Mission Grey Daily Brief - February 25, 2025
Summary of the Global Situation for Businesses and Investors
The Russia-Ukraine war continues to dominate the global agenda, with foreign leaders visiting Ukraine to show support on the third anniversary of the conflict. US President Donald Trump's abrupt change in US policy towards Ukraine has raised concerns about the impact on Taiwan and transatlantic relations. Meanwhile, Ukrainian President Volodymyr Zelenskyy has expressed willingness to step down in exchange for peace or NATO membership. The shifting geopolitical landscape presents both risks and opportunities for businesses and investors, particularly in the European and Asia-Pacific regions.
US Policy Shift on Ukraine
US President Donald Trump has reversed three years of American policy towards Ukraine, raising concerns about the impact on Taiwan and transatlantic relations. Trump has falsely claimed that Ukraine should not have started the war and questioned the legitimacy of President Volodymyr Zelenskyy's government. He has also begun direct talks with Moscow and voiced positions similar to the Kremlin's. This abrupt shift has raised concerns about the impact on Taiwan, with some experts suggesting that China might become emboldened to push its territorial claim on Taiwan. However, others argue that Beijing is likely in a wait-and-see mode, monitoring the situation in Europe before making any moves.
Impact on Taiwan
Trump's policy shift has raised concerns about the impact on Taiwan, with some experts suggesting that China might become emboldened to push its territorial claim on Taiwan. Taiwanese officials have questioned whether the US could pull back its support, potentially leaving Taiwan vulnerable. However, others argue that Beijing is likely in a wait-and-see mode, monitoring the situation in Europe before making any moves. Trump's administration has appointed China hawks in top-level positions, including Secretary of State Marco Rubio and Defense Secretary Pete Hegseth. Hegseth has stressed that if the US pulls back support from Ukraine, it will concentrate on the Asia-Pacific region, leaving European defense to Europeans.
Transatlantic Relations
Trump's policy shift has raised concerns about transatlantic relations, with European leaders expressing dismay at Trump's approach and fears of being sidelined in efforts to secure a peace deal. European leaders have emphasized the importance of consulting Ukraine and Europe in any peace negotiations and thwarting Putin's ambitions. European Council President Antonio Costa has announced an emergency summit of EU leaders in Brussels on March 6, with Ukraine at the top of the agenda. European leaders have stressed the need for Europe to take on more responsibility for its own defense, particularly in the face of a potential Russian victory.
Zelenskyy's Offer to Step Down
Ukrainian President Volodymyr Zelenskyy has expressed willingness to step down in exchange for peace or NATO membership. This offer comes amid escalating tensions with US President Donald Trump, who has accused Ukraine of starting the conflict and blamed predecessor Joe Biden and Zelenskyy for not stopping the fighting sooner. Zelenskyy has hit back, accusing Trump of being in a "disinformation space", straining ties at a pivotal moment in the conflict. Analysts suggest that confronting Trump might not be the best approach, as it could lead to further escalation.
Further Reading:
Foreign leaders visit Ukraine to show support on war’s 3rd anniversary
Foreign leaders visit Ukraine to show their support on Russia-Ukraine war’s third anniversary
Three Years Into Russia-Ukraine War, A Look At Where Their Economies Stand
Trump meets with French President Macron as uncertainty grows about US ties to Europe and Ukraine
Trump will meet French and UK leaders as uncertainty grows about US ties to Europe
Trump will meet French and UK leaders as uncertainty grows about US ties to Europe and Ukraine
Trump's abrupt change of US policy on Ukraine raises questions about Taiwan support
Trump’s abrupt change of US policy on Ukraine raises questions about Taiwan support
Western leaders visit Kyiv and pledge military support against Russia on the war’s 3rd anniversary
Zelenskyy Says 'Ready To Step Down' As President In Exchange For NATO Membership For Ukraine
Themes around the World:
EU Considers Anti-Coercion Measures
In response to US tariffs, the EU is preparing to activate its anti-coercion instrument, potentially restricting US market access and imposing retaliatory tariffs. This unprecedented move could escalate into a full-scale trade war, amplifying risks for Finnish companies.
Currency Volatility and Monetary Policy
The Brazilian real is forecast to remain around R$5.50 per USD in 2026, with inflation expectations at 4.05% and the Selic rate at 12.25%. External shocks, US interest rates, and election risks may drive volatility, affecting trade contracts, investment returns, and hedging strategies.
Green Transformation and Regulatory Burden
Germany’s ambitious green policies have increased regulatory complexity and compliance costs for businesses. While supporting climate goals, these measures contribute to capital flight, slower investment, and concerns about overregulation, particularly for small and medium-sized enterprises.
Robust Foreign Direct Investment Growth
Turkey attracted $12.4 billion in FDI over 11 months in 2025, a 28% increase year-on-year. The EU accounts for 75% of inflows, with retail, information, and food sectors leading. This signals improving investor confidence and opportunities for international business expansion.
Green Hydrogen Industry Expansion
Australia is scaling up its green hydrogen sector through major projects like the Tasmania initiative, supported by favorable policies and international partnerships. This positions Australia as a leader in clean energy exports, with significant implications for industrial supply chains and investment flows.
Regulatory Instability and Economic Reforms
Iran’s government has responded to unrest by replacing the central bank governor and promising reforms. However, regulatory unpredictability, inflation, and currency collapse undermine investor confidence and complicate compliance for foreign businesses.
Gold Reserves Offset Sanctions Impact
Russia’s gold holdings, now 43% of reserves, have surged in value by $216 billion since 2022, offsetting losses from frozen Western assets. This financial buffer supports Russia’s war effort and complicates the effectiveness of sanctions, influencing global reserve management strategies.
Widespread Protests and Political Instability
Mass protests driven by economic hardship and political repression have spread nationwide, resulting in hundreds of deaths. The risk of regime change or violent crackdowns creates extreme uncertainty for investors, supply chains, and operational continuity.
India-Israel FTA and Bilateral Trade Shift
India and Israel are advancing a Free Trade Agreement to reverse a 52% drop in Indian exports and boost investment. The FTA aims to expand trade in high-tech, defense, and medical sectors, reshaping supply chains and market access for global businesses.
Japan’s Strategic Rare Earth Mining Push
Japan has launched the world’s first deep-sea rare earth mining trial near Minamitori Island, aiming to reduce dependence on China. Success could transform Japan into a key supplier, but technical, environmental, and cost hurdles remain, with full-scale operations targeted for 2027.
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.
Chronic Economic Instability and Reform Imperative
Pakistan faces persistent economic instability, marked by declining foreign investment, high debt, and inflation. Structural reforms, improved governance, and policy consistency are urgently needed to restore investor confidence and enable sustainable growth, directly impacting international business strategies.
Trade Policy Liberalization and Growth
Egypt’s trade reached $107.6 billion in the first ten months of 2025, with a 19% rise in exports and a 16% drop in the trade deficit. Expanded trade agreements and customs incentives are driving export growth, market access, and investment opportunities, especially in non-oil sectors.
Surge in Foreign Direct Investment
Turkey attracted $12.4 billion in FDI in the first 11 months of 2025, a 28% increase year-on-year. The EU remains the main source, with wholesale, ICT, and food manufacturing leading. Improved macroeconomic stability and policy consistency drive renewed investor confidence.
Vision 2030 Economic Diversification Acceleration
Saudi Arabia is entering the third phase of Vision 2030, shifting from launching reforms to maximizing their impact. The focus is on logistics, tourism, and non-oil sectors, with hundreds of billions in government and private investment, reshaping trade and supply chain opportunities for global firms.
USMCA Uncertainty and Trade Tensions
The upcoming review of the USMCA and threats of renegotiation or expiration by the US create uncertainty for Mexico’s trade stability, supply chains, and investment planning, with potential tariff hikes and regulatory changes impacting cross-border business operations.
Iron Ore and Commodity Export Volatility
Australian iron ore exports, a cornerstone of the economy, face volatility due to pricing disputes and declining Chinese demand. This has led to a drop in the national trade surplus, highlighting the sector’s vulnerability to geopolitical and market shifts, impacting investment and economic growth.
Geopolitical Tensions and Security Risks
China’s persistent claims over Taiwan and frequent military exercises in the Taiwan Strait heighten regional instability. Any escalation could disrupt global electronics, automotive, and defense supply chains, making Taiwan a critical flashpoint for international business risk.
Political Volatility: Snap Election Gamble
Prime Minister Sanae Takaichi’s dissolution of parliament and snap election on February 8 introduces significant policy uncertainty. The outcome will shape Japan’s fiscal, trade, and security strategies, with potential shifts in economic stimulus, tax policy, and regional diplomacy.
Rising Non-Oil Private Sector Growth
Non-oil private sector activity continues to expand, supported by Vision 2030 reforms and strong domestic demand. The Riyad Bank PMI remains well above 50, with real GDP growth forecast at 4–4.6% in 2026, signaling robust opportunities for international investors in diversified sectors.
Infrastructure Investment Drives Construction Boom
US infrastructure spending, supported by federal and state initiatives, is fueling robust growth in construction and heavy equipment markets. This trend supports supply chain modernization and creates opportunities for global suppliers, though regulatory and environmental uncertainties persist.
Defense Industry and Sanctions Dynamics
Turkey’s exclusion from the US F-35 program and ongoing defense industry sanctions affect technology transfers and procurement. Efforts to rejoin the program and possible return of Russian S-400 systems highlight ongoing risks for defense sector investments and international partnerships.
Infrastructure Megaprojects Drive Growth
Large-scale projects such as NEOM and Red Sea developments are reshaping Saudi Arabia’s business landscape, creating opportunities in construction, tourism, logistics, and technology. However, project execution risks and regulatory changes require vigilant risk management for global partners.
US-China Relations Remain Volatile
Ongoing tensions and policy reversals in US-China economic relations continue to disrupt trade flows, investment decisions, and technology transfers. Businesses face persistent risk from tariffs, regulatory changes, and unpredictable bilateral negotiations.
New Capital City (IKN) Investment Momentum
The IKN project continues to attract new investors, with recent agreements covering culinary, commercial, and office developments. This signals growing business confidence in IKN’s role as a future economic hub, with implications for real estate, infrastructure, and supporting industries.
France’s Opposition to EU-Mercosur Deal
France’s rejection of the EU-Mercosur trade agreement, driven by agricultural sector protests and concerns over unfair competition, highlights deep domestic resistance to further market opening. This stance risks isolating France within the EU and complicates supply chain diversification for international businesses.
Demographic Shifts and Talent Gaps
With the world’s lowest birth rate and a rapidly aging population, South Korea faces acute talent shortages. Consulting firms are increasingly advising on workforce planning, migration, and automation to address labor gaps affecting trade and operational continuity.
Communications Blackouts and Information Risks
Iran has imposed nationwide internet and phone shutdowns, severely restricting information flow. These blackouts hinder business continuity, disrupt logistics, and complicate due diligence, heightening operational uncertainty for all international stakeholders.
Regulatory Reforms and Investment Climate
The government is pursuing regulatory reforms to attract foreign and domestic investment, including tax incentives and streamlined credit for SMEs. However, inconsistent policies, high production costs, and compliance challenges remain barriers to sustained investment and supply chain integration.
Uncertainty Over North American Trade Pact
President Trump’s open criticism of the CUSMA/USMCA trade agreement and threats not to renew it create significant uncertainty for Canadian businesses. Disruption of this pact would upend North American supply chains, particularly in automotive and manufacturing sectors, impacting investment and operations.
Geopolitical Risks in East Asia
Rising military tensions over Taiwan and the Senkaku Islands, with Chinese naval activity and Japanese security commitments, increase the risk of regional conflict. This instability directly affects trade, investment flows, and the strategic calculus of multinational firms operating in Asia.
Shifts in Global Capital Flows and FPI Behavior
US monetary policy, tariff uncertainty, and geopolitical risks have triggered large-scale foreign portfolio investor outflows from emerging markets, notably India. While US and European investors maintain selective exposure, volatility in currency and bond markets is prompting a reassessment of risk and asset allocation strategies.
Political Uncertainty and Border Tensions
Thailand faces heightened political uncertainty ahead of the February 2026 elections, compounded by border tensions with Cambodia. These factors increase operational risks, impact investor confidence, and may disrupt cross-border trade and supply chains.
Labor Market Weakness and Demographic Strain
Unemployment reached a 12-year high at 2.95 million in 2025, with a 6.3% jobless rate and declining job vacancies. Despite skilled labor shortages, demographic decline and structural industry challenges are leading to rising unemployment and complicating economic recovery.
Supply Chain Diversification Mandates
US policy now ties tariff relief to Taiwanese firms’ US manufacturing presence, incentivizing relocation of up to 40% of Taiwan’s semiconductor supply chain. This shift aims to mitigate concentration risk but challenges Taiwan’s domestic industry and global logistics.
Robust Export Growth and Trade Surplus
Vietnam posted a record $20 billion trade surplus in 2025, with exports up 17% and processed industrial goods leading. The US remains the top export market, while China dominates imports. Trade growth supports macroeconomic stability but increases exposure to global demand fluctuations and protectionism.