Digital Infrastructure Investment Surge

Board of Investment approvals reached 958 billion baht, including TikTok’s 842 billion baht expansion and other data-centre projects. Thailand is emerging as a regional AI and cloud hub, but execution depends on grid capacity, permitting speed, and skilled-labour availability.

Auto Sector Market Access

Canada’s auto industry remains highly dependent on tariff-free U.S. access. Industry data show Canadian vehicle production fell to 1.2 million in 2025 from 2.3 million in 2016, with executives warning prolonged tariffs could redirect investment, accelerate restructuring and threaten Ontario manufacturing clusters.

Non-Oil Growth With Cost Pressures

The non-oil economy returned to expansion in April, with PMI at 51.5 after 48.8 in March, but firms faced the sharpest input-cost increase since 2009. Higher freight, raw material and wage pressures will affect pricing, margins and sourcing strategies.

Sovereign Electronics Push Intensifies

Geopolitical disruptions and regional conflict are sharpening India’s focus on domestic electronics and semiconductor capability. Industry leaders are urging stronger design incentives and trusted-country partnerships, signalling continued state support for localising strategic technologies across energy, automotive, AI, and security applications.

Higher-for-Longer Rate Uncertainty

Federal Reserve policy is increasingly constrained by inflation risks from energy shocks, with markets even pricing some probability of rate hikes. Elevated rates raise financing costs, pressure valuations, slow dealmaking, and complicate inventory, real estate, and long-cycle investment decisions.

Energy Shock and Inflation

Higher oil prices linked to Middle East disruption pushed April inflation to 2.89%, with officials warning it could exceed 3% in coming months. Rising fuel, freight, and input costs are pressuring manufacturers, transport operators, consumer demand, and margins across Thai supply chains.

Reconstruction Access Remains Blocked

Gaza reconstruction is stalled by deadlock over Hamas disarmament, despite estimates that rebuilding needs reach $71.4 billion over ten years. Restricted aid flows, delayed border access, and unresolved governance arrangements limit opportunities in construction, transport, services, and donor-backed commercial participation.

Electronics Export Boom Risks

March exports rose 18.7% year on year to a record $35.16 billion, with electronics and electrical goods leading on AI and data-centre demand. However, front-loaded shipments, US policy shifts, and regional conflict make this upswing vulnerable for supply-chain planning.

Investment climate seeks certainty

Mexico is easing permits through Plan México, including 30-90 day approval targets and a foreign-trade single window. Yet 18 months of annual investment declines, legal uncertainty, and uneven execution still deter foreign investors and delay expansion commitments.

US-China Tariff Uncertainty

Trade friction remains the top business risk. Washington is rebuilding tariff tools after court setbacks, while both sides discuss only limited relief on roughly $30-50 billion of non-sensitive goods. Companies should expect persistent duties, compliance costs, and volatile sourcing economics.

Energy Import Exposure Intensifies

Egypt raised its FY2026/27 fuel import budget to $5.5 billion, up 37.5%, reflecting vulnerability to regional energy shocks. Higher diesel, LPG, and gasoline costs increase inflation, pressure foreign-exchange needs, and raise production, logistics, and utility expenses for trade-exposed businesses.

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.

Trade Deficits and Tariff Exposure

The UK’s visible trade deficit widened to £27.2 billion in March as imports jumped 8.1% and exports rose just 0.1%. Recent tariff shocks, including reported export declines to the US, increase uncertainty for exporters, pricing strategies and cross-border sourcing.

Nickel Policy Uncertainty Intensifies

Indonesia’s nickel sector faces shifting quotas, delayed royalty hikes, possible export duties, and proposed windfall taxes. Chinese investors warned quota cuts above 70% and cost increases up to 200% could disrupt EV, stainless steel, and wider manufacturing supply chains.

Semiconductor Export Surge Dominates

South Korea’s trade outlook is being reshaped by an AI-driven chip boom: Q1 exports reached a record $219.9 billion, with semiconductor shipments up 138-139% to $78.5 billion. This strengthens growth and investment, but deepens concentration risk for exporters and suppliers.

Political Instability and Policy Volatility

Prime Minister Keir Starmer faces internal party pressure after poor local election results, raising risks of leadership instability and delayed policymaking. For international firms, this increases uncertainty around EU talks, industrial policy, tax choices, and the consistency of long-term investment conditions.

Labor Shortages and Foreign Worker Limits

Japan’s chronic labor shortage is intensifying as the food service sector nears its 50,000 cap for Specified Skilled Workers, forcing hiring suspensions. The broader constraint highlights demographic pressure across industries, increasing wage costs, recruitment challenges, and operational risk for labor-intensive businesses.

Fiscal Slippage and Debt

Brazil’s fiscal framework is under strain after a March nominal deficit of R$199.6 billion pushed gross debt to 80.1% of GDP. Higher sovereign risk can delay rate cuts, raise financing costs, pressure the real, and complicate investment planning.

Budget Deficit and War Spending

Russia’s federal deficit reached 5.9 trillion rubles, or 2.5% of GDP, in the first four months, already above plan. Defense-driven spending and 41% higher state procurement distort demand, crowd out civilian sectors, and heighten tax, inflation, and payment risks.

Gas Reservation Rewrites Energy Markets

Canberra will require LNG exporters to reserve 20% of production for domestic users from July 2027, aiming to reduce volatility and avert shortages. The reform may lower local input costs, but raises investor concerns over export economics, contract structures and policy predictability.

Critical Minerals Investment Surge

Australia and Japan elevated critical minerals cooperation with about A$1.67 billion in identified support, including up to A$1.3 billion from Australia. Projects spanning gallium, rare earths, nickel, cobalt, fluorite and magnesium should deepen non-Chinese supply chains and attract downstream processing investment.

Persistent Inflation, Costly Capital

Brazil’s inflation outlook remains above target, with 2026 IPCA at 4.91% and April 12-month inflation at 4.39%, while Selic is expected around 13.0%. Elevated borrowing costs constrain investment, pressure working capital, and complicate pricing, hedging, and expansion decisions.

Advanced Packaging Bottlenecks

CoWoS and OSAT capacity remain structurally tight even as TSMC targets 130,000-140,000 wafers monthly by end-2026. Packaging constraints are delaying deliveries, increasing capex and pushing customers toward alternative providers, affecting lead times for AI, automotive and high-performance computing products.

Banking and Payment Fragmentation

Iran-linked transactions increasingly rely on small local banks, yuan settlement structures, and informal or crypto-adjacent channels as internationally exposed banks pull back. This fragmentation raises transaction costs, delays settlements, weakens transparency, and elevates anti-money-laundering, sanctions, and counterparty risks for foreign firms.

Labor shortages constrain industry

Russian officials and the central bank continue warning of acute labor shortages as employment nears full capacity. Scarcity of skilled workers is raising wage pressure, delaying projects and limiting output across industry, infrastructure, technology and supply-chain operations.

LNG Dependence and Energy Diversification

Taiwan remains heavily exposed to imported fuel, with over 90% of energy sourced abroad and gas inventories often covering only about two weeks. A 25-year LNG deal with Cheniere for 1.2 million tons annually from 2027 helps diversify supply but not eliminate vulnerability.

Regulatory Reform and State-Level Execution

India’s next reform phase is shifting toward deregulation, trust-based governance and smoother state-level approvals. For international firms, execution at state and municipal level will increasingly determine project timelines, operating ease, factory expansion, closures, labour compliance and return on investment.

Data Center Investment Surge

Thailand approved 958 billion baht in projects, including TikTok’s 842 billion baht expansion and additional UAE and Singapore-backed facilities. This strengthens Thailand’s role in regional cloud and AI infrastructure, while raising urgency around power, permitting, and digital supply capacity.

China Competition Reshapes Strategy

German industry is simultaneously losing momentum in China while facing stronger competition from Chinese electric-vehicle producers globally. This dual challenge threatens export volumes, compresses margins, and raises urgency for technology upgrades, partnership choices, and market diversification.

Hormuz shipping and energy shock

Strait of Hormuz instability is raising freight, fuel and insurance costs for Israeli companies and importers. Higher oil and LNG prices, shipping delays and rerouted maritime traffic amplify inflation, pressure industrial input costs and complicate procurement, export scheduling and supply-chain resilience planning.

Tax and VAT Rules Shift

Recent tax changes, including revised VAT rules effective June 20, 2026, alter exemptions, deductions and treatment of selected financial and export activities. Companies should reassess invoicing, payment documentation, mineral exports and transaction structures to avoid compliance gaps and cash-flow inefficiencies.

Sanctions Escalation and Uncertainty

US sanctions pressure is intensifying, with about 1,000 individuals, vessels, and aircraft added since early 2025. Continued exposure to snapback measures, secondary sanctions, and shifting nuclear-talk outcomes complicates compliance, contract enforcement, financing, and long-term investment planning in Iran-linked business.

Semiconductor Concentration and De-risking

Taiwan still produces about 90% of the world’s most advanced chips, keeping it central to AI, automotive, and defense supply chains. Simultaneously, pressure to diversify production abroad is reshaping investment allocation, procurement strategies, and long-term supplier concentration risk.

China De-risking, Selective Reopening

India continues reducing strategic dependence on China while selectively easing FDI restrictions through Press Note 2. New beneficial-ownership thresholds could reopen non-controlling Chinese capital in manufacturing, infrastructure and technology, while preserving screening in sensitive sectors and supply chains.

Industrial Overcapacity and Trade Pushback

Overcapacity in solar, EV and other cleantech sectors is intensifying global trade tensions. China produces over 80% of solar components, while domestic price wars, anti-involution measures, and foreign tariffs are reshaping investment returns and sourcing strategies.

US Trade Pressure Escalates

Rising US scrutiny over tariffs, forced-labor exposure, trade imbalances and intellectual property could raise costs for Vietnam-based exporters. With Vietnam deeply tied to the US market, additional duties would reshape sourcing decisions, margin assumptions and investment planning for manufacturers.