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Mission Grey Daily Brief - February 17, 2025

Summary of the Global Situation for Businesses and Investors

The global situation is characterised by rising tensions between the United States and Europe, Russia, and Ukraine, as well as ongoing conflict in the Middle East. US President Donald Trump has held talks with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy to negotiate an end to the war in Ukraine, but Zelenskyy has warned against a peace deal that leaves Putin in control of Ukrainian territory. Meanwhile, Israel and Hamas have agreed to a fragile ceasefire deal, but the war could resume if no agreement is reached on the more complicated second phase. The Munich Security Conference has highlighted the growing divide between the US and Europe, with Zelenskyy calling for the creation of an 'armed forces of Europe' and US Vice President JD Vance criticising European leaders for their handling of various issues. French President Emmanuel Macron has called an emergency summit of European leaders to discuss the challenges posed by the Trump administration.

US-Europe Tensions

The US-Europe relationship is under strain, with President Trump holding talks with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy to negotiate an end to the war in Ukraine. Zelenskyy has warned against a peace deal that leaves Putin in control of Ukrainian territory, saying that Europe must take the threat of further war seriously. He has called for the creation of an 'armed forces of Europe', arguing that Europe needs to defend itself and make its own decisions. French President Emmanuel Macron has called an emergency summit of European leaders to discuss the challenges posed by the Trump administration, with Polish Foreign Minister Radosław Sikorski expressing concern over Trump's method of operating.

US-Russia-Ukraine Negotiations

President Trump has held talks with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy to negotiate an end to the war in Ukraine. Zelenskyy has warned against a peace deal that leaves Putin in control of Ukrainian territory, saying that Ukraine will not accept deals made without its involvement. Trump has made concessions to Russia, saying that US troops will not defend Ukraine, Russia might be able to keep land taken by force, and Ukraine will not be able to join NATO. Zelenskyy has stressed the need for extensive discussions to prepare for any end to the conflict, saying that Ukraine needs real security guarantees. US Vice President JD Vance has said that the US seeks a "durable" peace, but has not responded to questions about Ukraine's potential NATO membership.

Middle East Ceasefire

Israel and Hamas have agreed to a fragile ceasefire deal, with three Israeli hostages set to be released in exchange for more than 300 Palestinian prisoners. The war could resume if no agreement is reached on the more complicated second phase, which calls for the return of all remaining hostages captured in Hamas' attack on Oct. 7, 2023, and an indefinite extension of the truce. Trump's proposal to remove 2 million Palestinians from Gaza and settle them elsewhere in the region has thrown the truce's future into further doubt, with Hamas potentially unwilling to release any more hostages if it believes the war will resume. The captives are among the only bargaining chips Hamas has left.

US-Europe Divide at Munich Security Conference

The Munich Security Conference has highlighted the growing divide between the US and Europe, with US Vice President JD Vance criticising European leaders for their handling of various issues. Vance has railed against censorship and mass migration in Europe, downplaying other threats such as those posed by Russia and China. He has scolded European leaders for efforts to censor disinformation on social media, specifically lambasting the United Kingdom for charging a man who silently prayed near an abortion clinic. Vance has also complained about mass migration, pointing to an asylum-seeker who was suspected of ramming his car into a crowd in Munich. He has said that mass migration is the most urgent challenge facing Europe, and has called for a change of course to take civilisation in a new direction.


Further Reading:

Ex-PM Major warns of ‘dangerous world’ if US does not stand behind allies

Ex-PM Sir John Major warns of ‘dangerous world’ if US does not stand behind allies

John Major warns of ‘dangerous world’ if US does not stand behind allies

Macron calls emergency European summit on Trump, Polish minister says

Middle East latest: 3 Israeli hostages and over 300 Palestinian prisoners are set to be exchanged

Trump signs order on Covid vaccine mandates; Vance, Rubio meet with Ukraine's Zelenskyy - NBC News

VP JD Vance Criticized European Leaders At Munich Security Conference

Volodymyr Zelenskyy: Ukraine’s president calls for creation of ‘armed forces of Europe’ amid fears of reduction in US support

Zelensky calls for creation of 'armed forces of Europe' and warns Trump not to deal with Putin 'behind our backs' over Ukraine's future

Zelenskyy meets with Vance, says Ukraine needs

Themes around the World:

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Rising Poverty and Socioeconomic Instability

With poverty rates approaching 45% and unemployment at 7.1%, Pakistan faces severe socioeconomic challenges. This environment increases operational risks, affects consumer demand, and may trigger policy shifts or social unrest impacting business continuity and investment strategies.

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Labor Market Reform and Demographic Challenges

Japan is revising pension rules in 2026 to encourage seniors to remain in the workforce, addressing acute labor shortages and an aging population. While male parental leave uptake is rising, progress on gender diversity in management remains slow, affecting long-term productivity and talent strategies.

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Supply Chain Infrastructure Modernization

Major investments in logistics, freight, and facility management are underway, with the market projected to reach USD 37.8 billion by 2031. Enhanced infrastructure and integrated services improve operational efficiency and regional connectivity for global businesses.

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Stable Growth and Investment Climate

President Prabowo projects economic growth above 5% with low inflation, driven by industrialization and the new sovereign wealth fund Danantara. The government is rationalizing state-owned enterprises and courting foreign investors, enhancing Indonesia’s appeal as a stable investment destination.

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Foreign Investment Faces High Uncertainty

Foreign direct investment in Ukraine remains subdued, with FDI at only 0.9% of GDP in late 2025. Investors are cautious due to security risks, regulatory instability, and infrastructure damage, though reconstruction initiatives offer selective opportunities for risk-tolerant capital.

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Vision 2030 recalibration, capex shift

Saudi Arabia is rescoping and deferring flagship giga-projects as oil revenues tighten, while redirecting capital toward AI, mining, logistics, and advanced manufacturing. This reshapes EPC pipelines, demand forecasts, and counterparty risk for suppliers, lenders, and investors.

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EV policy reset and incentives

Canada scrapped the 2035 100% ZEV sales mandate, shifting to tighter tailpipe/fleet emissions standards plus renewed EV rebates (C$2.3B over five years) and charging funding (C$1.5B). Automakers gain flexibility; investors must reassess demand forecasts and compliance-credit markets.

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Evolving Foreign Investment Regulations

Recent reforms, including new real estate laws and capital market liberalization, make Saudi Arabia more accessible to foreign investors. Enhanced ownership rights and streamlined procedures are expected to boost FDI inflows, but regulatory adaptation remains crucial for entrants.

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Energy export policy and pricing

US LNG export capacity and permitting decisions influence global gas prices and industrial competitiveness. Any tightening of export approvals or infrastructure constraints can raise volatility for energy-intensive manufacturers abroad, while expanded capacity strengthens US leverage and attracts downstream investment into North America.

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Defense-driven simulation procurement

Finland’s heightened security posture is accelerating procurement of training, mission rehearsal and synthetic environments across NATO-compatible standards. This expands demand for simulators, XR devices and secure networks, creating export opportunities but raising compliance, security-clearance and supply-chain assurance requirements.

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Regulatory Changes and Labor Compliance

Recent labor reforms include a 13% minimum wage hike, stricter workplace inspections, and new rules for app-based workers. Businesses must adapt to evolving compliance requirements, increased enforcement, and potential cost pressures in sectors like automotive and technology.

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Syria Policy and Regional Security Risks

Turkey’s evolving Syria strategy, focused on eliminating YPG/PKK influence and supporting Syrian state control, aims to stabilize its southern border. While this may improve regional security and trade, ongoing tensions and humanitarian concerns pose risks for cross-border operations and investor confidence.

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Tighter tax audits and customs scrutiny

SAT is intensifying enforcement against fake invoicing and trade misvaluation, using CFDI data to trigger faster audits and focusing on import/export inconsistencies and improper refunds. Compliance burdens rise for multinationals, making vendor due diligence, transfer pricing and customs documentation more critical.

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Record Trade Surplus Fuels Expansion

China’s 2025 trade surplus hit $1.2 trillion, driven by export growth to Africa, ASEAN, Latin America, and the EU, offsetting US declines. This export reliance boosts global influence but risks long-term structural imbalances and protectionist backlash.

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Export-Led Growth and Trade Policy Shifts

Ambitious targets to double exports to $60 billion hinge on tax reforms, trade facilitation, and sectoral diversification. However, high energy costs, regulatory bottlenecks, and financial system distortions still hinder export competitiveness, making sustained reform execution critical for international trade expansion.

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Aging Workforce and Social Security Reform

Thailand’s rapidly aging population is straining the labor market and social security system. Reforms are underway to ensure fund sustainability, attract skilled foreign workers, and turn the ‘Silver Economy’ into a growth engine, but demographic pressures remain a long-term risk.

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Supply Chain Resilience and Diversification

South Korea and the EU are launching a dedicated supply chain dialogue to reduce dependence on specific countries and diversify channels. This initiative, driven by US-China competition, aims to enhance resilience and strategic partnerships, affecting sourcing and logistics decisions for international firms.

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Sanktionsdurchsetzung und Exportkontrollen

Strengere Durchsetzung von EU-Russland-Sanktionen erhöht Compliance-Risiken. Ermittler deckten ein Netzwerk mit rund 16.000 Lieferungen im Wert von mindestens 30 Mio. € an russische Rüstungsendnutzer auf. Unternehmen müssen Endverbleib, Zwischenhändler und Dual-Use-Checks deutlich verschärfen.

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Foreign Investment Scrutiny Intensifies

Australian authorities are tightening scrutiny of foreign investment, especially in strategic sectors like rare earths. Recent government actions to force divestment of Chinese-linked stakes in Northern Minerals reflect heightened national interest concerns, affecting deal certainty for international investors.

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Nickel Policy Drives Global Supply Chains

Indonesia’s tightening of nickel ore production quotas and crackdown on illegal mining directly impacts 65% of global supply. These moves, aimed at boosting domestic processing, create volatility in battery and EV supply chains and influence global commodity prices.

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Fiscal consolidation and tax uncertainty

France’s 2026 budget targets a ~5% of GDP deficit and debt around 118% of GDP, relying on higher levies on large corporates and restrained spending. Political fragmentation and 49.3 use heighten policy volatility for investors, pricing, and hiring.

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Infrastructure Expansion And Connectivity

Major investments in expressways, airports, and logistics hubs are underway, targeting 5,000 km of expressways by 2030. Improved transport infrastructure is expected to boost regional integration, reduce logistics costs, and enhance supply chain resilience for international businesses.

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USMCA Uncertainty and Trade Policy

The 2026 USMCA review introduces significant uncertainty for Mexico’s trade and investment climate. Potential renegotiation or non-renewal, new US tariffs, and stricter rules of origin could disrupt supply chains, especially in automotive, manufacturing, and critical minerals, impacting cross-border operations and investment planning.

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Export-Led Growth Amid Weak Demand

China’s 2025 growth was driven by record exports and a $1.2 trillion trade surplus, offsetting a 20% drop in US-bound shipments. However, domestic demand remains subdued due to a prolonged property crisis and weak consumer confidence, raising sustainability concerns.

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Global Supply Chain Realignment

China’s supply chains have reallocated through third-party countries like Vietnam and Mexico, maintaining effective access to US and Western markets despite tariffs. This rerouting complicates compliance, origin tracing, and risk management for international businesses.

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Logistics, Inventory, and Supply Chain Reconfiguration

US logistics networks are adapting to tariff-driven cost pressures, with firms reducing inventories, diversifying ports of entry, and reconfiguring warehousing. These changes are tightening trucking capacity and increasing supply chain velocity, impacting operational costs and strategic sourcing decisions.

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China’s Strategic Export Controls

China has expanded export controls on critical minerals and technology, targeting entire supply chains. These measures, often ambiguous and reactive, create uncertainty for global manufacturers and heighten the risk of supply disruptions in sectors such as electronics, EVs, and renewable energy.

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US tariff shock and AGOA risk

US imposed 30% tariffs on South African exports in 2025, undermining AGOA preferences and creating uncertainty for autos, metals, and agriculture. Exporters face margin compression, potential job losses, and incentives to re-route supply chains or shift production footprints regionally.

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E-Auto-Förderung und Autowandel

Die Regierung reaktiviert E-Auto-Subventionen (1.500–6.000 €, ca. 3 Mrd. €, bis zu 800.000 Fahrzeuge). Das stabilisiert Nachfrage, beeinflusst Flottenentscheidungen und Zulieferketten. Gleichzeitig verschärfen EU-Klimaziele und Konkurrenz aus China Preisdruck, Lokalisierung und Technologietransfer-Debatten.

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Yuan Internationalization and Financial Opening

China is deepening capital account opening and promoting the yuan’s global use. These efforts aim to enhance financial sector strength and support cross-border trade, but gradual reforms and market volatility require careful navigation by international investors and corporates.

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Political Stability And Reform Momentum

Vietnam’s leadership reaffirmed its commitment to ambitious economic reforms and growth targets, pledging over 10% annual GDP growth through 2030. Political stability and streamlined governance continue to attract foreign investors seeking predictability and reduced bureaucratic hurdles.

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Market Transparency and Capital Outflows

Indonesia’s stock market suffered an $80 billion rout in January 2026 after MSCI flagged transparency and ownership concerns, threatening a downgrade to frontier market status. Regulatory reforms, including a 15% free float requirement, are underway, but investor confidence and foreign capital flows remain fragile.

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Gas expansion and contested offshore resources

Saudi Arabia and Kuwait are advancing the Dorra/Durra offshore gas project, targeting 1 bcf/d gas and 84,000 bpd condensate, despite Iran’s claims. EPC and consultancy tenders are moving, creating opportunities but adding geopolitical, legal, and security risk to contracts.

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Macroeconomic Stabilization and Reform Momentum

Pakistan has achieved notable macroeconomic stabilization, with inflation dropping to 4.5–5.5%, policy rates declining to 10.5%, and foreign reserves rising to $16.1 billion. Structural reforms, fiscal discipline, and privatization are improving investor sentiment and positioning Pakistan as a more attractive investment destination.

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Supply Chain and Border Management Uncertainty

The reopening of the Rafah border crossing and ongoing controls highlight persistent uncertainty in supply chain logistics. Restrictions on goods and movement, coupled with complex oversight, continue to challenge humanitarian aid, trade, and operational planning for international businesses.

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Semiconductor Supply Chain Realignment

Taiwan’s $250 billion investment in US chip manufacturing and supply chain relocation aims to reduce reliance on Asian supply chains, boost US manufacturing, and address security vulnerabilities. This shift will significantly impact global supply chains and technology sector competitiveness.