Strong Growth Faces External Shocks

Vietnam’s Q1 GDP grew 7.83%, but inflation reached 4.65% in March and external risks are intensifying. U.S. trade tensions, higher energy costs, and logistics disruption could squeeze manufacturers, weaken demand visibility, and complicate planning for investors and importers.

Lira Volatility And Reserves

Authorities have spent or swapped over $50 billion to support the lira, while net reserves excluding swaps fell sharply before partial recovery. Persistent currency fragility raises hedging costs, import pricing risk, balance-sheet stress and repatriation concerns for multinationals and investors.

Energy Import Vulnerability Exposed

Taiwan imports nearly 96% of its energy, with over 70% of crude oil sourced from the Middle East and roughly one-third of LNG from Qatar. Recent petrochemical disruptions and price spikes underline operational exposure for manufacturers, logistics operators, and energy-intensive exporters.

Supply-Chain Diversification Momentum

India’s semiconductor and electronics policy push, combined with active trade negotiations, reinforces its role as a China-plus-one destination. For international firms, India offers greater resilience and market scale, though execution risks remain around regulation, infrastructure readiness, and policy consistency.

Tax Pressure on Business

To defend fiscal targets, Paris is considering further tax measures as it prepares the 2027 budget and submits its trajectory to Brussels. With compulsory levies already around 43.6% of GDP, firms face margin pressure, reduced investment incentives and heavier compliance burdens.

Middle East Shipping Disruptions

Conflict-linked disruptions around the Strait of Hormuz have sharply increased freight, insurance and rerouting costs for Indian trade. Gulf-linked sectors including chemicals, engineering, pharma and perishables face longer transit times, working-capital stress and greater supply-chain volatility across major corridors.

Critical Minerals and Supply Exposure

US-China trade friction increasingly centers on critical minerals and rare earths, where Chinese restrictions have already disrupted downstream industries. US businesses in autos, defense, electronics, and energy face higher vulnerability to licensing delays, input shortages, supplier concentration, and inventory costs.

Trade Surplus Backlash Intensifies

China’s large merchandise surplus—reported near $1.2 trillion last year—is fueling foreign protectionism and scrutiny of Chinese manufacturing dominance. Businesses should expect more tariffs, investment screening, local-content rules and political pressure reshaping sourcing, market access and cross-border capital allocation.

Foreign investment boosting currency

Net foreign investment surged to about $39 billion in 2025 from $25 billion in 2024, reinforcing shekel appreciation and local asset demand. Strong inflows support liquidity and valuations, but intensify currency headwinds for export-oriented business models.

UK-EU Trade Reset Momentum

The government is pursuing closer practical cooperation with the EU on food and drink trade, youth mobility, and emissions trading. While core Brexit red lines remain, reduced frictions could improve customs efficiency, labor access, and cross-border investment confidence.

Semiconductor Controls Tighten Globally

Washington is expanding technology restrictions on China through the proposed MATCH Act and allied coordination, targeting chipmaking equipment, servicing, and software. This raises compliance burdens for semiconductor, electronics, and industrial firms while increasing concentration risk around trusted manufacturing and export-control jurisdictions.

Suez Canal Route Disruptions

Red Sea insecurity continues to divert shipping from the Suez Canal, with Egypt even suspending its 15% rebate for large container ships. For traders and manufacturers, freight costs, transit reliability, insurance exposure, and regional routing decisions remain materially affected.

Customs and Tax Overhaul Pressure

Ukraine is pushing revenue reforms under IMF pressure, including customs modernization, digital platform taxation, and proposed changes to the self-employed FOP regime used by 1.6–1.8 million people. Businesses face potential compliance cost increases, labor-model adjustments, and greater formalization of economic activity.

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.

Balochistan Security and Project Risk

Escalating insurgent attacks in Balochistan are directly affecting strategic assets including Gwadar and the Reko Diq mining project. The violence heightens operational, insurance, and personnel-security risks for investors, threatening logistics corridors, minerals development, and infrastructure projects linked to external partners.

Tax Reform Execution Burden

Brazil’s VAT transition is accelerating, with IBS and CBS regulation expected shortly and a seven-year implementation path running to 2033. Companies face major compliance, ERP, invoicing, and contract adjustments as old and new systems coexist, raising near-term operating and cash-management complexity.

US Trade Relationship Scrutiny

Trade with the United States remains central but increasingly sensitive. Bilateral trade reached US$141.4 billion in the first ten months of 2025, while Section 301 probes, market-economy status issues, export controls, and labor allegations could alter compliance costs and sourcing strategies.

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.

BoE Policy and Financing Uncertainty

The Bank of England kept rates at 3.75%, but markets still price possible hikes as inflation risks persist. Elevated borrowing costs and policy uncertainty affect credit conditions, capital allocation, refinancing decisions, and UK deal economics for investors.

China Ties Bring Mixed Risks

Canada is expanding commercial engagement with China, including lower tariffs on up to 49,000 Chinese EVs annually and deeper financial ties. Opportunities come with heightened data-security, supply-chain integrity, and forced-labour due-diligence risks that multinationals must manage carefully.

Defense Industry Investment Upside

Ukraine’s defense sector is becoming a major industrial growth node, backed by EU programs. The European Commission approved €260 million for Ukraine’s defense base within a broader €1.5 billion package, creating openings in drones, components, joint ventures and supply-chain localization.

Renewable Grid Buildout Bottlenecks

Australia’s energy transition is creating major investment openings but also execution risk as transmission, storage and renewable zones expand. New South Wales alone expects 4.5 GW of added network capacity by 2028, while project delays and community opposition can raise costs materially.

Regulatory Streamlining and Licensing

The new administration plans an omnibus bill within a year and a 'super licence' within 180 days to remove outdated rules and accelerate approvals. If implemented effectively, this could lower market-entry costs, shorten project timelines, and improve operating predictability.

Navigation and Tracking Degradation

Electronic interference, altered AIS signals, and politically managed routing are reducing maritime visibility around Iranian chokepoints. Poor tracking increases collision, misidentification, and enforcement risks, while making inventory planning, ETA forecasting, and cargo monitoring materially less reliable for international operators.

Resilient tech attracting capital

Despite wartime conditions, Israel’s technology sector continues drawing foreign funding, with 28 startups raising $1.1 billion in March and first-quarter funding above $3 billion. This supports M&A, innovation partnerships and high-value services exports, but concentration risk remains.

Port and Rail Bottlenecks Persist

Brazil is expanding logistics capacity, including Paranaguá’s R$600 million Moegão project, which could lift rail’s share of cargo arrivals from 15% to 50%. Yet delayed private connections and legal risks around 12 port auctions, including Santos, continue to threaten throughput and export reliability.

Fiscal Reliance Preserves Resource Nationalism

Oil and gas still generate about a quarter of Russian state budget proceeds, reinforcing Moscow’s focus on extracting revenue from producers through tax mechanisms such as the mineral extraction tax. Investors should expect continued intervention, limited transparency, and prioritization of fiscal resilience over market efficiency.

US Metal Tariffs Escalate

New U.S. rules now apply 25% tariffs to the full value of many steel, aluminum, and copper-based products, sharply increasing costs for Canadian manufacturers. Companies report cancelled orders, suspended forecasts, and potential production shifts, undermining cross-border supply chains and investment decisions.

Stagflation and Weak Domestic Demand

The UK economy entered 2026 with fragile momentum, then stalled further. Services PMI fell to 50.3, GDP growth was just 0.1% in late 2025, and weaker household spending now threatens sales, hiring, and investment returns.

Rare Earth Supply Weaponization

China’s rare earth and critical mineral export controls remain a major leverage point in trade disputes. These materials are essential for EVs, electronics, defense, and renewables, so licensing uncertainty and possible retaliatory restrictions create acute sourcing risk, inventory pressure, and diversification costs globally.

Energy Infrastructure Vulnerability

Israel’s offshore gas system has proven exposed to wartime shutdowns. Leviathan and Karish closures cost an estimated NIS 1.5-1.7 billion, lifted power-generation costs by 22%, and disrupted exports to Egypt and Jordan, highlighting material energy-security and industrial input risks.

Power Security Drives LNG Buildout

Rapid electricity demand growth and heat-driven load spikes are accelerating LNG infrastructure and gas-fired generation. Key projects include the 3,000 MW Quang Trach complex, the $2.2 billion 1,500 MW Ca Na plant, and expanded Thi Vai terminal capacity.

Coalition Reform and Fiscal Uncertainty

Germany’s ruling coalition is racing to agree tax, pension, health and debt-brake reforms before the July recess, while budget gaps range from roughly €140 billion to €170 billion through decade-end, creating policy uncertainty for investors, public procurement and regulated sectors.

Hormuz Disruption Reshapes Energy

Middle East conflict and disruption around the Strait of Hormuz are forcing Korea to secure alternative crude and naphtha supplies. Seoul has lined up 273 million barrels of crude and 2.1 million tons of naphtha, underscoring persistent energy-security risk for industry.

CUSMA Review and Tariff Uncertainty

The July 1 CUSMA review is Canada’s most consequential business risk. Canada and the U.S. trade roughly $3.5 billion daily, yet unresolved disputes over dairy, procurement, alcohol and digital rules are delaying investment, weakening hiring and clouding cross-border supply chains.

War Risk Insurance Expands Logistics

New public-backed insurance and reinsurance mechanisms are beginning to cover transport risks including war, terrorism, sabotage, and confiscation. This reduces a major barrier for logistics operators, lowers entry friction for foreign carriers, and could gradually restore cross-border trade and reconstruction activity.