Return to Homepage
Image

Mission Grey Daily Brief - February 23, 2025

Summary of the Global Situation for Businesses and Investors

As the third anniversary of the Russia-Ukraine war approaches, the Ukrainian people are rallying around President Volodymyr Zelenskyy, who has been denigrated by US President Donald Trump and Russian President Vladimir Putin. Trump's false claims that Zelenskyy is a dictator and started the war have been criticised by Democrats and Republicans in the US Congress, and even some of Zelenskyy's harshest domestic critics have begun defending him. Meanwhile, Russia is preparing to declare victory in the war, and preparations are underway for a face-to-face meeting between Trump and Putin. In other news, Hamas has freed three more Israeli hostages as part of a fragile ceasefire deal, and Swedish authorities are investigating a damaged cable in the Baltic Sea, which has heightened fears of Russian sabotage and spying in the region.

Ukraine-Russia War

The Russia-Ukraine war is approaching its third anniversary, and the Ukrainian people are rallying around President Volodymyr Zelenskyy, who has been denigrated by US President Donald Trump and Russian President Vladimir Putin. Trump's false claims that Zelenskyy is a dictator and started the war have been criticised by Democrats and Republicans in the US Congress, and even some of Zelenskyy's harshest domestic critics have begun defending him. Trump's harsh words for Zelenskyy have drawn criticism from Democrats and even some Republicans in the US Congress, where defending Ukraine from Russia has had bipartisan support. However, Vice President JD Vance admonished Zelenskyy for publicly warning Trump about falling for Russian disinformation.

Trump's false claims have caused a political rift with the US, as Ukrainian forces, outnumbered and outgunned, increasingly struggle to hold back Russia's slow but steady advances. Trump has also signalled his desire to rapidly bring the fighting to a close on terms that Zelenskyy and many in the West say are too favourable to Russia. Reports have emerged of US and Russian officials meeting in Saudi Arabia to discuss a possible ceasefire without input from Ukraine.

Meanwhile, Russia is preparing to declare victory in the war, and preparations are underway for a face-to-face meeting between Trump and Putin. Senior US officials have suggested Ukraine will have to give up its goals of joining NATO and retaining the 20% of its territory seized by Russia. No Ukrainian officials were present at the Saudi meeting, and European allies have also expressed concerns that they are being sidelined.

Israel-Hamas Ceasefire Deal

Hamas has freed three more Israeli hostages as part of a fragile ceasefire deal, which has paused over 15 months of war but is nearing the end of its first phase. The latest hostage release, to be followed by the freeing of hundreds of Palestinians imprisoned by Israel, is going ahead after tensions mounted over a grisly and heart-wrenching dispute triggered this week when Hamas initially handed over the wrong body for Shiri Bibas, an Israeli mother of two young boys abducted by militants.

The dispute over the body's identity raised new doubt about the ceasefire deal, and negotiations over a second phase, in which Hamas would release dozens more hostages in exchange for a lasting ceasefire and an Israeli withdrawal, are likely to be even more difficult. The six hostages being freed are the last living ones to be released under the ceasefire's first phase. The new releases brought a moment of joy and relief for families, but with the ceasefire's future uncertain, fears remain over the fate of the remaining hostages seized during the Oct. 7, 2023, attack by Hamas that killed 1,200 in Israel and ignited the war.

Damaged Cable in the Baltic Sea

Swedish authorities are investigating a damaged cable that was discovered in the Baltic Sea, according to Swedish news agency TT. The breakage is the latest in a string of recent incidents of ruptured undersea cables that have heightened fears of Russian sabotage and spying in the region. Late last month, authorities discovered damage to the undersea fiber-optic cable running between the Latvian city of Ventspils and Sweden’s Gotland. A vessel belonging to a Bulgarian shipping company was seized but later released after Swedish prosecutors ruled out initial suspicions that sabotage caused the damage.

The most recent break was found off the island of Gotland, south of Stockholm, in the Swedish economic zone, TT reported Friday. The cable runs between Germany and Finland. Prime Minister Ulf Kristersson said on the social media platform X on Friday that the government takes all reports of damage to infrastructure in the Baltic Sea very seriously.

Russia-Ukraine War and Business

The Russia-Ukraine war has had a devastating impact on both countries, with hundreds of thousands killed or wounded, tens of thousands missing, and millions fleeing the country. The war has also had a significant impact on the global economy, with rising energy prices and supply chain disruptions.

For businesses, the war has created significant uncertainty and risk, particularly for those with operations in the region. The war has also disrupted global supply chains, particularly for energy and food, which has led to higher prices and reduced availability.

To mitigate these risks, businesses should diversify their supply chains and consider alternative sources of energy and food. They should also monitor the situation closely and be prepared to adapt their operations as needed.


Further Reading:

BBC forced to apologise as EastEnders star says a racial slur live on air

Hamas frees 3 more Israeli hostages

Sweden is investigating a cable break in the Baltic Sea

Three More Israeli Hostages Freed By Hamas As Gaza Ceasefire Deal Advances

Trump-Putin summit preparations are underway, Russia says

Ukrainians Rally Around Zelensky as Trump and Putin Denigrate Him

Ukrainians rally around their president after Trump seeks to denigrate him

Ukrainians rally around their president after Trump’s harsh comments

Themes around the World:

Flag

External Financing And Reforms

Ukraine’s budget, macro stability, and business confidence remain tied to IMF, EU, and World Bank funding. A €90 billion EU package and IMF flexibility help, but delayed reforms, tax changes, and parliamentary bottlenecks still create policy uncertainty for investors.

Flag

Tax And Funding Reforms

Kyiv is advancing tax bills tied to external financing, including digital-platform taxation, parcel taxation from zero euros, and extending the 5% military levy. These measures may improve fiscal stability, but they also raise compliance costs and could affect e-commerce, retail, and consumer demand.

Flag

War-Risk Insurance Market Deepens

New insurance mechanisms are slowly reducing barriers to operating in Ukraine. A PZU-KUKE scheme now covers war, terrorism, sabotage, and confiscation risks, potentially reviving cross-border transport capacity after Polish carriers’ market share on Poland-Ukraine routes fell from 38% in 2021 to 8% in 2023.

Flag

Petrochemical Input Vulnerability

South Korea imports about 45% of its naphtha, historically 77% from the Middle East, exposing chemicals and chip supply chains to acute feedstock risk. Emergency export bans, plant shutdowns, force majeure notices and temporary Russian sourcing underscore fragility for manufacturers and investors.

Flag

Growth Slowdown and Inflation

The government cut its 2026 growth forecast to 0.9% from 1.0% and raised inflation to 1.9% from 1.3%, citing Middle East-related pressures. Slower demand and higher input costs could affect pricing, investment timing, consumer spending and logistics planning.

Flag

Power Security Under Strain

Electricity demand is rising faster than expected, with consumption surpassing 1 billion kWh on March 31 and peak load reaching 48,789 MW. Grid bottlenecks, delayed projects and fuel risks threaten industrial continuity, especially for manufacturers concentrated in northern export corridors.

Flag

Investor Confidence Still Fragile

South Africa fell five places to 12th in Kearney’s developing-market investment ranking as concerns persist over governance, infrastructure, logistics, and policy delivery. Large headline pledges contrast with modest realized inflows, reinforcing caution around project execution and medium-term returns.

Flag

Resilience Spending and Drills Expand

Taiwan is increasing anti-blockade planning, including escort drills for energy shipments and efforts to keep corridors open toward Japan, the Philippines and the United States. These measures support continuity planning, but also highlight rising operational risk for shipping, insurers and critical infrastructure operators.

Flag

Power Tariffs and Circular Debt

The IMF-backed Rs830 billion power subsidy for FY2027 comes with further tariff increases and accelerated sector reform. Persistent circular debt, theft losses, and cost-recovery measures will keep electricity prices volatile, undermining industrial competitiveness, investment planning, and margins in energy-intensive industries.

Flag

US Becomes Top Trade Partner

The United States overtook China and Hong Kong as Taiwan’s largest trading partner in the first quarter, US$78.25 billion versus US$73.80 billion. This shift supports friend-shoring but heightens business sensitivity to US policy, tariffs, export controls, and bilateral negotiations.

Flag

Alternative Payments Accelerate De-Dollarisation

Sanctions on Russian banks have pushed counterparties toward yuan-based settlement channels and China’s CIPS network, whose average daily volume reached 921 billion yuan in March, up nearly 50% month on month. Businesses face changing payment rails, settlement risks, and treasury management implications.

Flag

Route Congestion at Alternatives

As exporters divert cargoes away from Hormuz, substitute corridors and terminals are coming under strain. Saudi Arabia’s Yanbu system is nearing practical loading limits, with tanker queues and multi-day delays, showing that alternative infrastructure cannot fully absorb prolonged Gulf disruption.

Flag

Gigaprojects Face Reprioritization

Saudi authorities are reassessing flagship Vision 2030 projects, with spending discipline increasing under fiscal pressure and security shocks. Neom’s emphasis is shifting toward Oxagon, logistics, and practical industrial assets, affecting construction pipelines, suppliers, and long-term real-estate expectations.

Flag

Currency Strength, Mixed Effects

The real has strengthened and 2026 dollar forecasts improved to around R$5.30, supported by capital inflows and commodity revenues. This eases imported inflation and lowers some input costs, but can erode export competitiveness for industrial and labor-intensive sectors.

Flag

Energy Route Disruptions Raise Costs

Tensions linked to Iran and the Strait of Hormuz have disrupted energy and fertilizer flows, pushing up oil, gas, shipping, and insurance costs. US exporters and importers face greater freight volatility, margin compression, and contingency planning needs across agriculture, chemicals, and manufacturing.

Flag

USMCA Review and Tariff Risk

Canada’s July USMCA review is drifting beyond deadline as Ottawa links renewal to relief from U.S. Section 232 tariffs on steel, aluminum, autos, lumber, and derivative goods. Prolonged uncertainty is delaying investment, raising cross-border costs, and disrupting integrated North American supply chains.

Flag

Automotive Electrification Localisation

The UK automotive supply chain offers a significant localisation opportunity as electrification advances. Industry estimates an extra £4.6 billion in domestic manufacturing value by 2030, with UK-sourced component demand up 80%, supporting investment in batteries, power electronics and specialist manufacturing.

Flag

Higher Inflation, Rates Pressure

March CPI rose 0.9% month on month and 3.3% year on year, the fastest increase in nearly four years. Elevated energy and tariff pass-through are reducing prospects for Fed cuts, raising financing costs, pressuring demand, and complicating investment timing.

Flag

China Exposure Faces Scrutiny

Canada’s trade posture toward China is becoming more sensitive as U.S. officials criticize perceived openness to Chinese products and transshipment risks. Businesses exposed to China-linked sourcing, electric vehicles, or strategic minerals should expect greater geopolitical scrutiny, compliance burdens, and partnership reassessment.

Flag

Defence Spending Delays Distort Investment

Delays to the UK’s Defence Investment Plan and a reported £28 billion funding gap are creating procurement uncertainty for defence, aerospace and advanced technology suppliers. While spending is set to rise, unclear timing is already affecting order books and investment planning.

Flag

Middle East Supply Shock

Conflict around Iran and disruption in the Strait of Hormuz have cut shipments to the Middle East by 49.1%, lifted oil prices, and constrained crude, LNG and feedstock flows. Firms face higher transport, energy, insurance and contingency-planning costs across regional operations.

Flag

Industrial Margin Squeeze Emerging

China’s producer prices rose 0.5% year-on-year in March, ending a 41-month deflation streak, but mainly because of higher energy and commodity costs. With consumer demand still weak, manufacturers face difficulty passing through input inflation, threatening margins, supplier solvency and pricing stability across export chains.

Flag

Regulatory Uncertainty for Foreign Firms

Broader national-security framing in trade, data and supply-chain governance is making China’s operating environment less predictable for foreign companies. Vaguely defined enforcement powers increase the risk of sudden investigations, delayed approvals and political exposure across procurement, compliance and market-exit planning.

Flag

Critical Minerals Supply Chain Push

Canberra has created a A$1.2 billion strategic reserve covering rare earths, antimony and gallium, aiming to underpin domestic processing, support offtake agreements, and strengthen allied supply chains. The policy improves resilience, but midstream capacity and energy costs remain major constraints.

Flag

Antitrust Pressure Targets Big Tech

US regulators and lawmakers are intensifying antitrust pressure on dominant platforms, including Meta and self-preferencing legislation aimed at Amazon and Apple. This could alter digital market access, platform fees, M&A assumptions, and data strategies for internationally exposed businesses.

Flag

Middle East Cost Shock

Conflict-linked disruption in oil and LNG markets is lifting Taiwan’s input, freight and utility costs. Manufacturing PMI stayed expansionary at 55.4, but supplier delivery times worsened and raw-material prices climbed near two-year highs, squeezing margins across industrial supply chains.

Flag

Energy Security Drives Industrial Policy

Amid global energy volatility, Indonesia is accelerating biodiesel, ethanol, and sustainable aviation fuel mandates while leveraging refinery upgrades. This supports domestic energy resilience and selected industrial opportunities, but also increases policy activism that can redirect feedstocks, subsidies, and infrastructure priorities.

Flag

African Market Integration Finance

South Africa is deepening its role in African trade integration through AfCFTA and new Afreximbank support. A headline $11 billion package for energy, infrastructure, mineral processing and SMEs could improve regional value chains, export finance and cross-border investment capacity.

Flag

Tariff and Trade Friction Exposure

Japanese firms remain exposed to lingering U.S. tariff effects and broader trade-policy uncertainty, even as some adapt through cost pass-through and production shifts. Exporters face margin pressure, supply-chain reconfiguration, and more complex market-entry decisions, particularly in autos and industrial goods.

Flag

US Trade Pact Recalibration

India-US trade talks have reset after Washington imposed a temporary 10% tariff on all countries, eroding India’s earlier advantage. Ongoing Section 301 probes add compliance risk, making tariff outcomes and market-access terms critical for exporters, sourcing strategies, and investment planning.

Flag

Inflation Risks From Oil

Middle East tensions are feeding directly into South Africa’s fuel, transport and input costs. Brent crude rose from $69.08 to $93.67 per barrel during the review period, lifting inflation risks, threatening rate hikes, and pressuring import-dependent supply chains and consumer demand.

Flag

Selective but Slower Investment Momentum

First-quarter 2026 investment is forecast at Rp497 trillion, up 6.9% year on year, with downstream sectors still attracting capital from China, Japan, and South Korea. Yet weaker business expectations and geopolitical risk point to more selective, slower foreign direct investment decisions.

Flag

Privatization and State Exit

Cairo has raised about $6 billion from 19 state exit deals, reaching 48% of its target, with further listings planned. This opens acquisition opportunities, deepens capital markets, and signals private-sector expansion, but execution pace remains crucial for foreign investors.

Flag

Surging shekel squeezes exporters

The shekel has strengthened to below NIS 3 per dollar for the first time since 1995, up more than 20% year on year. Cheaper imports help inflation, but exporters, manufacturers and tech firms face margin compression and relocation pressure.

Flag

Defence Machinery Demand Expansion

Finland’s €546.8 million order for 112 additional K9 self-propelled howitzers, plus related maintenance and modification work, signals stronger demand for heavy mobility platforms and components. Defence procurement is creating openings for suppliers, local integration, aftermarket services, and resilient industrial partnerships.

Flag

Green Industrial and Critical Minerals Push

South Africa is positioning around decarbonisation, beneficiation and industrial upgrading, backed by large projects in renewables, automotive transition and mineral processing. This supports long-term manufacturing opportunities, but competitiveness still depends on logistics, power pricing and policy follow-through.