Mining Sector Under Pressure

Mining output has declined due to falling coal and iron ore production, rising costs, and logistical bottlenecks. Global trade tensions, especially US-China tariffs, further threaten export demand, while structural challenges and job losses persist in this critical sector for foreign exchange and employment.

Green Energy Transition and Overcapacity

China leads in renewable energy, installing over half the world’s new wind and solar capacity. Policy shifts, including cuts to export tax rebates for batteries and solar, aim to curb overcapacity and align with global climate goals, but also reshape trade dynamics and supply chains.

Horn of Africa Recognition and Geopolitical Expansion

Israel’s recognition of Somaliland signals a strategic push into the Horn of Africa, aiming for access to key maritime corridors and security partnerships. This move risks regional destabilization, affecting trade routes, supply chains, and investment prospects for businesses operating across Africa and the Middle East.

National Security Strategy and Economic Unilateralism

The 2025 US National Security Strategy prioritizes reindustrialization, energy independence, and technological supremacy. Its mercantilist, interventionist stance increases regulatory barriers, marginalizes allies, and risks global market fragmentation, directly affecting international trade and investment planning.

FDI Reforms and High-Value Sector Focus

Thailand is shifting its investment strategy to attract FDI in high-tech, green infrastructure, and wellness tourism. Legal and regulatory reforms, infrastructure upgrades, and anti-corruption initiatives aim to reposition Thailand as a regional hub for future industries, but execution remains critical.

India’s Strategic Response to US Trade Pressure

India is recalibrating its economic strategy in response to US tariffs, focusing on boosting domestic manufacturing, attracting FDI, and diversifying export markets. The 2026 Union Budget emphasizes capital expenditure, fiscal discipline, and incentives for manufacturing to position India as a resilient, long-term investment destination.

Escalating Security Guarantees and Military Commitments

Recent summits produced concrete frameworks for multinational forces and security guarantees, with the UK and France pledging military hubs and infrastructure. These commitments underpin Ukraine’s defense and postwar stability, but their implementation and scope remain subject to political and legal negotiations.

Energy Security and Regional Gas Exports

Israel’s natural gas exports, notably to Egypt, underpin regional energy security and trade. Recent $35 billion deals and rising exports position Israel as a key supplier, but regional instability and shifting alliances, such as the recognition of Somaliland, may affect energy flows and investment strategies.

Labor Market Transformation and Data Challenges

Saudi Arabia has doubled women’s labor participation and created 800,000 jobs, but conflicting labor data and rising unemployment rates raise concerns about policy effectiveness and workforce sustainability. Reliable labor statistics are critical for business planning and investment decisions.

Special Investment Facilitation Council Scrutiny

The SIFC, established to streamline investment, faces criticism for lack of transparency and overlapping mandates with the Board of Investment. The IMF and Finance Ministry warn that insufficient disclosure of incentives and decisions may erode investor confidence and policy predictability.

US-Australia Strategic Partnership Deepens

Recent agreements on critical minerals and defense supply chains signal a deepening US-Australia strategic partnership. Joint initiatives aim to counter China’s dominance in key sectors, strengthen Indo-Pacific security, and foster investment in advanced manufacturing and technology.

Major Infrastructure Tokenization Initiative

Indonesia’s $28 billion tokenization of Maluku development rights marks a global breakthrough in blockchain-based infrastructure financing. This move democratizes access, attracts institutional investors, and sets a precedent for digital asset-backed investment in emerging markets.

Ambitious Double-Digit Growth Targets

Vietnam is targeting sustained GDP growth of over 10% annually through 2030. This aggressive goal is tied to deep economic reforms, industrial upgrading, and infrastructure investment, but its feasibility is challenged by global trade headwinds, tariff risks, and the need for innovation-driven growth.

US Sanctions Policy Intensifies

The US continues to expand sanctions, targeting Iranian officials, entities, and financial networks linked to oil sales and human rights abuses. These measures increase compliance risks for global firms, especially those with exposure to sanctioned jurisdictions and complex cross-border transactions.

Resilience Amid US Tariff Pressures

Despite punitive US tariffs in 2024-2025, Brazil achieved record exports of US$348.7 billion in 2025. Diversification toward China, India, and other markets offset losses, but ongoing negotiations with the US and the risk of renewed trade tensions remain critical for exporters and multinationals.

Volatile Inflation and Interest Rate Outlook

Despite moderating inflation, robust employment and wage growth have increased expectations of Reserve Bank rate hikes in 2026. This environment creates uncertainty for borrowing costs, investment planning, and consumer spending, requiring businesses to closely monitor monetary policy developments.

Transport and Logistics Complexity Post-Brexit

UK–EU trade now depends on complex road freight and customs processes, with increased costs and delays. Businesses must invest in advanced logistics planning, compliance, and diversified routes to mitigate disruptions, making transport strategy central to maintaining international trade flows.

Political Uncertainty and Governance Risks

Upcoming municipal elections and ongoing political realignment introduce governance risks, affecting policy stability and business confidence. Service delivery failures and coalition instability in major metros remain concerns for international investors and supply chain operators.

Logistics and Port Inefficiencies

Severe congestion and operational failures at major ports, particularly Cape Town and Durban, have led to export delays and substantial losses for key sectors. These structural weaknesses in logistics undermine South Africa’s competitiveness and disrupt global supply chains reliant on South African goods.

Supply Chain Diversification Imperatives

Japanese firms are intensifying efforts to diversify suppliers, particularly for critical minerals and advanced components. Moves to secure alternative sources in Australia and North America aim to mitigate the impact of Chinese restrictions and enhance long-term business continuity.

Political Uncertainty and Governance Risks

Upcoming municipal elections and potential leadership changes introduce policy unpredictability. While recent reforms and coalition governance have improved sentiment, concerns remain over service delivery, regulatory consistency, and the ability to sustain economic reforms, impacting long-term investment decisions.

Labor Market Reform and Wage Pressure

2026 brings decisive labor reforms, including stricter inspections, higher minimum wages, and possible workweek reductions. These changes raise compliance costs and affect competitiveness, especially for SMEs and export-oriented sectors, while informal employment remains a persistent challenge.

Full Liberalization of Capital Markets

Saudi Arabia’s abolition of the Qualified Foreign Investor regime and opening of its equity market to all foreign investors from February 2026 marks a historic liberalization. This reform is expected to unlock $10 billion in inflows, deepen liquidity, and enhance Saudi Arabia’s integration into global indices, but regulatory clarity and governance standards remain critical for long-term investor confidence.

Massive Reconstruction and Investment Needs

A €682 billion international support package over ten years is planned for Ukraine’s recovery, focusing on infrastructure, compensation, and economic stability. Reconstruction offers significant opportunities for foreign investors, but success depends on security and regulatory reforms.

Environmental Protection and Sustainable Growth

The new development blueprint elevates environmental protection to a central policy priority. Vietnam’s rapid industrialization is now balanced with commitments to sustainability, affecting project approvals, supply chain standards, and compliance requirements for international investors.

Labor Market Stagnation and Wage Pressure

US job growth slowed sharply in late 2025, with only 50,000 jobs added in December and unemployment at 4.4%. Hiring is concentrated in healthcare and leisure, while other sectors stagnate. Wage growth remains moderate at 3.8% annually, raising concerns about economic dynamism, consumer demand, and future cost structures.

Inflation Moderation and Economic Stability

After peaking at 64% in 2023, inflation is projected to fall below 20% by end-2026. Economic growth continues, with GDP expanding 3.7% in early 2025. Stabilizing inflation and steady growth support a more predictable business environment for international operations and investment planning.

Accelerated OECD Accession and Reforms

Indonesia is fast-tracking its accession to the OECD, aligning policies with international standards to improve governance, regulatory quality, and competitiveness. This process is expected to boost investor confidence, enhance the investment climate, and facilitate greater integration with global markets.

Labor Market Transformation and Demographic Advantage

Vietnam’s young population and rising labor productivity underpin its competitiveness. The government is prioritizing workforce upskilling, digital transformation, and social equity, aiming to sustain productivity growth above 8.5% annually (2026-2030) and maintain its position as a leading manufacturing hub.

Strengthened Strategic Partnerships and Trade Alliances

Japan is deepening economic and security ties with partners such as the EU, India, and Italy, focusing on critical minerals, technology, and defense. These alliances support resilient supply chains, market access, and shared innovation, reinforcing Japan’s role as a stable anchor in the Indo-Pacific and global economy.

Technology Sector and Digital Transformation

India’s electronics exports reached Rs 4 lakh crore in 2025, with mobile phone and semiconductor manufacturing surging. Major global tech firms are increasing hiring and offshoring to India, driven by US visa restrictions and cost advantages, signaling a structural shift in global supply chains.

State-Level Climate And Innovation Leadership

Despite federal policy reversals, US states and private sector actors continue to drive renewable energy adoption and climate innovation. This creates a patchwork regulatory landscape, with subnational initiatives sustaining investment opportunities and supply chain diversification for global firms.

Escalating Cross-Strait Tensions

China’s military drills, incursions, and amphibious exercises near Taiwan have intensified, raising the risk of conflict. These tensions threaten regional stability and global supply chains, prompting increased US arms sales and defense cooperation with Taiwan.

CPTPP Accession and Trade Policy Shifts

South Korea is actively pursuing membership in the CPTPP to diversify trade and reduce reliance on China. Progress is hindered by Japan’s conditions, such as easing seafood import bans, reflecting the complex interplay of trade, public sentiment, and regional politics.

Geopolitical Tensions Undermine Stability

The Greenland dispute has strained transatlantic alliances, with Finland caught between US demands and EU solidarity. Heightened geopolitical risk undermines the predictability of the business environment and complicates long-term investment strategies.

Geopolitical Tensions and Trade Fragility

Global conflicts, notably US–Venezuela tensions, increase volatility in energy prices, logistics costs, and exchange rates. These risks disrupt supply chains and trade flows, requiring Thai businesses and foreign investors to adopt robust risk management and diversification strategies.