Mission Grey Daily Brief - February 11, 2025

Summary of the Global Situation for Businesses and Investors

The global situation is currently characterised by a brutal conflict in the Democratic Republic of Congo, Trump's trade war, rising tensions in the Middle East, and China's demographic crisis. The conflict in the DRC has the potential to spiral into a wider regional war, impacting mineral-rich regions and displacing civilians. Trump's trade war has led to retaliation from China, with China's economy facing a quadruple blow despite a spending boom. Rising tensions in the Middle East, including a fragile ceasefire between Israel and Hamas, and Iran's threat to shut down the Strait of Hormuz, could have significant implications for global oil trade. China's demographic crisis, marked by a decline in marriages and a shrinking population, poses challenges for the country's long-term economic growth.

Conflict in the Democratic Republic of Congo

The Democratic Republic of Congo (DRC) is currently experiencing a brutal conflict that has the potential to spiral into a wider regional war. The conflict is centred around the eastern region of the country, which is rich in minerals and has never enjoyed much stability. The Rwanda-backed rebel group M23 has made significant advances in the region, seizing the capital of North Kivu state and moving south to expand its territory. The humanitarian consequences of the violence are profound, with sexual violence as a weapon of war, children forced to fight, and millions displaced. The conflict is the latest episode of a decades-long struggle in the region, with about 6 million people killed and more than 3 million displaced in the most recent fighting.

The DRC is a prime example of the "resource curse", where an abundance of raw materials leads to authoritarian regimes and civil wars. The country has approximately $24 trillion worth of natural resources, including cobalt, copper, niobium, tantalum, coltan, diamonds, gold, silver, zinc, manganese, tin, uranium, and coal. However, about a fifth of its population relies on aid to survive. The weak state institutions and corrupt governments have failed to benefit the people or invest in essential infrastructure.

The regional summit aimed at ending the violence ended with a call for an immediate and unconditional ceasefire. However, many fear that a ceasefire is less likely than escalation to a wider regional war. The fate of civilians in the region, who are frequently the subject of ethnically targeted attacks, is at stake.

Trump's Trade War

Trump's trade war has led to retaliation from China, with China's economy facing a quadruple blow despite a spending boom. The deflationary crisis in China is compounded by sluggish domestic consumption, an out-of-character production slump, and the recent imposition of tariffs from the United States. As the world's leading industrial manufacturer and top exporter of goods, the health of the Chinese economy has profound knock-on effects for global supply chains and markets.

If China remains trapped in its deflationary spiral, an influx of cut-price Chinese goods into global markets could create intense competitive pressures for global manufacturers. As the world's second-largest importer, a weakened Chinese economy could slash demand for foreign products and deprive exporters of a critical marketplace.

Trump has indicated that he is open to a deal and might not impose tariffs if countries agree to buy more US products, particularly its oil and gas. However, the seemingly ad hoc nature of Trump's announcements of tariffs has caused chaos, confusion, and some abrupt about-faces. The practical difficulties and costs of collecting duties from massive volumes of relatively low-value items have also been a major factor.

Rising Tensions in the Middle East

Rising tensions in the Middle East could have significant implications for global oil trade. A fragile ceasefire between Israel and Hamas is at risk, with Hamas accusing Israel of breaking parts of the agreement. Trump's proposed U.S. takeover of Gaza after the war has the potential to inflame tensions in the region.

Iran's armed forces have warned that they could shut down the Strait of Hormuz if ordered by top officials, a move that would disrupt global oil trade. The Strait of Hormuz is a vital waterway for global energy markets, handling about 20 percent of the world's oil trade. Any disruption could trigger a surge in oil prices and escalate tensions between Iran and Western nations.

China's Demographic Crisis

China is facing a demographic crisis, marked by a decline in marriages and a shrinking population. The number of marriages in China fell to 6.1 million last year, 20% lower than in 2023 and down by more than 50% since 2013. The marital malaise is part of a bigger demographic crisis facing China. Although China boasts the world's second-largest population, at 1.4 billion people, the country's population is declining.

Until 2015, the state enforced a "one-child" policy to avoid urban overcrowding. However, since then, the high costs of child care and education have stymied government efforts to encourage people to have children. The shrinking population poses challenges for the country's long-term economic growth and social stability.

Conclusion

The global situation is currently characterised by a brutal conflict in the Democratic Republic of Congo, Trump's trade war, rising tensions in the Middle East, and China's demographic crisis. These events have the potential to impact global supply chains, markets, and oil trade, as well as regional stability and social cohesion. Businesses and investors should closely monitor these developments and consider their potential impact on their operations and investments.

Themes around the World:

Industrial and Logistics Disruption

Russian attacks have hit steel plants, warehouses, railway infrastructure and commercial storage, forcing major plants to close and damaging inventories. Daytime air alerts can legally halt business activity, while disrupted logistics threaten suppliers, tax revenues, payrolls and delivery schedules.

FATF Greylisting Risk Returns

Business leaders warn shortcomings in organised-crime investigations, prosecutions and asset recovery could return South Africa to FATF greylisting. Renewed scrutiny would raise compliance burdens, reputational concerns and transaction friction for banks, investors and cross-border counterparties.

Oil Volatility Reshapes Cost Assumptions

Brent approached $118 a barrel amid disruptions, while Aramco's third-quarter net profit rose 34.6% to 135.9 billion riyals. Volatile energy costs can reshape freight, fuel and input budgets, while windfall earnings do not remove exposure to outages.

European Content Requirements Expand

The Franco-German proposal links public support and procurement to European production, with at least 70% of components meeting European criteria and battery content partly covered. If adopted, these rules could reshape sourcing, market access and investment location choices.

Tax Reform Creates Planning Uncertainty

Businesses face uncertainty ahead of the consumption-tax overhaul scheduled to begin in 2027: the CBS reference rate, selective-tax rules, and split-payment operations remain unsettled. Political proposals to revise timing and benefits complicate tax, technology, and cash-flow planning.

AGOA Preference Loss Raises Export Costs

Washington plans to remove South Africa from AGOA from 1 January 2027, ending duty-free treatment for qualifying goods. The $1.7bn represented about 10% of US-bound exports and 1% of global exports in 2025, but exposed sectors face weaker price competitiveness.

EU Free-Trade Agreement Nears Completion

Thailand says negotiations with the European Union are in their final stage, targeting conclusion by end-2026 and signature in 2027. An agreement could diversify trade, reshape market access, and influence sourcing and investment decisions across sectors.

Rare-Earth Inputs Pose Risks

TSMC is surveying suppliers for production equipment that avoids rare-earth magnets after China restricted exports of these materials. Taiwan and the United States are pursuing alternative sources and processing, but substitution remains early-stage, leaving chip operations exposed to input disruption.

Black Sea Shipping Risk Surges

More than 570 vessels were attacked in the Black Sea during 2026, with at least 40 seafarer deaths; war-risk premiums reached 15% of vessel value. Shipping constraints and mine and navigation hazards threaten exports and raise freight costs.

Technology and Semiconductor Upgrading

Bilateral plans include joint semiconductor research, AI cooperation, digital transformation and advanced technology investment. Japan also expressed support for training 100 Vietnamese AI PhDs, while the two sides outlined research and workforce initiatives that could strengthen local capabilities and supplier value. [XoNX]

CPTPP Accession Delayed, Costs Rise

President Lee signaled accession may slip beyond 2030 amid farm-sector opposition, though the pact covers members representing 25% of Korean trade. Delays risk lost market access; accession could lift GDP 0.38 percentage points but reduce farm, forestry and fisheries output.

Digital Infrastructure Repair Constraints

Attacks damaged data centers and disrupted digital services, while sanctions complicate access to replacement servers and high-tech equipment. Businesses dependent on Russian cloud or digital infrastructure face continuity concerns, longer repair timelines and potentially higher critical-import costs.

Defense-industrial cooperation remains unsettled

Germany is reconsidering participation in the UK-Italy-Japan GCAP fighter programme after leaving a Franco-German project. Competing options and calls to reduce system complexity create uncertainty for defense suppliers, investment decisions and prospective cross-border industrial work.

Manufacturing Competitiveness Under Pressure

Parliamentary critics cited factory closures, SME credit constraints and a manufacturing share falling from 22% of GDP in 2022 to 15.5% in 2025; they also reported automotive output down 17% in the first nine months of 2026.

Inflation and Monetary Policy Risk

Inflation has resurfaced as a material operating risk: the IMF reported Pakistan’s consumer prices rose 11.1% year-on-year in August, driven by food and energy, and urged readiness to tighten monetary policy if shocks persist, raising working-capital and demand uncertainty.

EU trade deal faces ratification risk

Australia’s proposed EU agreement could remove tariffs on 97.8% of goods, but opposition over farm quotas, climate and labour provisions, plus the government’s Senate arithmetic, leaves ratification uncertain. Businesses should plan for delayed or foregone market-access benefits.

Tariffs Threaten Export Competitiveness

US tariffs of 25% on vehicles and 50% on steel and aluminum weigh on key export sectors. Mexican light-vehicle production fell 15.3% year-on-year and exports 11.85% in September, increasing pressure for relief and contingency planning.

AGOA Preference Access Ends

From January 1, 2027, South Africa is set to lose African Growth and Opportunity Act (AGOA) duty-free access. Its 2025 covered exports were about $1.7 billion, exposing exporters to higher costs and weaker US-market competitiveness.

USMCA Review Drives Trade Uncertainty

Mexico’s 2027 USMCA review follows Washington’s refusal to extend the pact automatically, with annual reviews, three formal negotiating rounds and 94 open issues reported. Businesses face prolonged uncertainty over tariffs, market access and investment planning.

Tariffs are relocating production

Audi’s proposed $4 billion Georgia plant, planned for 200,000 SUVs and 4,500 jobs after 2030, responds to import tariffs and US incentives. Local assembly may protect sales but shift investment, supplier opportunities and capacity away from Germany.

Allied Sourcing Accelerates Beyond China

Japan and Germany agreed to diversify critical-mineral sourcing and deepen economic-security cooperation, including joint procurement and financing. More than 20 commercial deals, drone-manufacturing partnerships and fusion-related materials collaboration signal new routes for investment and supply-chain resilience beyond China.

Decarbonisation Creates Investment And Compliance Pressures

EU decarbonisation rules create both investment openings and compliance costs: Brussels is backing green hydrogen and critical-mineral chains, while CBAM, sustainable-fuel criteria and the 2035 vehicle transition could require exporters and manufacturers to accelerate costly upgrades.

Oil Export Blockade and Sanctions

A US naval blockade and sanctions have sharply curtailed Iranian seaborne trade; reporting says no oil was loaded onto tankers after August 25, while lost oil revenue was estimated at $25 billion. Energy buyers face supply and compliance uncertainty.

Rare Earth Licensing Selectivity

China’s licensing system can enable higher overall exports while limiting particular buyers: September magnet shipments rose 23% month-on-month, yet yttrium oxide exports to Japan fell sharply. Procurement forecasts should therefore distinguish generalized availability from destination-specific authorization and political exposure. [0jWh]

Local Production Becomes Market Strategy

Chinese automakers are preparing or expanding European production in Hungary, Spain and elsewhere as trade barriers loom. Local factories, service networks and compliance capabilities may preserve market access, but require greater capital commitment and deeper regional operational integration.

Logistics and Infrastructure Capacity

Swiss firms are building container-terminal capacity, and reported cooperation includes major airport infrastructure; EFTA investors have also identified logistics as a target sector. Delivery will shape export throughput, import reliability and the attractiveness of manufacturing locations.

Cross-strait tensions threaten continuity

Recent U.S. assessments say Beijing has no fixed invasion timetable, yet military preparations and coercive pressure remain concerns; a conflict could interrupt semiconductor access, trade, transport, and markets. Firms should stress-test Taiwan exposure and diversify contingency plans.

Industrialização mineral exige execução

O Brasil busca atrair capital e tecnologia para refinar minerais localmente, mas capacidade limitada de processamento, escassez de mão de obra especializada e longos prazos de desenvolvimento restringem a expansão. Investidores precisarão avaliar infraestrutura, maturação dos projetos e previsibilidade regulatória.

Stagnant Output Weakens Demand

French GDP contracted 0.1% in the third quarter, following stagnation and an earlier decline, while official growth assumptions were judged difficult to achieve. Businesses should account for weaker domestic demand and less reliable budget forecasts. [R0vb]

Micron Labor Disputes Threaten Supply

A Taoyuan strike and unresolved profit-sharing negotiations expose Micron’s Taiwan DRAM and HBM operations to disruption. Taiwan produces over 60% of Micron’s DRAM, while any prolonged stoppage could delay memory shipments, tighten AI-server supply and increase customer delivery uncertainty.

Tighter Origin Rules Reshape Sourcing

Washington is pressing for stronger regional-content requirements and limits on Chinese inputs; proposed automotive thresholds could rise from 75% to about 82%. Industry groups warn further restrictions may raise costs and weaken North American manufacturers’ global competitiveness.

Geopolitical Disruptions Raise Route Risk

Officials and visiting partners cite Hormuz shipping restrictions and regional conflict as direct threats to energy markets and international trade, increasing the value of alternative Asia-Europe corridors. Route resilience, inventory buffers and fuel-cost exposure warrant closer planning.

Critical Mineral Supply Shock

Chinese restrictions have cut yttrium oxide shipments to Japan by 98% year-on-year, leaving stocks reportedly sufficient for only months; prices outside China hit $1,150/kg. Potential interruptions threaten chipmaking, automotive, aerospace and U.S. defense-linked components, making diversification and inventory resilience essential.

European Union Export Growth

EU–Vietnam trade exceeded $73.8 billion in 2025, with Vietnamese exports reaching $44.26 billion in the first eight months of 2026, up 19.8%. That growth sustains export opportunities, but stringent EU standards and seafood traceability remain binding market-access conditions.

Import Growth Outpaces Goods Exports

In July–September, goods exports rose 7.7% to $8.5bn, but imports climbed 14.3% to $17.8bn; remittances rose 14% to $10.9bn. This cushions external payments, yet import-intensive firms remain exposed to energy bills and FX availability volatility.

Asian Crude Storage Moves Closer

Aramco plans to store crude in Singapore’s Jurong Rock Caverns from the second half of 2027, adding to arrangements in Japan and South Korea. Locating inventories near customers may improve supply response, while broadening the company’s logistics footprint and regional partnerships.