Weak Domestic Demand and Structural Imbalances

China’s economic growth remains export-driven, with domestic consumption and investment lagging. Despite 5% GDP growth in 2025, retail sales and fixed-asset investment declined, reflecting persistent property sector weakness and deflationary pressures, which may limit long-term growth and market opportunities.

EU-Mercosur Trade Agreement Approval

The historic EU-Mercosur trade deal, set for signing January 17, will eliminate tariffs on over 90% of bilateral trade, creating the world’s largest free trade zone. This will boost Brazilian exports by US$7 billion, especially in processed goods and agribusiness, but also impose stricter sustainability standards.

Structural Economic and Regulatory Reforms

South Korea’s 2026 economic strategy emphasizes structural reforms, regulatory streamlining, and industrial innovation. These efforts aim to sustain growth, improve the investment climate, and address underlying challenges such as low productivity, labor market rigidity, and demographic shifts.

Persistent Political and Corruption Risks

High-profile anti-corruption raids, including against opposition leader Yulia Tymoshenko, highlight ongoing governance challenges. Political infighting and corruption allegations can delay reforms, undermine EU accession, and complicate the investment climate, despite progress in institutional reforms and external oversight.

Supply Chain and Infrastructure Modernization

Turkey prioritizes infrastructure upgrades, particularly rail-port connectivity and logistics, to enhance export capacity and supply chain resilience. Investments in renewable energy and agriculture support sustainable operations, while modernization efforts reduce bottlenecks for international business.

Canada–China Tariff and Trade Reset

Canada and China have reached a landmark agreement reducing tariffs on Chinese electric vehicles and Canadian canola, seafood, and peas. This deal reopens key export markets for Canadian agriculture and signals a strategic shift toward diversifying trade away from the U.S., with significant implications for supply chains and investment flows.

Sustainable Aquaculture and Fisheries Transformation

The seafood sector targets $11.5 billion in exports for 2026, shifting from capture fisheries to sustainable aquaculture. Emphasis is on environmental monitoring, disease control, and integrated value chains. Meeting global ESG, animal welfare, and traceability standards is essential for export growth and long-term sectoral competitiveness.

Expansion of Non-Energy Exports to Allies

Russia is targeting a 67% increase in non-energy exports by 2030, focusing on machinery, chemicals, and agriculture to 'friendly' countries. This diversification aims to reduce reliance on hydrocarbons and offers new opportunities and risks for foreign investors in these sectors.

Internet Blackouts and Security Crackdown

Amid protests, Iran has imposed nationwide internet shutdowns and deployed military forces, severely disrupting communications, logistics, and business continuity. The crackdown has led to hundreds of deaths and thousands of arrests, raising operational and reputational risks.

Geopolitical Volatility and US-China Tensions

Brazil faces heightened geopolitical risk due to US military action in Venezuela and growing US-China rivalry. This volatility affects currency, commodity prices, and investor sentiment, requiring robust risk management for international businesses operating in or sourcing from Brazil.

Currency Controls and Ruble Weakness

Reduced oil revenues and lower central bank FX sales are weakening the ruble. Currency controls and capital restrictions complicate cross-border transactions, profit repatriation, and risk management for foreign enterprises operating in Russia.

Fed Independence Faces Political Threats

The US Federal Reserve is under unprecedented political pressure, with DOJ subpoenas against Chair Powell amid Trump administration efforts to influence rate policy. Erosion of central bank independence risks market volatility, higher inflation, and diminished investor confidence in US assets.

Reshoring And Supply Chain Security

Major US industrial policy now prioritizes reshoring advanced manufacturing, especially in AI and semiconductors. Large-scale investments aim to reduce supply chain vulnerabilities and create middle-class jobs, but higher costs and regulatory hurdles challenge implementation and global competitiveness.

China-Japan Trade Tensions Escalate

China’s ban on dual-use exports and rare earths to Japan, triggered by Taiwan-related remarks, threatens key Japanese industries, especially automotive and electronics. The move signals intensifying geopolitical risk and potential supply chain disruptions for international businesses.

Canada’s Energy Market Diversification

Canada is accelerating efforts to expand oil and LNG exports to Asia, aiming to reduce dependence on the US. Major pipeline and LNG projects face regulatory, Indigenous, and environmental hurdles, but are critical for future trade resilience and investment strategies.

Resilient But Cooling Labor Market

US labor market growth has slowed, with job demand tepid and unemployment stabilizing. While not yet signaling recession, this cooling trend affects wage pressures, consumer demand, and strategic workforce planning for international investors and operators.

Populism, Protectionism, and Social Strains

Rising energy costs, fragmented grids, and contentious trade policies are fueling protectionist sentiment and social unrest in France. These trends heighten regulatory unpredictability, complicate cross-border operations, and require careful stakeholder engagement for international investors and supply chain managers.

Private Sector Empowerment and State Oversight

Recent reforms elevate the private sector as a key economic driver while maintaining strong state guidance in strategic sectors. This dual approach encourages innovation and FDI but may create friction over market access and regulatory clarity for international businesses.

Political Instability and Security Risks

2025 was Pakistan’s deadliest year in a decade, with over 3,400 killings and violence up 34%. Persistent instability, especially in Khyber Pakhtunkhwa and Balochistan, increases operational risk, disrupts logistics, and raises costs for international businesses, particularly in energy, mining, and infrastructure.

Political Uncertainty and Regulatory Reform

Political instability, policy inconsistency, and upcoming elections in 2026 heighten regulatory risk. Recent reforms in competition law, land equity audits, and foreign investment rules are closely watched by investors, as shifts in governance and regulatory direction could impact market access and business operations.

Bioenergy and MSME Supply Chain Challenges

India is promoting bioenergy adoption in MSMEs to decarbonize industrial heat and reduce fossil fuel reliance. However, fragmented biomass supply chains and technology gaps present challenges, requiring policy support and international collaboration for scalable, reliable solutions.

Energy Transition and LNG Imports Surge

Egypt’s domestic gas production has declined, driving record LNG imports—9.01 million metric tons in 2025, mostly from the US. New agreements with Qatar and Israel aim to secure supply, but Egypt’s shift from exporter to major importer impacts energy costs, industrial competitiveness, and investment strategies.

Aggressive US Tariff and Sanctions Policy

The US has imposed sweeping tariffs, including a new 25% tariff on countries trading with Iran, and expanded secondary sanctions. These measures disrupt supply chains, provoke diplomatic friction, and increase compliance risks for multinational firms.

ESG Compliance and Export Market Access

Stricter environmental, social, and governance (ESG) standards are becoming mandatory for export access, especially to the US and EU. Recent US bans on Vietnamese seafood due to environmental non-compliance highlight the growing importance of ESG for maintaining global market share and attracting sustainable investment.

Labor Market and Skills Shortages

Labor market reforms remain slow, with senior employment and skills gaps becoming critical issues. Companies face challenges in recruitment and internal mobility, impacting productivity and increasing operational risks for international firms in France.

Supply Chain Resilience and Restructuring

Global supply chain uncertainties, especially in semiconductors and advanced manufacturing, are prompting Korean firms to invest in local capacity and diversify sourcing. This trend enhances resilience but requires ongoing adaptation to geopolitical shocks, regulatory changes, and technology competition.

Surge in M&A and Privatization Activity

Mergers and acquisitions doubled in 2025, reaching $11.8 billion, with foreign investors—especially from Germany and France—leading 55 deals. Privatizations, notably in energy and infrastructure, offer new entry points and competitive dynamics for global investors.

Affordable Housing Crisis and Government Response

Canada’s acute housing shortage has prompted the launch of Build Canada Homes, aiming to accelerate construction and cut red tape. While thousands of units are planned, execution speed and intergovernmental coordination will determine the initiative’s effectiveness for business and workforce stability.

Modernization of Trade and Tariff Policy

Recent reforms target the National Tariff Commission and broader trade policy, aiming to enhance trade-remedy tools, liberalize tariffs, and improve export competitiveness. These changes are designed to align with global trade norms and support private sector growth, but implementation remains key.

Export Growth and Trade Diplomacy

Turkey targets $410 billion in exports for 2025, with significant growth in both goods and services. The government is actively negotiating with the EU to update the Customs Union, aiming to further integrate with global markets and strengthen trade resilience amid rising global protectionism.

Rising Chinese Trade Influence

South Africa’s trade deficit with China is widening, driven by surging imports of Chinese vehicles and manufactured goods. This trend threatens local industries and complicates trade balances, requiring strategic adaptation by businesses to remain competitive in key sectors.

Greenland Sovereignty Crisis Escalates

Intense US pressure to acquire Greenland has triggered a sovereignty crisis, with Denmark and Greenland resisting both purchase and military threats. This standoff poses severe risks to NATO stability, Arctic security, and international business confidence in Danish governance.

Green Energy and Ammonia Investments Accelerate

South Korea is investing heavily in green ammonia and renewable energy, aiming to retrofit 24 coal plants for ammonia co-firing and expand clean energy exports. These initiatives support decarbonization goals and position Korea as a leader in Asia’s green transition.

Infrastructure Reform And Connectivity

Ongoing infrastructure reforms focus on improving cross-border connectivity and logistics, with regulatory updates in rail and transport. Enhanced infrastructure may support supply chain efficiency, but regulatory complexity and funding constraints could delay business benefits.

Labour Market Pressures and Unemployment

Unemployment remains elevated at 31.9%, with major retrenchments in manufacturing and automotive sectors. US tariffs and company closures threaten further job losses in 2026, intensifying social pressures and impacting consumer demand, with implications for both local and international businesses.

Industrial Investment and Regional Modernization

Major investments in sectors like aerospace, steel, chemicals, and logistics—such as Airbus Helicopters’ €600 million modernization and Marcegaglia’s €750 million low-carbon steel plant—demonstrate France’s focus on industrial competitiveness, job creation, and sustainable development, shaping the long-term business environment.