Energy market shocks and fiscal stance

Oil price spikes and intermittent infrastructure disruptions are reshaping Saudi revenues and policy space; 2025 deficit was about SAR 276bn with oil revenues down ~20%. For investors, budgeting, payment cycles, and project pipelines can shift quickly with crude prices, output constraints, and subsidy decisions.

Oil infrastructure as conflict target

Strikes and threats against Kharg Island—handling ~90% of Iran’s crude exports with ~30m bbl storage—highlight concentrated single-point failure. Damage to terminals, pipelines or storage would tighten global supply, spike prices, and disrupt petrochemical feedstocks and shipping schedules.

SIFC-Driven Investment and Energy Projects

The Special Investment Facilitation Council is accelerating foreign-partner projects, including OGDCL’s deal with France’s SNF to boost oil and gas output (projected $460m revenue). This can improve energy security, but execution, transparency and regulatory consistency remain key diligence areas.

War Economy Crowds Out Civilians

Defense spending and war procurement are sustaining headline industrial activity while civilian sectors weaken. Oil and gas now provide roughly 20-30% of budget revenues, and military spending remains near 5-6.3% of GDP, distorting demand, credit allocation, and long-term investment conditions for private business.

US-China Tech Controls Tighten

Export controls on advanced AI chips and semiconductor equipment remain a major operational fault line. Recent smuggling indictments, licensing controversies, and shifting Commerce rules increase enforcement risk, compliance costs, and strategic uncertainty for technology, electronics, cloud, and manufacturing supply chains.

Manufacturing exports rebound amid uncertainty

UK manufacturing PMI rose to 51.7, with export orders growing at the fastest pace in 4.5 years, led by demand from the EU, China and Middle East. Jobs still decline, and firms cite policy change and US tariffs risk—supporting trade upside but supply-chain planning volatility.

Regional War Escalation Risk

Israel’s conflict with Iran, continuing Gaza instability and Hezbollah-related threats are the dominant business risk, disrupting investment planning, raising insurance costs and increasing force-majeure exposure across logistics, energy, aviation and industrial operations throughout the country.

EU security posture and sanctions spillovers

France’s push for stronger European deterrence alongside ongoing Russia-related constraints elevates geopolitical and compliance risk for trade, dual-use goods, and certain financial flows. Expanded cooperation with European partners can also accelerate common standards in defense-tech and controls.

Agriculture Access Still Constrained

While the EU pact expands quotas for beef, sheep meat, sugar, dairy and other farm exports, producers remain dissatisfied. Beef access rises to 30,600 tonnes over ten years, but quotas remain restrictive, limiting upside for agribusiness exporters and related cold-chain logistics providers.

Strategic planning: 15th Five-Year priorities

China’s 15th Five-Year Plan signals a pragmatic blend of energy security, electrification and tighter control over key sectors, while managing heavy-industry overcapacity and carbon-intensity targets. Policy-driven demand shifts will affect metals, grid equipment, and regulatory expectations for investors and suppliers.

Tourism recovery amid policy tightening

Tourism remains a key demand driver but is exposed to geopolitics and immigration changes. Authorities are considering cutting visa-free stays from 60 to 30 days; long-haul travel may soften with higher airfares, while Chinese arrivals show early rebound but remain fragile.

Section 301 probes broaden trade

USTR launched Section 301 investigations targeting 16 partners (including EU, China, Mexico, Japan, India) over “excess capacity,” plus forced-labor-related probes. Outcomes could drive new, sector-spanning tariffs and retaliation, reshaping sourcing, market access, and trade-finance assumptions.

Regional trade and corridor exposure

Türkiye’s proximity to regional conflict and reliance on key maritime chokepoints create uncertainty for shipping insurance, freight rates, and lead times. Disruptions around Hormuz and broader Middle East trade flows can affect inputs, tourism receipts, and re-export operations via Turkish hubs.

Incertidumbre institucional y clima inversor

Plan México enfrenta debilidad: FDI récord US$41 mil millones a 3T2025, pero solo US$6.5 mil millones fueron proyectos nuevos; confianza empresarial cae y la inversión real desciende. La reforma judicial y riesgos T‑MEC aumentan prima de riesgo y demoras de CAPEX.

Nickel quotas squeeze processing

Lower nickel ore RKAB quotas (260–270m tons versus ~340–350m needed) could cut smelter utilization to 70–75% from ~90%, pushing ore prices up and driving imports toward ~50m tons. This raises cost and supply risks for batteries and metals.

FX-market microstructure and gold curbs

New retail gold-trading rules cap online baht-settled transactions at 50 million baht/day per person per platform and ban nominee accounts and short selling. The aim is to reduce gold-driven baht strength, impacting liquidity, FX volatility, and treasury operations for traders and exporters.

FX volatility and capital flows

Geopolitical shocks have driven large foreign equity outflows and Taiwan-dollar weakness, with swaps pricing possible rate hikes. Currency swings affect import costs, hedging needs, and cross-border earnings translation, while tighter monetary conditions can lift borrowing costs for corporates.

Energy-price shock exposure via gas

Despite power resilience, France remains exposed to gas-market spikes through indexed contracts and industrial feedstock costs. Around 60% of gas subscribers are on indexed offers; Bercy expects impacts from May, typically under €10/month for households, but higher for energy-intensive firms.

GST formalisation and compliance intensification

GST collections and registrations are rising as e-invoicing, Aadhaar authentication, and faster SME registrations expand the tax base. Businesses face tighter reconciliation and audit trails, affecting working capital via ITC mismatches, refunds, and import-linked IGST—especially for new entrants.

Energy shock and inflation risk

Escalation around Iran and shipping disruption near Hormuz has driven UK gas prices up sharply (weekly spikes near 90% reported), threatening Ofgem’s cap from July and lifting CPI forecasts (BCC sees 2.7% end‑2026). Higher input costs hit industry, logistics and margins.

EU value-chain integration under pressure

EU industrial policy drafts acknowledging Turkey in “Made in EU” criteria underscore Customs Union-linked integration, especially automotive and materials. Yet rising low-carbon and local-content requirements could reshape supplier qualification, traceability, and capex needs for Turkish exporters and EU investors.

External Aid And Reform Risk

Ukraine’s macro-financial stability still depends heavily on donor flows that are increasingly tied to reform execution and EU politics. Analysts warn missed reform benchmarks could jeopardize billions in support, while a separate €90 billion EU package remains vulnerable to member-state opposition.

Subventions cleantech et réindustrialisation

Un schéma d’aide d’État de 1,1 Md€ validé par la Commission soutient capacités de production cleantech (batteries, solaire, éolien, pompes à chaleur, hydrogène). Il dynamise investissements, choix de sites et concurrence intra-UE pour les projets.

Tighter FX controls and liquidity

Bank Indonesia tightened FX rules to curb outflows: cash FX purchases capped at $50,000 per month (from $100,000) and documentation required for outbound transfers from $50,000. These measures can affect dividend repatriation, trade settlement and treasury operations.

Semiconductor supply-chain security scrutiny

Congressional pressure is rising on US chipmakers’ links to China-tied suppliers (e.g., Intel testing tools with China exposure). Expect stricter vendor vetting, facility access controls, and contracting constraints—impacting equipment makers, fab operators, and foreign partners reliant on US semiconductor ecosystems.

AI Boom Drives Infrastructure Strain

Rapid AI and advanced-manufacturing expansion is increasing electricity demand, data-center requirements and pressure on grid resilience. For investors and operators, this creates opportunities in power equipment, storage and digital infrastructure, but also heightens utility, land and permitting constraints.

Control a importaciones asiáticas

México endurece permisos y trazabilidad en acero y aplica aranceles de hasta 50% a más de 1,400 fracciones de países asiáticos sin TLC (incluida China). Reduce riesgos de triangulación, pero eleva costos de insumos y obliga a reconfigurar abastecimiento y compliance aduanero.

Rules-of-origin pressure in textiles

Textile exports were ~US$46.2bn in 2025 (+~6%) with a 2026 target of ~US$49bn, but firms face higher energy/transport costs and tighter tariff-policy uncertainty. Upgrading domestic weaving/dyeing capacity supports FTA rules-of-origin compliance and reduces import dependence.

Logistics Bottlenecks and Rail Reform

Ports and rail remain the biggest operational constraint, with logistics inefficiencies costing nearly R1 billion daily. About 69% of freight moves by road, while private rail access reforms and Transnet upgrades could gradually reduce delays, costs and export disruption.

Renewables scale-up facing cost constraints

India is reassessing offshore wind tenders (1 GW) amid high steel costs and weak bidder appetite; floating solar remains ~700 MW commissioned despite large potential. Policy support, VGF and domestic manufacturing (ingots/wafers) will shape project bankability and clean-energy supply chains.

Hormuz shock hits energy costs

Strait of Hormuz disruption and Qatar LNG outages are pushing oil above US$110–120 and Asian LNG prices sharply higher, forcing subsidies and conservation. Expect higher logistics and manufacturing costs, power-price volatility, and tighter hedging for importers and exporters.

Industrial exports: autos and electronics

Thailand’s export engine is buoyed by AI/electronics demand, yet autos face softer overseas orders from tighter environmental rules (e.g., Australia) and conflict-driven shipping disruption. Export forecasts for 2026 range from -3.1% to +1.1%, raising planning uncertainty for suppliers.

Semiconductor Demand Drives Growth

AI-linked semiconductor and ICT exports are powering Taiwan’s economy, with the central bank lifting its 2026 GDP forecast to 7.28%. Strong export momentum supports investment and supply-chain expansion, but also heightens global dependence on Taiwan’s advanced chip production and logistics reliability.

Critical Minerals Supply Chain Push

The EU deal eliminates tariffs on Australian critical minerals and hydrogen, strengthening Australia’s position in lithium, rare earths, cobalt, nickel and uranium supply chains. It should attract downstream processing capital, long-term offtake agreements, and strategic diversification away from concentrated suppliers.

Investment screening and data sovereignty

Canada is tightening national-security scrutiny of foreign investment, especially in sensitive tech and data. The TikTok Canada decision proceeded only with legally binding undertakings on data protection, oversight and local presence, signaling higher compliance burdens and deal-closure timelines for investors.

LNG Expansion Reshapes Energy Trade

The United States is strengthening its role as a global energy supplier, including a 13% export-capacity increase at Plaquemines to 3.85 Bcf/d. This supports energy security for allies but may also transmit global gas-price volatility into US industrial costs and utility bills.