Energy Cost Competitiveness Squeeze

High power costs remain a major constraint on UK manufacturing, with industrial electricity prices previously around 25.85p/kWh versus roughly 18p in France and Germany and 6.5p in the US. Expanded relief for 10,000 firms helps, but competitiveness pressure persists.

Nuclear Extension Policy Uncertainty

The government is prioritising longer-term energy security through offshore wind tenders and negotiations to extend Doel 4 and Tihange 3 for another decade. Delays or disputes could affect industrial power-price expectations, investment planning, and Belgium’s competitiveness for energy-intensive sectors.

Trade Defence and Sanctions

The government is preparing anti-coercion powers allowing sanctions, export controls, import curbs or investment restrictions against economic pressure from major powers. Simultaneously, tighter Russia-diversion export licensing will raise compliance costs, especially for dual-use manufacturers shipping through intermediary markets.

Turkey As Regional Hub

The government is expanding tax incentives to attract foreign firms, traders and financial institutions, positioning Istanbul as a safer regional base. Interest from Gulf and Asian investors is rising, but high inflation, legal uncertainty and bureaucracy still temper execution and long-term confidence.

Downstream Tax Policy Uncertainty

The government has delayed a proposed windfall tax and is still studying export duties on processed nickel products such as NPI. This creates uncertainty over project economics, future margins and capital allocation for miners, refiners and EV-linked industrial investors.

Housing, Transit and Cost Pressures

Ontario and Ottawa’s C$8.8 billion housing-infrastructure pact and tax relief aim to lower development charges and support transit. Over time this may ease labour and real-estate pressures, but near-term construction costs and municipal funding trade-offs remain material for businesses.

Energy Nationalism and Investor Retreat

Mexico’s state-favoring energy framework remains a major business risk. U.S. officials cite permit delays, shorter fuel permit terms and Pemex arrears above $2.5 billion, while 2025 foreign investment in oil, gas and power weakened sharply, undermining energy security and project confidence.

US-Taiwan Supply Chain Deepening

The United States became Taiwan’s largest trading partner in the first quarter for the first time in 25 years, while US imports from Taiwan rose US$59.6 billion last year. Deeper bilateral investment and trade integration is reshaping market access, compliance priorities and site-selection decisions.

Trade exposure to US and China

Germany’s export engine faces mounting pressure from US tariff uncertainty and weaker Chinese demand. February exports to the US fell 7.5% and to China 2.5%, while broader tariff disputes, steel duties and Chinese competition complicate market access and investment allocation.

Trade Flows Shift to Third Countries

US import demand is being rerouted from China toward Mexico, Vietnam, Taiwan, India, and other suppliers rather than disappearing. Taiwan alone generated a $21.1 billion February goods deficit with the US, underscoring new concentration risks in semiconductors, electronics, and transshipment-sensitive supply chains.

Trade Diversification Toward China

Zero-tariff access to China from 1 May 2026 could materially expand exports and attract manufacturing investment, including automotive projects. However, benefits depend on regulatory compliance, localisation, logistics performance and firms’ ability to build distribution and market access.

Automotive Policy and China Pressure

Germany is pushing in Brussels for softer post-2035 vehicle rules, including greater flexibility for e-fuels and plug-in hybrids, to protect its auto base. The debate reflects mounting pressure from more competitive Chinese producers across EVs, machinery and supplier chains.

Balochistan Security and Project Risk

Escalating insurgent attacks in Balochistan are directly affecting strategic assets including Gwadar and the Reko Diq mining project. The violence heightens operational, insurance, and personnel-security risks for investors, threatening logistics corridors, minerals development, and infrastructure projects linked to external partners.

Energy Shock and Cost Pressures

Britain is highly exposed to imported gas and oil shocks. Since late February, crude and European gas prices reportedly rose 53% and 65%, squeezing margins, lifting transport and power costs, and worsening inflation, procurement risk, and operating expenses.

Fiscal Strain and Tax Pressure

France’s 2025 public deficit narrowed to 5.1% of GDP, but debt climbed to €3.46 trillion, or 115.6% of GDP, amid record tax pressure. Rising borrowing costs, possible new tax hikes, and uncertain consolidation plans weigh on investment, margins, and policy predictability.

Frozen Assets And Reconstruction Funding

Tehran is pressing for access to billions in frozen assets and external financing for war-related reconstruction, with figures from $6 billion to about $120 billion cited. Any partial release could reshape import demand, state spending priorities, and opportunities in sanctioned-adjacent sectors.

Protectionist Pressures Increase Compliance

Taiwan’s export orders rose 65.9% in March, yet officials warn protectionist trade policies and U.S. investigations could weigh on future demand. Businesses should expect stricter rules on forced-labor screening, subsidies, tariffs, and origin compliance across Taiwan-linked supply chains.

Macro Growth Masks Fragility

Q1 GDP grew 7.83%, supported by manufacturing, investment, and services, but inflation reached 4.65% in March and Vietnam posted a US$3.6 billion trade deficit as imports surged. External shocks, weaker demand, and higher energy costs could pressure margins and policy flexibility.

Revisión T-MEC y reglas

La revisión del T-MEC domina el riesgo país en 2026. Washington busca endurecer reglas de origen en autos, acero y agro, mientras analistas asignan 65% a una extensión. La incertidumbre ya retrasa inversión, encarece planeación exportadora y eleva volatilidad cambiaria.

Mining Policy Certainty Still Fragile

South Africa wants to revive exploration and critical-minerals investment, but investors still seek stronger tenure security, faster cadastral rollout and clearer legislation. The country attracted only 1% of global exploration spending in 2023, highlighting opportunity alongside meaningful regulatory and execution risk.

Digital and Regulatory Bottlenecks

OECD warnings highlight Germany’s fragmented regulations, slow public-service digitalisation, high labour taxes and burdensome market-entry rules. Weak administrative capacity and delayed approvals continue to hinder construction, technology deployment and business formation, raising time-to-market and compliance costs for foreign investors.

War-Economy Production Model Emerging

Government and industry are shifting toward a ‘war economy’ approach, with co-financing for priority capacity and faster output scaling. MBDA plans a 40% production increase this year, while firms like Renault, Safran, and Airbus expand defense-related manufacturing and innovation programs.

Energy Security Threatens Industrial Stability

Taiwan imports about 97% of its energy, while LNG stocks cover only around 11 days and gas supplies roughly half of power generation. Any shipping disruption or price spike could raise electricity costs, threaten factory continuity, and undermine investment confidence.

Privatisation and Reform Openings

The government is advancing privatisation of major power distribution companies including FESCO, GEPCO and IESCO, while courting over 250 global investors with reform pledges. This may create selective entry opportunities, though tariff uncertainty and execution delays remain material risks.

Non-Oil Export Expansion Accelerates

Saudi non-oil exports reached a record SR624 billion in 2025, up 15%, with their share of total exports rising to 44%. Growth in services, re-exports, machinery, fertilizers, and food signals broader manufacturing and trade diversification opportunities beyond hydrocarbons.

Export Market Access Pressure

Thailand faces US tariff investigation risks and potential trade diversion in Europe as the EU-India FTA advances. With exports to the EU worth US$26.4 billion and bilateral EU trade at US$45.03 billion, pressure is rising to accelerate Thailand’s own trade agreements.

Supply-chain resilience with Singapore

Australia and Singapore are negotiating a binding protocol on economic resilience and essential supplies under their free trade agreement. The effort aims to secure flows of LNG and refined petroleum products, improving contingency planning for importers, shippers, manufacturers, airlines, and critical infrastructure operators.

Capital Allocation Shifts Abroad

Taiwanese firms are committing at least US$250 billion to US semiconductor, energy and AI production, with Taiwan’s government offering another US$250 billion in financing support. This outward investment diversifies risk, but may tighten domestic labor, capital and supplier availability for locally based operations.

Regulatory Streamlining and Licensing

The new administration plans an omnibus bill within a year and a 'super licence' within 180 days to remove outdated rules and accelerate approvals. If implemented effectively, this could lower market-entry costs, shorten project timelines, and improve operating predictability.

Fuel And Industrial Shortages

Energy disruption is constraining domestic industry, with reported gasoline deficits reaching 77 million liters daily under war conditions and refinery stress worsening shortages. Businesses face heightened risk of electricity curbs, fuel scarcity, factory stoppages, transport disruption, and delayed local procurement.

Trade Surplus Masks Concentration Risks

Indonesia continues to post trade surpluses, supported by palm oil and mineral exports, yet external earnings remain concentrated in commodities and key buyers. Heavy dependence on China for nickel demand and on volatile global prices leaves exporters exposed to sudden policy or market shifts.

Tariff Volatility and Litigation

US trade policy remains highly unstable as courts challenge broad import tariffs and the administration shifts between Section 122, 232 and 301 authorities. This raises landed-cost uncertainty, complicates sourcing decisions, and increases compliance burdens for exporters, importers, and investors.

Regional Trade Frictions in SACU

Restrictions by Namibia, Botswana and Mozambique on South African farm exports are disrupting regional food supply chains despite SACU and AfCFTA commitments. The measures raise policy uncertainty for agribusiness, cold-chain investment and cross-border distribution models in Southern Africa.

Supply Chains Shift Regionally

Importers are reengineering sourcing around tariff differentials rather than simple reshoring, benefiting suppliers in Taiwan, Mexico, Vietnam, India, and Latin America. This creates opportunities for diversified procurement, but also heightens exposure to origin rules, transshipment scrutiny, and logistics complexity.

US Trade Relationship Scrutiny

Trade with the United States remains central but increasingly sensitive. Bilateral trade reached US$141.4 billion in the first ten months of 2025, while Section 301 probes, market-economy status issues, export controls, and labor allegations could alter compliance costs and sourcing strategies.

Growth Slows Amid Inflation

South Korea faces a tougher macro mix as growth forecasts fell to around 1.92% while inflation expectations rose to 2.63%. The Bank of Korea held rates at 2.5%, leaving businesses exposed to weaker domestic demand, financing uncertainty and stagflation concerns.