecast to remain around R$5.50 per USD in 2026, with inflation expectations at 4.05% and the Selic rate at 12.25%. External shocks, US interest rates, and election risks may drive volatility, affecting trade contracts, investment returns, and hedging strategies.

Structural Trade Deficit Worsens

Pakistan’s trade deficit surged 35% to $19.2 billion in the first half of FY26, driven by a 20% export decline and rising imports. Persistent external imbalances threaten currency stability, increase sovereign risk, and undermine investor confidence in the country’s trade outlook.

Energy Transition and Nuclear Expansion

France’s €52 billion commitment to new nuclear reactors underscores its strategy for energy security and decarbonization. However, hardware shortages, dependence on Asian imports, and rising energy nationalism across Europe create operational and investment uncertainties for energy-intensive industries and infrastructure projects.

Record Export Growth to United States

Mexico’s exports to the US reached historic highs in late 2025, with a 6.7% increase to $48.5 billion in October. This strengthens Mexico’s position as the US’s top trading partner, but exposes it to US protectionist policies and sudden regulatory shifts.

Geopolitical Risks Impact Investment Climate

Heightened China-Japan tensions over Taiwan, coupled with regional military posturing, increase uncertainty for foreign direct investment. Businesses face elevated regulatory and operational risks, with potential for further escalation affecting market stability and cross-border capital flows.

Comprehensive Crypto Regulatory Shift

The UK is transitioning from a ‘crypto hub’ narrative to a full regulatory regime, with new rules set for October 2027. This shift favors established financial players, raises compliance costs, and will reshape the fintech and digital asset landscape for international investors.

Saudi-UAE Rivalry Disrupts Supply Chains

The intensifying Saudi-UAE competition in Yemen, especially over control of strategic ports and oil-rich regions, risks fragmenting regional alliances and disrupting Red Sea and Gulf supply chains. This rivalry could alter trade flows and increase operational risks for international businesses.

Real Estate Market Resilience and Opportunity

Israel’s real estate sector faces a temporary slowdown due to conflict and labor shortages, but strong demand and rising prices—up 5.1% in 2025—create strategic opportunities for foreign investors, especially in satellite cities and developing regions.

Broader Regional Economic Realignment

China’s selective engagement with South Korea and other regional actors amid Japan tensions signals a shifting economic landscape. Businesses must navigate evolving alliances, trade blocs, and competitive pressures across East Asia.

Labor Market Challenges and Mobility

Germany’s stagnant labor market and skill shortages are prompting policy reforms and new migration agreements, notably with India. Streamlined visas for healthcare and tech professionals are expected to support business operations and competitiveness.

Ambitious Double-Digit Growth Targets

Vietnam is targeting sustained GDP growth of over 10% annually through 2030. This aggressive goal is tied to deep economic reforms, industrial upgrading, and infrastructure investment, but its feasibility is challenged by global trade headwinds, tariff risks, and the need for innovation-driven growth.

Major Infrastructure and Digital Expansion

India’s infrastructure financing is integrating with global capital markets, focusing on green, resilient, and tech-enabled projects. Data center capacity doubled in 2025, with projections to triple by 2030, supporting digital transformation and robust supply chain logistics.

Tokenization of Infrastructure Investment

A $28 billion partnership is transforming Indonesian development rights into blockchain-based tokens, enabling fractional ownership and attracting global investors. This innovation increases transparency, liquidity, and access to infrastructure projects, potentially reshaping investment models in emerging markets.

China And Russia Strategic Partnerships

Iran is deepening economic and military ties with China and Russia, including discounted oil sales and infrastructure projects. While these partnerships offer some economic lifelines, they complicate Western business interests and expose supply chains to secondary sanctions.

Mega-Projects and Infrastructure Investment

Saudi Arabia is reallocating capital from delayed real estate projects to logistics, tourism, and infrastructure, including giga-projects like NEOM and the Red Sea. These initiatives are central to supply chain strategies and offer significant opportunities for foreign contractors, technology firms, and financiers.

Renewable Energy Expansion and Export Plans

Eskom is expanding its renewable energy portfolio, aiming to integrate nuclear and gas by 2030 and sell excess capacity to neighboring countries. This transition supports industrialization, energy security, and new export opportunities for South African businesses.

Infrastructure Investment Accelerates Growth

Major investments in transport, energy, and digital infrastructure are underway to support economic expansion and competitiveness. These projects present opportunities for foreign investors but require careful navigation of regulatory, environmental, and local stakeholder considerations.

Sectoral Impact: Whisky, Manufacturing, and Finance

Key UK sectors such as Scotch whisky, manufacturing, and financial services face direct exposure to US tariffs. The whisky industry alone risks losses exceeding £600 million, while broader manufacturing and financial services could see reduced US market access and investment.

US Protectionism and Export Barriers

US tariffs on Canadian goods, including furniture, cabinets, and biofuel feedstocks, challenge Canadian manufacturers and exporters. Delays or increases in tariffs disrupt business planning, employment, and force companies to seek alternative markets and strategies.

Persistent National Security and Human Rights Concerns

Despite renewed economic engagement with China, Canada faces ongoing challenges around foreign interference, technology transfer, and human rights. These issues influence investment screening, regulatory compliance, and reputational risk for international firms in sensitive sectors.

Foreign Direct Investment Surge

FDI in Vietnam rose 8.9% to $23.6 billion in 2025, with manufacturing accounting for 82.8%. High-tech, green industries, and logistics attract multinational corporations, reinforcing Vietnam’s role as a strategic hub in global supply chains and boosting long-term investment prospects.

Political Instability And Coalition Risks

South Africa faces heightened political uncertainty as local elections approach, with coalition governments struggling for stability. Persistent factionalism and service delivery failures threaten policy continuity, impacting investor confidence and business operations across key urban centers.

OPEC+ Oil Output Policy Unchanged

Saudi Arabia, as a leading OPEC+ member, has opted to maintain steady oil production despite falling prices and internal group tensions. This decision aims to stabilize global energy markets but creates uncertainty for energy-dependent industries and international investment planning.

China-Iran Trade And Supply Chain Adaptation

Despite sanctions, Iran sustains trade with China by rerouting oil and goods through third countries. This circumvention supports Iran’s export revenues but exposes supply chains to regulatory, reputational, and compliance risks for global companies operating in or with China.

US Retreats from Global Climate Leadership

The US withdrawal from the UNFCCC and 65 other international bodies marks a strategic shift away from multilateral climate action. This move risks isolating US firms, ceding clean energy leadership to China, and complicating compliance for multinationals operating across jurisdictions.

Currency Volatility and Financial Innovation

Pakistan’s rupee remains vulnerable amid external deficits and debt pressures. The government’s partnership with World Liberty Financial for a dollar-pegged stablecoin aims to boost remittance flows and financial inclusion, but regulatory, ethical, and geopolitical risks remain for cross-border transactions and digital finance.

Intensified Technology Export Controls

China is strengthening legal frameworks and oversight on technology exports, particularly in AI, semiconductors, and rare metals. Tighter reviews and restrictions on foreign acquisitions and technology transfers reflect Beijing’s focus on national security and self-reliance, impacting cross-border investment and innovation flows.

Sanctions, Compliance, and Regulatory Risk

US and EU sanctions related to defense procurement, financial transactions, and Turkey’s dealings with sanctioned states (e.g., Venezuela, Russia) create compliance challenges. Businesses must navigate evolving regulatory frameworks and potential secondary sanctions exposure.

Structural Economic Reforms and Growth

Comprehensive reforms in fiscal, monetary, and supply-side policies have strengthened Turkey’s economic fundamentals. Infrastructure upgrades, improved reserve levels, and reduced external debt costs foster a more attractive climate for foreign direct investment and export-oriented operations.

Security Threats from Weapons Proliferation and Smuggling

The widespread availability of illegal weapons, fueled by smuggling from Iran and regional instability, poses a growing national security threat. This environment increases operational risks for businesses, complicates supply chain security, and demands heightened vigilance in risk management and compliance frameworks.

Resilience Amid US Tariff Pressures

Despite punitive US tariffs in 2024-2025, Brazil achieved record exports of US$348.7 billion in 2025. Diversification toward China, India, and other markets offset losses, but ongoing negotiations with the US and the risk of renewed trade tensions remain critical for exporters and multinationals.