Ongoing Security and War Risks

The persistent full-scale war with Russia remains the dominant risk for businesses in Ukraine, with 83% of AmCham companies citing employee safety and security as top concerns. Continuous missile and drone attacks on critical infrastructure disrupt operations, deter investment, and strain supply chains, while uncertainty about ceasefire prospects through 2025 complicates strategic planning and reconstruction efforts.

Infrastructure and Logistics Modernization

Government initiatives such as Bharatmala, Sagarmala, and Dedicated Freight Corridors are improving India's logistics infrastructure, reducing costs by 6%, and enhancing connectivity. Plug-and-play industrial parks and multimodal transport networks are enabling manufacturing scale-up, especially for MSMEs. Addressing warehousing capacity, skill gaps, and value addition remains essential to boost competitiveness and attract investment.

Defense Industry Financing and Resource Allocation

Reports of resource reallocation, including land sales to fund missile development, indicate prioritization of defense capabilities. This focus on military self-reliance may divert resources from other economic sectors, influencing Iran's industrial landscape and investment priorities.

Climate Change Adaptation Costs

Canadian businesses face rising costs adapting to climate change, with sectors like utilities, insurance, and industrial services most affected. Investments in resilience, such as infrastructure upgrades and catastrophe bonds, are increasing. Public funding covers two-thirds of adaptation spending, but financing remains a challenge. Canadian firms like Nutrien and MDA Space may benefit from growing demand for climate-related products and services, influencing investment and operational strategies.

Eurasian Economic Union Investment Dynamics

Russia has become the primary investor within the Eurasian Economic Union (EAEU), channeling capital into member states like Kazakhstan and Uzbekistan amid Western sanctions. While Russia faces reduced foreign direct investment inflows due to sanctions and currency controls, its investments in EAEU countries expand economic ties and create alternative trade and supply chain routes, reinforcing regional economic integration.

Inflationary Pressures from Energy Costs

Rising oil prices due to Middle East tensions are driving inflation concerns in Australia, with potential increases in petrol, airfares, and consumer goods. This inflationary environment influences Reserve Bank monetary policy, interest rates, and overall economic growth prospects.

Airspace Safety and Aviation Resumption

The EU Aviation Safety Agency lifted its flight warning for Israel, facilitating the gradual resumption of European airline operations. This development supports tourism, trade logistics, and international business travel, improving connectivity and supply chain reliability after conflict-related disruptions.

Cross-Border Corruption and Money Laundering

Investigations reveal extensive corruption and money laundering involving Thai and Cambodian labor officials exploiting migrant workers through extortion and illicit fees. Estimated scams exceed ฿6 billion, undermining labor market integrity and bilateral relations. This systemic corruption threatens Thailand’s regulatory environment, labor supply stability, and international reputation.

France’s Labour Market and High-Paying Sectors

France’s top-paying jobs concentrate in aviation, corporate management, healthcare, legal, and finance sectors, with executives earning up to €200,000 annually. This wage structure influences talent attraction, retention, and labor costs, shaping investment decisions and operational strategies for multinational companies operating in France’s competitive labor market.

Escalating U.S. Tariff Regime

The Trump administration's aggressive tariff policies, including threats of tariffs up to 70% and additional 10% tariffs on BRICS-aligned countries, are creating significant uncertainty in global trade. These measures disrupt supply chains, increase costs for U.S. businesses and consumers, and risk retaliatory tariffs, impacting investment strategies and international economic relations.

Geopolitical Tensions and Economic Impact

Escalating Middle East conflicts, especially the Israel-Iran crisis, pose significant risks to Pakistan's economy through rising oil prices, supply chain disruptions, and increased shipping costs. The potential closure of the Strait of Hormuz threatens energy imports, inflation, currency depreciation, and export competitiveness, necessitating strategic policy responses including oil reserves and diversified procurement.

National Security and Preparedness for Conflict

The UK government has issued warnings about potential direct attacks on British soil amid rising threats from Russia, Iran, and North Korea. The National Security Strategy calls for enhanced defense spending, cybersecurity measures, and preparedness for wartime scenarios, which could disrupt supply chains, increase operational risks, and affect investor confidence.

National Security and Defense Preparedness

The Indonesian military underscores the real threat of regional and global conflicts, emphasizing the need for enhanced national defense readiness. This geopolitical uncertainty influences defense spending priorities and strategic planning, impacting government budgets and potentially affecting investor confidence and long-term economic planning.

Middle East Conflict Impact on German Foreign Policy

The Gaza war and shifting German-Israeli relations create diplomatic dilemmas rooted in historical ties and current geopolitical realities. Germany’s stance influences trade relations, defense cooperation, and its position within EU foreign policy, with potential repercussions for Middle East trade routes and energy security.

Energy Sector Resilience and Expansion

Despite conflict and sanctions, Iran has maintained and increased oil exports and recently commenced natural gas exports from the South Pars Phase 14 refinery. This resilience in energy production and export capacity is critical for Iran’s economic stability and regional energy supply, influencing global energy markets and investment decisions.

Financial Inclusion and Digital Economy Growth

Pakistan has made significant strides in financial inclusion, with formal account ownership rising from 7% in 2014 to 35% in 2024, driven by branchless banking and mobile wallets. This expansion facilitates broader access to financial services, enabling digital transactions and potential credit growth, which can stimulate entrepreneurship, consumer spending, and economic diversification.

Softening Visa Policies Amid Geopolitical Challenges

Russian authorities are considering easing visa requirements, including multiple e-visas, to attract foreign business and investment. However, geopolitical tensions complicate consensus among federal and business authorities. Changes in visa regimes could influence foreign workforce mobility, international business operations, and cross-border collaboration in Russia.

Oil Price Volatility and Energy Security

Following U.S. actions in Iran, oil prices surged to multi-month highs, reflecting heightened geopolitical risk premiums. Disruptions or threats to key maritime chokepoints like the Strait of Hormuz could cause sustained energy price inflation, affecting production costs, consumer spending, and global economic growth, thereby influencing supply chains and investment decisions.

Corporate Governance and Business Conflicts

The violent dispute over the Pha Le sand mining company in Quang Nam underscores risks related to corporate governance, legal disputes, and organized crime influence in Vietnam's business environment. Such conflicts can disrupt operations, damage investor confidence, and highlight the need for stronger legal frameworks and enforcement to protect business interests.

Middle East Conflict Impact

The escalating conflict between Iran and Israel, including US strikes on Iranian nuclear sites, has caused significant volatility in global oil prices, impacting Australia's fuel costs, inflation, and market stability. Potential disruptions to the Strait of Hormuz threaten global energy supply chains, raising risks for Australian trade, investment, and economic growth.

US-Canada Trade War and Tariffs

Ongoing US-imposed tariffs on Canadian sectors, notably automotive and steel/aluminum, are straining bilateral trade relations. These tariffs have led to economic uncertainty, job losses in manufacturing, and slowed growth in key provinces like Ontario. The trade tensions necessitate strategic negotiations and diversification of trade partnerships to mitigate risks to supply chains and investment.

Supreme Court Social Media Liability Ruling

Brazil’s Supreme Court expanded legal liability for social media platforms, requiring proactive content removal without clear definitions of illegal content. This creates legal uncertainty, increased compliance costs, and risks over-censorship, threatening free expression and digital innovation. The ruling raises operational risks for global tech firms and may deter digital investment.

Workforce and Employment Challenges

Geopolitical instability has led 63% of Indian firms to freeze hiring or downsize, with 15% shifting towards contract or freelance roles. Employee morale, salary growth, bonuses, and international business travel have been adversely affected. In response, over half of employees are upskilling or seeking alternative job opportunities, signaling a significant shift in workforce dynamics.

Geopolitical Tensions Impacting Trade

Ongoing Middle East conflicts, notably the Israel-Iran war and potential Strait of Hormuz closure, threaten Japan's energy security and global supply chains. Japan's PM emphasizes de-escalation, while oil price volatility affects trade costs and investment decisions. Regional instability underscores Japan's vulnerability to geopolitical shocks impacting international trade and energy imports.

Trade Strategy and Protectionism Response

The UK unveiled its first comprehensive trade strategy in decades to counter global trade disruptions caused by tariffs, notably from the US under Trump. The strategy includes £5bn business support, expanded export finance to £80bn, enhanced trade defence tools against unfair practices, and aims to boost exports while protecting vital sectors like steel from dumping and unfair competition.

Geopolitical Risks from Middle East Conflict

South Africa's active role in opposing Israel's actions against Iran and Palestine, including legal challenges at the International Court of Justice and leadership in the Global South coalition, highlights rising geopolitical tensions. These developments risk diplomatic backlash, potential trade disruptions, and increased uncertainty for investors due to South Africa's principled stance amid escalating Middle East conflicts.

Rising U.S. Fiscal Deficit Risks

The U.S. deficit exceeding 6% of GDP, driven by expansive fiscal policies, raises concerns about inflation, higher interest rates, and crowding out private investment. Persistent deficits threaten economic stability, constrain government emergency responses, and pose national security risks by squeezing defense budgets, with potential global market and geopolitical repercussions.

Iran’s Economic Resilience and Governance

Despite ongoing conflicts and sanctions, Iran has demonstrated effective economic governance by maintaining and even increasing oil exports, ensuring market stability, and defending critical infrastructure against cyberattacks. This resilience supports continuity in business operations and signals Iran’s capacity to mitigate external shocks, which is crucial for investors and multinational companies assessing country risk.

Targeting of Foreign Business Assets

Russian airstrikes have deliberately targeted foreign companies such as Boeing in Kyiv, damaging operations and signaling risks to international investors. Attacks on warehouses of local and foreign firms disrupt supply chains, threaten employee safety, and increase operational costs, raising concerns about the viability of business activities in Ukraine.

Trade Negotiations and Uncertainty

Ongoing trade negotiations with countries such as China, Vietnam, the UK, and Indonesia remain fluid and uncertain. The looming tariff deadlines create a volatile environment for businesses, with partial agreements and ambiguous terms fueling market anxiety. This uncertainty undermines investment confidence, complicates supply chain planning, and risks prolonged trade disruptions.

Impact of China’s Rare Earth Export Restrictions

China's export restrictions on rare earth elements primarily affect India's emerging electric vehicle sector, which currently has low market penetration. Conventional internal combustion engine vehicles face minimal disruption. The restrictions highlight India's need to diversify supply chains, develop domestic capabilities, and mitigate risks in critical raw material sourcing for future automotive and technology industries.

Regional Research and Innovation Cooperation

Indonesia is advancing regional collaboration by proposing nine research partnerships within ASEAN to boost innovation and technology development. This strategic move enhances Indonesia’s global positioning, fosters knowledge exchange, and supports sustainable economic growth through science and technology integration in regional supply chains.

Vietnam’s Emerging Esports Market

Vietnam's gaming sector is witnessing rapid growth, exemplified by Tencent's launch of Delta Force and record-breaking player engagement on platforms like Roblox. This burgeoning esports ecosystem presents new investment opportunities, digital economy expansion, and potential shifts in youth consumer behavior, impacting Vietnam's tech industry and international digital trade.

Complex Taxation and Regulatory Risks

Brazil’s complex tax system, including recent hikes in the IOF tax on financial transactions, raises borrowing and investment costs by billions of reais. Resistance from lawmakers and business groups highlights risks of regulatory unpredictability, discouraging investment and complicating business operations, especially in finance, fintech, and international capital flows.

Government Stakeholder Engagement on Trade Risks

India's Commerce Ministry is actively engaging stakeholders including exporters, shipping lines, and container firms to assess and mitigate the impact of Middle East conflicts on trade. Focus areas include freight rate volatility, shipping route security through the Strait of Hormuz and Red Sea, and ensuring continuity of exports to key markets, aiming to safeguard India's trade flows amid geopolitical uncertainties.

U.S. Sanctions Policy and Russia

The Trump administration's halt on new sanctions against Russia has enabled Moscow to replenish resources for its Ukraine conflict. This policy shift affects global geopolitical stability and trade flows, influencing investor risk assessments and complicating U.S. relations with allies advocating for stricter measures.