Revenue-raising tax policy shifts

The government is leaning on targeted tax increases and reduced incentives to shore up revenues, including R$4.4 billion from fintechs, bets, and JCP plus R$16.5 billion from benefit cuts. This signals rising sector-specific tax risk and lower after-tax returns.

Tourism and services investment

Tourism remains a major diversification channel, with total committed sector investment reaching SAR452 billion and private capital contributing SAR219 billion. The sector recorded 122 million tourists in 2025, creating opportunities in hospitality, retail, aviation, logistics, and consumer services.

Infrastructure Reforms Expand Opportunities

Pretoria is using logistics, water, visa and licensing reforms to crowd in private capital, targeting R2 trillion in investment pledges for 2026-2030. Upcoming tenders in rail, ports and transmission could improve market access, but execution speed will determine commercial impact.

Ukrainian Strikes Disrupt Export Infrastructure

Drone attacks on Primorsk, Ust-Luga and other facilities have intermittently halted a large share of Russia’s oil export capacity. Reuters-based estimates put disrupted capacity near 40%, increasing supply-chain volatility, rerouting costs, and uncertainty for buyers, refiners, and logistics providers.

Agribusiness Adapts Under Fire

Agriculture remains export-critical but faces mined land, logistics bottlenecks, labor gaps, and energy shortages. About 137,000 square kilometers remain mined, while 2026 grain and oilseed area is projected at 16.6 million hectares, underscoring both resilience and persistent operational risk across food supply chains.

Power Grid Investment Accelerates

Brazil’s latest transmission auction contracted all five lots with an average 50.96% discount and about R$3.3 billion in expected investment, while a larger auction is planned for October. Expanded grid capacity should support industrial reliability, renewables integration, and regional project development.

Research and Industrial Upgrading Push

Trade and security arrangements with Europe are expanding cooperation in advanced technologies, clean energy, quantum, defence, and critical-mineral processing, with possible access to Horizon Europe funding strengthening Australia’s appeal for high-value R&D, manufacturing partnerships, and skilled-talent investment.

Auto Hub Navigates EV Shift

Thailand’s vehicle output rose 3.43% in February and pure EV production surged 53.7%, yet domestic BEV sales fell after incentives expired and exports weakened amid a strong baht and tougher Chinese competition, complicating automotive investment planning.

Credit Outlook and Sovereign Risk

Fitch affirmed Israel at A but kept a negative outlook, warning debt could rise toward 72.5% of GDP by 2027 and the 2026 deficit reach 5.7%. Elevated sovereign risk can lift borrowing costs, constrain investment appetite and pressure long-term project financing.

Cruise Capacity Reallocation Risk

Carnival says a reported 15% reduction affects only Carnival Adventure from 2028, with minimal near-term impact and possible 2027 gains from Auckland deployment. Still, fleet redeployment reviews create planning uncertainty for investors, concessionaires, and destination-dependent businesses in Vanuatu.

Labor Constraints Accelerate Automation

Immigration restrictions and persistent labor shortages are tightening workforce availability in agriculture, manufacturing, and logistics. Businesses are responding with automation and revised operating models, affecting production economics, investment priorities, and location choices for firms dependent on labor-intensive US operations.

Supply Chain Regional Rewiring

China is increasingly acting as a supplier of intermediate goods to third-country manufacturing hubs, especially in ASEAN. Exports of intermediate goods rose 9% while consumer goods exports fell 2%, indicating more indirect China exposure through Southeast Asian assembly networks rather than direct sourcing alone.

Consumer and logistics cost pressures

Extended conflict is pushing firms into higher-cost operating models through alternative fuels, detoured travel, security adaptations, and disrupted transport. Examples include more coal and diesel use in power generation, expensive rerouted flights via Jordan and Egypt, and broader cost inflation across logistics-dependent sectors.

Labor Shortages and Productivity Pressure

Military mobilization, school closures and security restrictions are tightening labor supply across sectors. Nearly 48% of surveyed tech firms said over a quarter of staff were unavailable, while the central bank cited absences and reserve duty as key constraints on output and services.

Energy Market Liberalisation Progress

Power reliability has improved markedly, supporting production and investor sentiment, but South Africa still faces major generation and grid investment needs. Planned spending exceeds R2 trillion for generation and R440 billion for transmission, creating both opportunity and implementation risk.

Fiscal Strain and Ratings

France’s deficit improved to 5.1% of GDP in 2025 from 5.8%, but debt rose to 115.6% and rating pressure persists. Higher borrowing costs and possible downgrades could tighten financing conditions, curb public support measures, and weigh on investor confidence.

Europe Hardens Investment Barriers

The EU’s proposed Industrial Accelerator Act would tighten FDI screening and impose local-content, technology-transfer, and local-hiring conditions in sectors like batteries, EVs, solar, and critical materials. Chinese-linked investors face greater regulatory friction, while multinational firms must reassess partnership and plant-location strategies.

Defense Export Boom Deepens

South Korea’s defense exports reached $15.4 billion in 2025, up 60.4% year on year, with prospects above $27 billion this year. Expanding contracts in Europe and the Middle East are boosting industrial output, localization investment, and supplier networks.

Macro Volatility and Demand Slowdown

Mexico’s macro backdrop is mixed for business planning. Banxico cut rates to 6.75% despite inflation rising to 4.63%, the peso weakened past 18 per dollar, and manufacturing output fell 1.8% in January, signaling softer industrial demand and planning uncertainty.

Nearshoring Potential with Constraints

Mexico remains a leading nearshoring destination because of its tariff-free access to the U.S. market and deep manufacturing integration, yet investment conversion is slowing. National investment reached 22.9% of GDP in late 2025, below the government’s 25% target, reflecting uncertainty over USMCA, regulation, infrastructure and security.

Domestic gas intervention risk rises

The ACCC forecasts Q3 east coast gas demand at 499 petajoules against 488 petajoules of supply, prompting possible activation of the domestic gas security mechanism. Export controls or redirected volumes could affect LNG contracts, industrial users, and long-term energy investment decisions.

Buy Canadian Procurement Frictions

Canada’s new procurement rules prioritizing domestic content in contracts above C$25 million are becoming a bilateral flashpoint. The U.S. has flagged the policy as a trade barrier, raising risks for foreign bidders, public-sector suppliers, and firms reliant on integrated North American procurement markets.

Power Mix and LNG Security

Japan is considering temporarily raising coal-fired generation as war-related disruption threatens LNG imports through Hormuz. About 4 million tons of LNG annually transit the route, so utilities and industrial users should prepare for fuel switching, electricity cost volatility, and sustainability trade-offs.

Manufacturing and Auto Sector Softness

Despite electronics resilience, broader industry is uneven: February manufacturing was flat year on year and down 2.1% month on month, while automotive output fell 1.3%. High appliance inventories and refinery maintenance signal patchy demand and capacity-planning challenges for suppliers.

Industrial Competitiveness Erosion Deepens

Germany’s export-led model is under heavy strain as industrial output weakens, firms lose over 10,000 jobs monthly, and competitiveness deteriorates under high energy, labor, tax, and regulatory costs, reducing Germany’s ability to capture global demand and complicating investment planning.

BOI Pushes Higher-Value Industry

Board of Investment data show total investment exceeding 670 billion baht, with Thai-majority investment value up 86% in 2025. Incentives are steering capital toward electronics, clean energy, digital infrastructure, transport, and advanced manufacturing, reinforcing Thailand’s industrial upgrading strategy.

PIF Partnership Model Shift

The Public Investment Fund is moving from predominantly self-funded deployment toward crowding in international and domestic partners. A new five-year strategy targets infrastructure, renewables, pharmaceuticals, real estate and data centers, creating opportunities but also reshaping deal structures and capital access.

Reform Momentum Boosts Investment

The government is using structural reform and the GNU’s relative stability to rebuild investor confidence, targeting R2 trillion in pledges for 2026-2030. Ratings improvement, FATF grey-list exit and regulatory streamlining support FDI, though implementation credibility still matters.

USMCA Review and Trade Uncertainty

Mexico’s July 1 USMCA review is the dominant external risk for exporters and investors. With annual U.S.-Mexico trade above $834 billion and 80-82% of Mexican exports going north, possible changes to rules of origin, tariffs, energy and Chinese-content restrictions could reshape market access and capital allocation.

AUKUS Spending and Delivery Uncertainty

The AUKUS submarine program, valued around A$368 billion, is driving defence infrastructure investment and industrial demand, especially in Western Australia, but persistent doubts over US and UK delivery timelines create uncertainty for contractors, workforce planning, and long-term sovereign capability bets.

Inflation, Fuel and Fiscal Stress

War-related energy and transport shocks are feeding inflation and budget pressure. Gasoline prices rose 14.7% to 8.05 shekels per liter, the policy rate stayed at 4%, and higher defense spending is complicating deficit management, tax expectations and medium-term sovereign risk assessments.

China De-risking Reshapes Model

Berlin increasingly recognizes that the old model built on cheap Russian gas and lucrative China business is over. Exporters and investors must adapt to weaker China dependence, more localised production, and tougher scrutiny around strategic technologies and market exposure.

EU Trade Pact Reshapes Flows

Australia’s new EU trade agreement removes over 99% of tariffs on EU goods and gives 98% of Australian exports by value duty-free access, potentially adding A$10 billion annually while redirecting trade, investment, autos, services, and sourcing patterns.

China Dependence Still Entrenched

Despite diversification efforts, Australia remains structurally tied to China across minerals processing and trade demand. China absorbs 97% of Australian spodumene exports, while dominating rare-earth refining, limiting the speed of supply-chain realignment and complicating long-term de-risking strategies for investors.

US-China Decoupling Deepens Further

Direct U.S.-China goods trade continues to contract, with the 2025 bilateral goods deficit down 32% to $202.1 billion and Chinese import share below 10% of U.S. imports, accelerating China-plus-one strategies across Asia and Latin America.

War Risk Shapes Investment

Stalled ceasefire talks, renewed Russian offensives and continued drone strikes keep political and physical risk exceptionally high. That raises insurance, financing and security costs, delays board approvals, and limits foreign direct investment beyond already committed investors and donor-backed vehicles.