Agricultural Export Disruptions

Ukraine, a major global grain exporter, faces challenges in agricultural production and export logistics due to conflict and infrastructure damage. These disruptions impact global food supply chains, commodity prices, and trade partnerships, affecting international markets and investment in agribusiness.

Energy Supply Instability

South Africa faces ongoing energy supply challenges due to frequent power outages and load shedding by Eskom. This instability disrupts manufacturing and logistics, increasing operational costs and deterring foreign investment. Businesses must factor in energy risks when planning supply chains and capital expenditures.

Regulatory Focus on Foreign Investment

Australia is tightening scrutiny of foreign investment, particularly in strategically sensitive sectors like critical minerals. Recent government actions to limit Chinese capital in key projects reflect heightened regulatory risk and a more cautious approach to foreign ownership, impacting cross-border M&A and joint ventures.

ESG Standards and Green Transition Pressures

Vietnam is developing tailored ESG standards to enhance compliance and transparency, with major cities and industrial projects prioritizing green and high-tech development. ESG adoption is seen as a competitive advantage, but implementation costs, data transparency, and access to green finance remain hurdles for local and foreign businesses.

Political Instability and Budget Uncertainty

France entered 2026 without an approved budget, causing delays in public investment, recruitment, and project launches. This uncertainty increases borrowing costs, weakens investor confidence, and risks slowing economic growth and business operations.

Mercosur Agreement Sparks Turmoil

France’s opposition to the EU-Mercosur trade agreement has triggered nationwide farmer protests and political threats, reflecting deep fears of unfair competition and lower standards. The deal’s ratification could reshape European agriculture, supply chains, and trade flows.

Supply Chain Diversification and Upgrading

Vietnam is strengthening its position as a global supply chain hub, attracting high-tech and electronics investment, and benefiting from supply chain shifts out of China. Industrial zones like Amata City Phu Tho and Ho Chi Minh City’s high-tech focus drive this trend, but infrastructure, skilled labor, and ESG standards are critical challenges.

Labor Market and Regulatory Evolution

Mexico’s labor market is adapting to increased demand from nearshoring and supply chain shifts, but regulatory changes, workforce development, and compliance remain critical. Evolving labor standards and business regulations will shape operational costs and investment strategies.

Escalating Regional And Geopolitical Tensions

Recent Israeli and US airstrikes on Iranian infrastructure, coupled with threats of further military action, have heightened geopolitical risks. These tensions threaten supply chains, cross-border trade, and the stability of foreign investments in Iran and the wider region.

Return of Global Capital Flows

December 2025 saw renewed global fund inflows into Thai equities, driven by attractive valuations and diversification needs. Political risks remain, but normalized foreign investment levels could bring up to US$20 billion in new capital, boosting market liquidity and growth.

Tokenization of Infrastructure Investment

A $28 billion partnership is transforming Indonesian development rights into blockchain-based tokens, enabling fractional ownership and attracting global investors. This innovation increases transparency, liquidity, and access to infrastructure projects, potentially reshaping investment models in emerging markets.

Shifting Alliances and Defense Pacts

Turkey’s potential entry into a Saudi Arabia-Pakistan mutual defense pact and its balancing act between NATO, Russia, and regional actors reflect a fluid security environment. These shifts may affect foreign investment, technology partnerships, and supply chain security, especially in sensitive sectors.

Investment Stagnation and Infrastructure Cuts

Sanctions and war have led to a 20% cut in Russian rail investment and stagnating GDP, with industrial output declining. Foreign direct investment is constrained, and infrastructure projects face delays, raising long-term risks for investors and operators.

Labor Reforms and Cost Pressures

Mexico’s 2026 labor reforms include a 13% minimum wage increase, mandatory social security for platform workers, and a proposed reduction of the workweek. These changes raise labor costs and compliance requirements, affecting competitiveness and supply chain strategies.

Sustainability Standards and Market Access

Environmental regulations and sustainability standards are increasingly shaping Brazil’s export competitiveness. The end of the Soy Moratorium raises deforestation concerns, potentially threatening market access, especially in the EU, where new trade deals include strict environmental provisions.

Infrastructure Investment and Financing Innovation

India is targeting $2.2 trillion in infrastructure investment by 2030, launching risk guarantee funds and PPP models to unlock private capital. Major rail, logistics, and energy projects promise improved connectivity, reduced costs, and new opportunities for foreign investors and supply chain operators.

Geopolitical Tensions with China

Taiwan faces ongoing geopolitical tensions with China, impacting international trade and investment. The risk of military conflict or political coercion creates uncertainty for global supply chains, especially in technology sectors. Businesses must consider these risks in strategic planning and risk mitigation to safeguard operations and investments in Taiwan.

Political Stability Amid Regional Shifts

Mexico’s government, led by President Sheinbaum, faces mounting external pressures but maintains domestic stability and high-level dialogue with the US. The broader Latin American shift toward market-friendly policies is boosting investor sentiment, but geopolitical risks remain elevated.

Energy Sector Challenges

Iran's oil and gas sectors are critical to its economy but face challenges due to sanctions, aging infrastructure, and limited foreign investment. These factors constrain production capacity and export potential, affecting global energy markets and related supply chains.

Critical Minerals Geopolitics Intensifies

Australia’s dominance in lithium, nickel, and rare earths positions it at the heart of global supply chain security for green technologies. Strategic partnerships and resource nationalism are rising, with ethical and environmental governance under scrutiny for international investors.

Foreign Direct Investment Fluctuations

UK outbound investment, particularly in Europe, has sharply declined—UK investment in Spain fell 83% in 2025. While the UK promotes itself as an attractive investment destination, these fluctuations signal caution for international investors assessing long-term commitments.

Regulatory Environment and Business Climate

Taiwan's regulatory framework and business-friendly policies facilitate foreign investment and trade. However, evolving regulations related to data security and cross-border transactions require businesses to stay informed to ensure compliance and operational continuity.

Trade Relations and Regional Integration

South Africa's role in the African Continental Free Trade Area (AfCFTA) and its trade relations with key partners like China, the EU, and the US shape its trade dynamics. Shifts in trade agreements and tariffs impact market access and supply chain configurations for businesses.

Japan’s Military Buildup Spurs Controls

Japan’s increased defense spending and security policy reforms have prompted China’s export restrictions, raising business risks in sectors linked to defense and advanced manufacturing, and signaling a more volatile regulatory environment for foreign investors.

Stagnant Growth and Industrial Decline

Germany's economy grew just 0.2% in 2025 after two years of recession, with industrial output still 14% below 2018 levels. Persistent weakness in manufacturing, especially automotive and machinery, and a record wave of insolvencies are undermining business confidence and investment.

Sanctions, Export Controls, and Geopolitical Tensions

The UK’s involvement in enforcing sanctions, particularly against Russia and in coordination with the US, affects global supply chains and trade flows. Ongoing tensions and policy shifts in sanctions regimes require businesses to maintain robust compliance and risk management frameworks.

AI Boom Spurs Startup Investment

Swedish startups like Lovable, Anysphere, and Legora have seen valuations multiply in 2025, fueled by record global AI investments. This trend enhances Sweden’s innovation ecosystem but also signals increased competition and volatility for investors.

Security and Crime Risks

Persistent security challenges, including organized crime and drug-related violence, pose risks to business operations and supply chain integrity. These issues increase operational costs, insurance premiums, and can disrupt logistics, affecting investor confidence and international trade routes.

Labour Market and Automation Shifts

The semiconductor boom is driving job growth in high-skill areas but also accelerating automation and reducing employment in legacy manufacturing. Businesses must adapt workforce strategies to balance advanced skills demand with potential job displacement in traditional sectors.

Energy Supply and Pricing Volatility

The UK is experiencing significant energy market fluctuations due to geopolitical tensions and shifts in global energy supply chains. Rising energy costs affect manufacturing and operational expenses, prompting companies to reassess energy sourcing and invest in renewable alternatives to mitigate risks and ensure business continuity.

Labor Market Dynamics and Skill Shortages

Pakistan's labor market is characterized by a large, young workforce but suffers from skill mismatches and low productivity. These factors affect manufacturing quality and innovation capacity, influencing foreign investors' decisions regarding local operations and outsourcing.

Comprehensive Crypto Regulatory Shift

The UK is transitioning from a ‘crypto hub’ narrative to a full regulatory regime, with new rules set for October 2027. This shift favors established financial players, raises compliance costs, and will reshape the fintech and digital asset landscape for international investors.

Infrastructure Expansion And Modernization

Major infrastructure projects, including new airports, railways, and logistics hubs, are underway nationwide. These investments, with public investment up 26% in 2026, improve connectivity, reduce logistics costs, and support Vietnam’s ambition to become a regional economic and transport center.

Strategic Infrastructure and Chabahar Port

Despite sanctions, Iran continues developing the Chabahar Port and North-South Transport Corridor, vital for regional connectivity and trade with India, Russia, and Central Asia. However, instability and external pressure threaten project timelines and long-term investment returns.

Persistent Attacks on Energy Infrastructure

Russian strikes on Ukrainian energy assets have caused widespread blackouts, affecting millions and disrupting industrial, transport, and municipal operations. These attacks threaten supply chains, increase operational risks, and require urgent investment in resilient infrastructure.

Financial Services Sector Transformation

The UK’s financial services sector is adapting to loss of EU passporting rights by expanding global partnerships and innovating fintech solutions. This transformation impacts London's role as a global financial hub and influences capital flows and investment strategies.