Energy Price Shock Exposure

Higher oil prices linked to Middle East tensions are lifting logistics, electricity, and production costs across Thailand. Government diesel subsidies and utility discounts may cushion near-term disruption, but businesses remain exposed to margin pressure, transport volatility, and imported energy dependence.

Energy Policy and Power Reliability

State-led energy policy and pressure on private participation continue to cloud investment conditions in electricity, gas, and industrial supply. For manufacturers, this creates risks around project approvals, power reliability, input costs, and the scalability of nearshoring-driven capacity expansion.

Industrial Competitiveness Under Pressure

High power prices are accelerating deindustrialisation risks in chemicals, bioethanol and basic materials. Industry reports energy can exceed 50% of manufacturers’ cost base, with UK facilities facing far higher costs than US peers, undermining local production, exports and supply-chain resilience.

Asia Pivot Reshapes Trade Flows

Russian crude and broader trade are tilting further toward Asia, with more cargoes moving to India and sustained dependence on China and intermediary hubs such as the UAE. This reorientation alters shipping routes, payment practices, sourcing networks and competitive dynamics for international suppliers.

Payment Channels Face Tighter Controls

Washington is sharpening scrutiny of financial intermediaries facilitating Iran-linked transactions, including possible pressure on regional and Asian banks. This raises settlement risk, compliance burdens and delays in cross-border payments, complicating trade finance, repatriation and supplier relationships.

Agricultural input and fertilizer vulnerability

French agriculture remains exposed to imported fertilizers and fuel costs, with fertilizer prices reportedly up 15% to 25% and domestic output covering under one-third of needs. This raises food-processing input risk, trade sensitivity and pressure for localized supply and energy solutions.

Energy Infrastructure Faces Security Risk

Iran-linked threats exposed the vulnerability of offshore gas platforms and raised Israel’s energy risk profile. Temporary shutdowns of Leviathan and Karish increased electricity costs by about 22% and caused roughly NIS 1.5 billion in economic damage, underscoring infrastructure exposure for investors and industry.

Industrial Energy Cost Shock

Germany’s 2026 growth forecast was cut to 0.5% from 1.0% as energy prices surged, with inflation projected at 2.7%. Energy-intensive sectors employing nearly 1 million people face margin compression, production risks, and renewed supply chain vulnerability.

Defense Export Policy Liberalization

Japan is loosening long-standing defense export restrictions to expand industrial scale and tap overseas demand, with interest from partners such as the Philippines and Poland. The shift could open manufacturing and technology opportunities, while increasing regulatory scrutiny and geopolitical sensitivity for cross-border deals.

Fiscal Slippage and Debt Pressures

Brazil’s public finances deteriorated sharply, with a March nominal deficit of R$199.6 billion, a primary deficit of R$80.7 billion, and gross debt at 80.1% of GDP. Fiscal uncertainty may weaken the real, raise sovereign risk premiums and delay investment decisions.

US Auto Tariff Shock

Washington’s planned rise in tariffs on EU cars and trucks to 25% is the most immediate external trade risk for Germany. Germany exported about 450,000 vehicles to the US in 2024; estimates suggest €15-30 billion in production losses if tariffs persist.

Middle East Shipping Exposure

Conflict-linked disruption around the Strait of Hormuz has sharply raised UK business concern over logistics and supply continuity. ONS data showed 29.4% of transport firms worried about conflict impacts, while manufacturers and retailers also reported steep rises in supply-chain risk.

Political Continuity Enables Policy Execution

A coalition government with a sizable parliamentary majority has reduced near-term political volatility, improving prospects for reform and investment approvals. For international businesses, steadier policymaking lowers operational uncertainty, though fiscal pressures and structural competitiveness issues still complicate execution.

Mining And Industrial Expansion

Saudi Arabia is scaling mining, metals and manufacturing as non-oil export engines, with mineral wealth estimated around SR9.4 trillion, Saudi ranking 10th in Fraser’s mining index, and factory growth supporting supply-chain diversification, downstream processing and new partnership opportunities for foreign firms.

Energy Shock Operating Pressure

Higher oil prices linked to Middle East tensions are lifting US fuel, freight, and input costs while reinforcing inflation. International businesses face margin pressure, more volatile transport expenses, and greater risk that geopolitical energy disruptions spill into broader American supply-chain operations.

High-Tech and Digital FDI Momentum

Approved foreign investment reached 324 billion baht in 2025, up 42% year on year, with momentum in semiconductors, cloud, AI, and related infrastructure. Interest from firms such as ASML and Microsoft signals growing opportunities for technology suppliers, industrial real estate, and skilled-labor strategies.

Logistics Hub Expansion Accelerates

Saudi Arabia is rapidly strengthening maritime and inland logistics, including 24 activated logistics centers, customs clearance below two hours, and new Europe-Red Sea shipping links. This reduces transit times and costs while improving supply-chain resilience across Europe, Asia, and Gulf markets.

Fuel Security and Import Dependence

Middle East disruption and Strait of Hormuz risks exposed Australia’s reliance on imported refined fuels, with roughly 80% imported and reserves near 37 days. Businesses face higher freight, energy and fertilizer costs, while government diplomacy seeks supply assurances from Asian partners.

Digital Entry and Talent Attraction

Turkey is simplifying market entry through online company formation, a one-stop investment office, Tech Visa channels, and incentives tied to Terminal Istanbul. Faster setup, two-week work permits, and support for digital firms may benefit regional service, technology, and startup investment strategies.

Saudization Compliance Tightening

Labor localization rules are becoming materially stricter, including 60% Saudization in 20 marketing and sales roles and a three-year Nitaqat upgrade targeting 340,000 jobs, raising workforce costs, visa constraints and operational risks for firms relying heavily on expatriate labor.

Freight and Energy Cost Pressures

Middle East disruption and higher fuel prices are lifting US logistics costs, with more than 34,000 shipping routes diverted and diesel remaining elevated. Port and trucking constraints are pushing surcharges higher, reducing schedule reliability, and pressuring importers, exporters, and inventory strategies.

US-Bound Investment Reallocation Intensifies

Taiwanese firms are accelerating investment into the United States under bilateral trade arrangements, with reported commitments of $250 billion and TSMC alone investing $165 billion in Arizona. This supports market access, but may redirect capital, talent, and supplier ecosystems away from Taiwan-based operations.

Cabinet Changes Signal Regulatory Uncertainty

President Prabowo’s latest cabinet reshuffle, including changes in environment, communications and quarantine leadership, may alter enforcement priorities and administrative procedures. For international firms, leadership turnover can delay permitting, complicate compliance and shift sector-level policy signals with limited notice.

Energy Cost Competitiveness Squeeze

High power costs remain a major constraint on UK manufacturing, with industrial electricity prices previously around 25.85p/kWh versus roughly 18p in France and Germany and 6.5p in the US. Expanded relief for 10,000 firms helps, but competitiveness pressure persists.

Outbound Chip Investment Reshapes Base

TSMC’s overseas expansion, including reported plans for 12 Arizona fabs, is shifting part of the semiconductor ecosystem outward. This diversifies geopolitical risk for customers, but may gradually redirect capital, talent, and supplier footprints away from Taiwan’s domestic industrial base.

Asset Security and Legal Exposure

Foreign companies still face expropriation, abusive litigation and intellectual-property risks in Russia, even as the EU expands legal protections for its firms. Investors must assume elevated asset-security concerns, difficult exits and reputational costs when evaluating any residual presence or dispute exposure.

Real Estate Credit Tightening

Authorities are capping 2026 credit growth around 15% and tightening oversight of real estate lending after a 36% surge in developer loans in 2025. Industrial and logistics projects may still get priority, but financing conditions will remain more selective.

Mining Exports Hit Infrastructure

Bulk commodity exports remain constrained by inland logistics. South Africa shipped 26.2 million tonnes of manganese in 2025, but roughly 10 million tonnes still moved by road, while coal and iron ore exports remain below potential, increasing transport costs and undermining supply reliability.

Regulatory and Bureaucratic Overload

Complex regulation and slow permitting continue to deter investment and delay execution. Industry groups say the EU adopted roughly 13,000 legal acts from 2019 to 2024, while companies cite weak public-sector digitalization and cumbersome administration as barriers to faster deployment.

Rupee Weakness Raises Costs

The rupee fell to a record 94.92 per dollar, reflecting higher energy-import costs and foreign outflows. Currency volatility is raising import, hedging, and financing costs, while increasing the risk of tighter monetary policy and more cautious bank lending conditions.

Reshoring Incentives Meet Friction

U.S. policy still favors domestic manufacturing and strategic self-sufficiency, yet companies report tariffs often redirect investment to Mexico or Southeast Asia rather than the United States. That gap between industrial policy goals and execution keeps footprint planning and supplier localization difficult.

Inflation Rates Stay Elevated

Regional conflict has pushed inflation back up to 15.2% in March, while economists see average inflation at 13.5% in FY2025/26 and lending rates near 20%. High financing costs and weaker consumer purchasing power weigh on investment returns and demand forecasts.

Energy Buildout Reshapes Logistics

Vietnam is accelerating LNG, offshore wind, gas and refining projects, including the US$2.2 billion Ca Na LNG plant and proposed US$16–20 billion Dung Quat energy centre. These projects can improve energy resilience, but execution delays would affect industrial expansion and logistics planning.

Tax Base Expansion Pressure

The upcoming budget is expected to widen taxation across agriculture, retail, real estate, IT and exporters. With tax collection at Rs11.735 trillion still below the Rs12.3 trillion target, companies should expect stronger enforcement, audit centralisation and heavier compliance obligations.

Expropriation Threats Hit Investors

Foreign investors face elevated asset-security and legal-enforcement risks. New EU tools specifically target Russian expropriations, temporary management regimes, and third-country enforcement of Russian legal claims, highlighting the growing danger to ownership rights, intellectual property, and cross-border dispute resolution.

Ports and Transit Gain Importance

Karachi Port is benefiting from transshipment shifts, dredging upgrades and lower charges, with officials saying 99% of transshipment issues were resolved within 40 days. Improved maritime throughput may support trade competitiveness, though gains depend on sustained regional stability and execution.