Fiscal Expansion and Market Volatility

Japan’s aggressive fiscal stimulus and proposed suspension of the 8% food consumption tax have triggered bond market volatility and yen fluctuations. With debt-to-GDP exceeding 230%, concerns over fiscal sustainability and potential debt-servicing risks are affecting global investor sentiment and cross-border capital flows.

Supply Chain Resilience and Diversification

Thailand has gained sourcing share as global supply chains diversify away from China, with U.S. imports from Thailand rising 28% in 2025. However, new trade regulations, such as the EU’s CBAM, and stricter U.S. origin verification are increasing compliance burdens for exporters.

Currency Collapse and Hyperinflation

Iran's rial has plunged to record lows, now trading at 1.4–1.5 million per US dollar, with inflation nearing 50%. This currency crisis, driven by sanctions, mismanagement, and corruption, has triggered mass protests, eroded purchasing power, and created severe import and operational challenges for businesses.

Energy Security and Transition Challenges

Vietnam’s drive for double-digit growth faces critical energy constraints. While LNG, offshore wind, and nuclear projects are prioritized, slow project execution, regulatory complexity, and grid integration issues risk power shortages, directly affecting industrial output and supply chain reliability.

Energy Security and Nuclear Revival

Japan has restarted the Kashiwazaki-Kariwa nuclear plant, boosting energy self-sufficiency and emissions targets. This move, amid regional security tensions, signals a shift toward stable domestic energy sources and reduced reliance on fossil fuel imports, affecting industrial competitiveness.

America First and Investment Nationalism

The US is pursuing an 'America First' agenda, leveraging tariffs and investment controls to promote domestic industries and national security. This approach complicates relations with allies, influences defense procurement, and increases compliance burdens for multinational firms.

Organized Crime and Investment Risk

Persistent organized crime and cartel activity, especially in key states like Michoacán, continue to pose operational and security risks. Despite increased arrests and bilateral cooperation, extortion, violence, and supply chain disruptions remain significant concerns for international investors.

Agricultural Export Resilience and Vulnerability

Despite war, Ukraine’s maritime corridor has shipped 100 million tons of grain since 2023, but attacks on ports have slashed agricultural exports by 47% year-on-year. This volatility threatens global food security and the stability of agri-business supply chains.

Continental Infrastructure and African Integration

Egypt prioritizes infrastructure-led economic integration across Africa, leading projects like the Lake Victoria-Mediterranean corridor. These initiatives enhance intra-African trade, create new supply chain routes, and position Egyptian firms as key players in continental development.

Oil Exports Under Sanctions Pressure

Despite sanctions, Iran exports up to 1.7 million barrels of oil daily, mainly to China at steep discounts. New US measures and domestic unrest threaten further disruptions, with potential to sharply impact global energy markets and pricing.

US-China Tech and Trade Tensions

The US has imposed a 25% tariff on advanced AI chips sold to China, targeting Nvidia and AMD products. This move, citing national security, disrupts global chip supply chains and intensifies US-China trade and technology competition, impacting multinational investment strategies.

Technology Export Controls Tighten

The US continues to restrict advanced technology exports to China, especially AI chips, with new licensing and compliance requirements. Recent policy adjustments allow limited sales with strict conditions, balancing national security with economic interests and impacting global tech competition.

Vision 2030 Giga-Projects Acceleration

Saudi Arabia’s giga-projects, such as Qiddiya and NEOM, are advancing rapidly, with major infrastructure and entertainment investments. These projects aim to diversify the economy, create up to 85,000 jobs by 2030, and generate significant non-oil revenue, attracting global investors and supply chain partners.

Logistics, Inventory, and Supply Chain Reconfiguration

US logistics networks are adapting to tariff-driven cost pressures, with firms reducing inventories, diversifying ports of entry, and reconfiguring warehousing. These changes are tightening trucking capacity and increasing supply chain velocity, impacting operational costs and strategic sourcing decisions.

Transatlantic Trade War Escalation

President Trump's threat of 10–25% tariffs on UK and European goods over Greenland has triggered the most serious US-EU trade crisis in decades. The risk of retaliatory measures and suspended trade agreements could severely disrupt UK exports, supply chains, and investment flows.

AI and Technology as Market Drivers Amid Fragmentation

Artificial intelligence and advanced technology investment remain central to US economic growth and global market leadership. However, trade fragmentation, export controls, and valuation risks are prompting more selective investment approaches, with a focus on supply chain security, domestic capacity, and regulatory compliance.

Disrupted Trade and Supply Chains

Widespread unrest, sanctions, and payment uncertainties have nearly halted key imports and exports, such as Indian basmati rice. Delayed remittances, shipment risks, and suspended subsidized foreign exchange have led to significant supply chain disruptions and heightened counterparty risk.

International ‘Board of Peace’ Governance Experiment

The US-led ‘Board of Peace’—involving multiple global actors—aims to oversee Gaza’s reconstruction and security. Israel’s recent agreement to participate marks a policy shift. However, questions over legitimacy, authority, and buy-in from Palestinians and Hamas create operational and reputational risks for international businesses.

Impact on Real Estate Investment Strategies

The Shelter Act changes the risk-reward calculus for real estate investors, with higher costs and longer project cycles. Institutional investors are expected to focus on finished or near-finished assets, while speculative and early-stage investments become less attractive due to regulatory uncertainty.

Political Stability and Policy Continuity Risks

The UK’s political landscape remains volatile, with ongoing debates over trade, security, and foreign policy direction. Uncertainty around future elections and leadership could impact investment strategies and long-term business planning for international investors.

Accelerated EU Accession and Market Integration

Ukraine aims for EU membership by 2027, viewing integration as a key security and economic guarantee. Many EU states support this timeline, but accession depends on reforms and consensus. Rapid integration could reshape trade, regulatory, and investment landscapes for international businesses.

Regional Geopolitical Tensions and Iran’s Role

Iran’s support for Hamas and other non-state actors continues to threaten Israel’s security and regional normalization efforts. The risk of escalation with Iran or its proxies remains high, impacting energy infrastructure, cross-border trade, and investor sentiment.

Trade Policy Uncertainty and Export Risks

Geopolitical tensions, sanctions on Russia, and trade disputes with the US have weakened external demand for German goods. Exporters face ongoing uncertainty, especially in automotive and machinery sectors, complicating supply chain planning and global market strategies.

US Tariff Escalation and Trade Wars

Recent US tariff threats against China, the EU, and South Korea have intensified global trade tensions, disrupting supply chains and raising costs. Tariffs averaging 18%—the highest since 1934—are largely borne by US consumers and businesses, impacting inflation and investment strategies.

Strategic Diversification Away from U.S. Dependence

Canada is actively seeking to double non-U.S. exports by 2035, driven by repeated U.S. tariffs and trade unpredictability. This diversification strategy is reshaping investment priorities, market access, and supply chain decisions for Canadian and international firms operating in the country.

European Strategic Autonomy Push

France is leading calls for greater European strategic autonomy in trade, defense, and technology, especially in response to US economic coercion and global instability. This shift impacts investment strategies, regulatory risk, and the future of transatlantic business cooperation.

Stagnation in Russian Oil and LNG Output

Despite sanctions and attacks, Russia’s oil production only fell 0.8% in 2024, but LNG output missed targets and long-term expansion plans are delayed. Sanctions on technology and finance hinder energy sector growth, affecting future export capacity and investment opportunities.

Escalating US-China Trade Tensions

Trade tensions between China and the US remain elevated, with renewed tariffs and retaliatory measures. Despite a 19.5% drop in exports to the US in 2025, China posted a $1.2 trillion trade surplus, highlighting its resilience but also the ongoing risk of further escalation and global supply chain disruptions.

US-Korea Alliance and Security Realignment

The evolving US-Korea alliance, shaped by Trump’s ‘America First’ policies, includes renegotiated defense cost-sharing, operational control, and military modernization. Shifts in USFK posture and nuclear submarine projects affect regional security and business risk assessments.

US-China Decoupling and Supply Chain Realignment

US-China trade relations have deteriorated, with tariffs and technology restrictions prompting companies to diversify supply chains. China’s exports to the US dropped 20% in 2025, but rerouting through third countries maintains indirect flows, complicating decoupling efforts and global sourcing strategies.

US-China Trade Realignment Intensifies

US-China trade contracted sharply in 2025, with US imports from China down 28% and exports falling 38%. Southeast Asia, especially Indonesia and Thailand, gained market share. This realignment is reshaping global supply chains, increasing costs and uncertainty for international businesses.

Hamas Disarmament and Security Dilemmas

The demilitarization of Hamas remains a central, unresolved issue. US and Israeli insistence on full disarmament is met with resistance, and the lack of clear enforcement mechanisms heightens the risk of renewed conflict, affecting supply chains, insurance costs, and investment planning.

Semiconductor and Technology Investment Surge

A landmark US-Taiwan deal commits at least $250 billion in Taiwanese semiconductor investments in the US, with reciprocal tariff reductions to 15%. This aims to boost US tech self-sufficiency, secure supply chains, and reshape the global semiconductor landscape.

Defense Buildup and Regional Alliances

Japan is doubling defense spending and deepening alliances with the US, Australia, and others to counter China. Expanded military capabilities and joint industrial policies are reshaping the Indo-Pacific security architecture, with direct implications for foreign investment and supply chains.

Sanctions, Export Controls, and Security Concerns

The UK’s alignment with Western sanctions on Russia and scrutiny of Chinese investments heighten compliance risks. Export controls, especially in technology and dual-use goods, require robust due diligence and may affect cross-border operations and partnerships.

Gaza Conflict Drives Regional Instability

The ongoing Gaza conflict, including ceasefire violations and humanitarian crises, continues to destabilize Israel’s security environment and regional relations. This volatility disrupts trade, investment, and supply chains, while raising reputational and operational risks for international businesses.