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:

Secondary sanctions hit shippers

Washington’s latest sanctions on eight Chinese and Hong Kong shipping firms, plus broader threats against third-country traders and financiers, materially raise compliance, banking, and counterparty risks for companies handling Iranian crude, petrochemicals, shipping insurance, or related logistics transactions.

US tariff enforcement pressure

Washington’s Section 301 actions and AI-based anti-transshipment crackdown are intensifying scrutiny of Vietnam-bound and Vietnam-origin exports, with reports citing Vietnam as a key routing hub and referencing 12.5% additional tariffs and potential 40% penalties on suspected transshipped goods.

Automotriz bajo reglas más estrictas

La industria automotriz concentra la disputa bilateral: Washington exige mayor contenido estadounidense y cuestiona el “free riding” de insumos asiáticos procesados en México. México propone elevar contenido regional conjunto, pero proveedores enfrentan riesgo de exclusión, ajustes productivos y menor visibilidad inversora.

Aramco resilience amid volatility

Aramco’s second-quarter net profit rose 42-44% to about $32.69 billion despite regional disruption, while supply reliability reportedly held at 98.4%. For investors, this highlights strong crisis-management capacity, but also dependence on elevated prices and vulnerable infrastructure.

Tourism model shifts to sustainability

Thailand is reorienting tourism toward lower-carbon and more sustainable growth, but fragmented standards, infrastructure strain, safety concerns, and uneven capacity between large and small operators could raise compliance costs and operational complexity across hospitality and travel supply chains.

Retaliation And Reciprocity Options

Brazil is studying countermeasures under its Reciprocity Law, while debate has intensified over export taxes on strategic goods. Proposed pressure points include coffee, orange juice, beef, iron ore, and niobium, creating potential volatility for bilateral supply chains and input pricing.

High-tech FDI competition intensifies

Vietnam is actively targeting higher-quality US and global investment in semiconductors, AI, energy, digital infrastructure, and strategic minerals, but officials stress success now depends on project readiness, power availability, land, administrative speed, and skilled labor rather than tax incentives alone.

US-Korea Alliance Turns Transactional

Security, trade, and investment are becoming more interconnected as Washington links military posture, tariffs, and burden-sharing. For businesses, this raises geopolitical risk around market access, policy predictability, and Korea’s exposure to sudden shifts in US negotiating tactics.

Fragile Summit-Driven Trade Truce

Both sides are preserving dialogue ahead of Xi Jinping’s expected September US visit, but disputes over tariffs, human rights listings, robotics, and technology controls continue to simmer. Businesses should plan for temporary stabilization rather than durable resolution in bilateral commercial relations.

Compliance and Certification Disruption

China suspended US-linked follow-up factory inspections tied to mandatory CCC certification, forcing manufacturers to use non-US auditors. Because CCC approval is required for many electronics sold in China, the change may increase certification costs, delay shipments, and complicate market-entry planning.

Labor Market Deterioration Threatens Economic Outlook

The US lost 23,000 jobs in July with May-June figures revised down by 103,000 combined. Labor force participation dropped to 61.4%, a five-year low. The Tax Foundation estimates current tariffs will cost average households $900 annually while cutting long-run output.

Food standards deal cost debate

Negotiations on an EU sanitary and phytosanitary agreement have become a major business issue, with claims of £800 million first-year costs for farmers and £300 million annual producer costs, while government argues reduced border friction could add £5.1 billion yearly.

Transport infrastructure constrains logistics

Germany’s logistics backbone is under strain from deteriorating rail reliability, bridge closures and funding gaps from 2028. Delayed corridor upgrades, unresolved track-pricing reform and infrastructure governance changes risk higher freight costs, weaker inland distribution performance and reduced supply-chain resilience.

Energy transition policy tension

Debate over approving new North Sea projects versus accelerating renewables highlights continuing policy tension. Businesses face uncertainty over long-term energy mix, infrastructure planning and industrial strategy as government balances energy security, emissions goals, jobs and investor confidence.

Fuel Security Drives Refining

Australia is backing a A$4 million feasibility study for a new Western Australia refinery after years of closures left it importing about 90% of liquid fuels. Middle East conflict-driven price spikes are intensifying inflation, energy-security planning, and industrial policy responses.

Industrial exports and plants hit

The maritime disruption now extends well beyond grain. Iron ore, steel and sunflower oil shipments have been interrupted, with companies including Allseeds and mining operations such as Poltava and Southern GOK reporting stoppages or reduced activity due to blocked export channels.

Growth slowdown and cost pressures

UK GDP growth slowed to 0.4% in the second quarter from 0.6% previously, while business groups warn that persistent cost pressures are choking expansion. Elevated energy prices, weak productivity and calls for trade-boosting measures create a more cautious environment for hiring, capital expenditure and market entry.

Direct Saudi military escalation

Riyadh has shifted from restraint to overt joint strikes with the US against Iran-backed militias in Iraq after repeated drone attacks. This raises the probability of retaliation against Saudi territory, complicating business continuity, sovereign risk pricing, and regional investment decisions.

Hormuz disruption reshapes logistics

Saudi Aramco says the Iran conflict removed 2.6 billion barrels from global supply, while Hormuz flows fell to one-tenth of prior levels. Saudi exporters are rerouting via the East-West pipeline, but logistics complexity, bottlenecks and transport costs are increasing materially.

Higher Import Cost Inflation

Recent estimates indicate tariffs have raised core goods prices by 3.1%, added roughly 0.8 percentage points to core inflation, and cost households around $1,100 annually, increasing pricing pressure for importers, retailers, and consumer-facing multinationals.

Regional industrialisation drives mineral value

South Africa is positioning itself as a regional processing hub for critical minerals through SADC industrialisation efforts. With Africa holding around 30% of global critical mineral deposits, successful beneficiation and cross-border value chains could reshape manufacturing, export composition and supplier strategy.

US Tariff Deadline Escalation

Canada is racing to avert threatened US tariffs of 50% on roughly $20 billion of goods, with August 19 framed as a cliff-edge moment. Failure would raise costs, disrupt cross-border trade flows, and intensify planning uncertainty for exporters and investors.

Military-led diplomacy reshapes business risk

Pakistan’s foreign policy is increasingly centered on military-led ties with Saudi Arabia, China and the United States, including defense commitments and crisis mediation. This may unlock short-term financial support, but it also heightens geopolitical exposure, sanctions sensitivity and policy unpredictability for international firms.

Iraq energy corridor expansion

Turkey and Iraq signed energy agreements activating 750,000 barrels per day on the Iraq-Turkey pipeline, with ambitions to raise capacity toward 1.5-2.5 million barrels. This materially affects regional trade flows, energy logistics, transit revenue, and downstream investment planning.

Strategic straits and energy exposure

Indonesia’s position near the Malacca, Sunda and Lombok straits keeps it central to Asian trade and energy flows. Rising maritime insecurity, including reported piracy increases and wider geopolitical tensions, elevates shipping, insurance and contingency-planning risks for companies dependent on regional sea lanes.

Ceyhan Energy Hub Expansion

Ankara is advancing plans to turn Ceyhan into a major oil and products trading center handling 3-3.5 million barrels daily. Expanded Iraq-linked pipeline capacity and petrochemical development could strengthen Turkey’s logistics appeal, while reshaping regional energy investment flows.

PIC Governance Crisis Threatens Pension Assets

South Africa's Public Investment Corporation, managing R3.6 trillion in public-sector assets, faces leadership instability following board resignations and incomplete Mpati Commission reforms. Governance failures risk undermining civil servants' pension security and may lead to further value-destroying investments, threatening broader financial market confidence.

Energy self-sufficiency reshapes imports

Indonesia says B50 biodiesel implementation ended diesel imports from July 2026 and could save Rp170 trillion in foreign exchange. For business, this may reduce exposure to global fuel shocks while altering palm-oil demand, energy trade flows, industrial input costs and transport planning.

Domestic Hydrocarbon Development Push

Turkey is accelerating domestic oil and gas production, targeting 1 million barrels per day and expanding output in Gabar while testing unconventional drilling in Diyarbakir. Greater local production could improve energy security, though execution and policy risks remain material.

Dawei and highway connectivity

Thailand and Myanmar reactivated the Dawei Special Economic Zone and prioritized the India-Myanmar-Thailand Trilateral Highway. If implemented, these projects could improve multimodal freight routes and Indian Ocean access, but timelines remain vulnerable to conflict and financing uncertainty.

US tariff and transshipment risk

U.S. customs inspections at Chinese-linked factories in Vietnam and stalled bilateral talks over origin rules and non-tariff barriers are raising tariff risks. Ongoing Section 301 probes and a new 12.5% tariff increase uncertainty for exporters, investors, and compliance-heavy supply chains.

Economic contraction hits outlook

Saudi GDP shrank 4.8% year-on-year in Q2 2026, with oil activity down 24.7% and non-oil growth slowing to 0.6%. The downturn signals weaker near-term demand, fiscal strain and a more cautious operating environment for foreign investors and suppliers.

Red Sea corridor insecurity

Houthi attacks on tankers, Saudi energy assets, and Yemen’s Mocha port are deepening disruption across the Red Sea-Bab el-Mandeb route. For firms trading through Israel or nearby markets, this increases rerouting risk, delays, cargo protection costs, and regional supply-chain volatility.

Commodity export control intensifies

Jakarta is moving to centralize oversight of strategic commodity exports through Danantara Sumber Daya Indonesia and a planned mineral and commodity exchange. The measures aim to curb under-invoicing, improve pricing power and reshape export compliance, trading arrangements and investor expectations.

Export costs surge sharply

ONS-linked reporting showed UK export costs hit a three-year high as the Iran conflict raised transport, sourcing, shipping, energy and fuel expenses. Margin pressure, delayed investment and weaker competitiveness are becoming material risks for trade-dependent businesses and supply chains.

Critical Minerals Alliance Deepens

US backing for Australian critical-minerals projects is accelerating, highlighted by a US$400 million conditional loan to Sunrise Energy Metals and broader project pipelines above US$3.5 billion. This supports allied supply-chain diversification and new investment opportunities in mining and processing.