Privatization and State-Owned Enterprise Reform Drive

The government is accelerating privatization of state-owned enterprises (SOEs) to reduce fiscal losses and improve efficiency. Recent sales, including Pakistan International Airlines, signal a shift toward private sector-led growth, but the process faces political, social, and operational challenges.

Israel’s Strategic Expansion in the Red Sea

Israel’s recognition of Somaliland and moves to secure maritime access in the Horn of Africa signal a major strategic shift. This enhances Israel’s security and logistics options but risks regional backlash, complicates relations with China, Turkey, and Arab states, and introduces new geopolitical uncertainties for international business operations.

Infrastructure Investment Transforms Logistics

Sydney’s decade-long infrastructure boom, including metro rail, motorways, and airport links, has reshaped urban logistics and connectivity. While future mega-projects may slow, completed upgrades enhance supply chain efficiency, urban mobility, and long-term competitiveness for international businesses.

Double-Digit Growth Ambitions and Risks

Vietnam targets over 10% annual GDP growth for 2026–2030, emphasizing industrial upgrading, high-tech sectors, and private sector expansion. These ambitious targets attract investment but heighten pressure on infrastructure, regulatory efficiency, and macroeconomic management.

Persistent Power Supply and Eskom Debt Crisis

South Africa’s chronic electricity shortages and Eskom’s R100 billion municipal debt undermine industrial productivity and investor confidence. Ongoing legal and operational interventions are critical, but persistent load shedding and financial instability continue to disrupt supply chains and business operations.

US-Indonesia Trade Agreement Finalization

Indonesia is set to finalize a major trade agreement with the United States, reducing tariffs from 32% to 19%. This deal will boost exports, enhance market access, and strengthen bilateral economic ties, directly impacting trade flows and investment strategies.

Iran-China and Iran-Russia Partnerships

Iran relies on China for 90% of oil exports and has deepened strategic ties with Russia, including infrastructure and military cooperation. These alliances provide economic lifelines but expose businesses to secondary sanctions and geopolitical volatility.

Sanctions Pressure and Russian Retaliation

Intensified Western sanctions on Russia target key sectors, reducing Russian revenues and impacting regional supply chains. Russia retaliates with threats and attacks on infrastructure, increasing geopolitical risks for businesses operating in Ukraine and neighboring markets.

Persistent Tariff and Regulatory Uncertainty

Despite new agreements, unresolved disputes over tariffs on key goods (EVs, canola, steel, aluminum) continue to disrupt supply chains and market access. The risk of retaliatory measures and regulatory unpredictability remains a significant operational challenge for international businesses in Canada.

Critical Infrastructure and Security Risks

The UK’s reliance on 60 undersea data cables, carrying 99% of its data and £1.15 trillion in daily financial transactions, exposes it to significant security risks. Russian maritime activities and sabotage threats underscore the need for increased investment in cyber and physical infrastructure resilience.

Energy Transition and Pipeline Politics

Political and regulatory disputes over pipelines, LNG, and oil exports—especially to Asia-Pacific—are intensifying. Indigenous opposition, environmental concerns, and shifting U.S. energy policies complicate project approvals, affecting energy supply chains and long-term investment planning.

Shifting Global Trade Power Dynamics

Despite US tariffs, China posted a record $1.19 trillion trade surplus in 2025 by expanding exports to Africa, Southeast Asia, and Latin America. This shift signals a gradual erosion of US trade dominance and compels international businesses to reassess market access and competitive positioning.

Geopolitical Tensions Drive Market Volatility

Escalating US-China rivalry, sanctions on Russia, and US military actions in Venezuela have heightened global risk aversion. These developments have triggered capital flight from emerging markets, increased currency volatility, and led to sharp corrections in equity markets, particularly in India, affecting global investment strategies.

Labour-Intensive Sector Tax Incentives

The government will cover personal income taxes for workers in labour-intensive industries until 2026, supporting household income and economic stability. This stimulus benefits sectors like textiles, footwear, and tourism, enhancing resilience and competitiveness for international investors.

Labor Market Weakens Amid Stagnation

Unemployment rose to 6.2% in December 2025, the highest since 2010, with nearly 2.91 million unemployed. The labor market faces demographic pressures, a persistent skills gap, and weak demand, impacting both domestic consumption and the attractiveness of Germany for international investors.

Geopolitical Tensions and Trade Fragility

Global conflicts, notably US–Venezuela tensions, increase volatility in energy prices, logistics costs, and exchange rates. These risks disrupt supply chains and trade flows, requiring Thai businesses and foreign investors to adopt robust risk management and diversification strategies.

Labor Market and Social Model Reforms Debate

Political debate is intensifying over labor market and welfare reforms, including proposals to end the 35-hour workweek and tighten unemployment benefits. Such reforms could reshape labor costs, productivity, and the attractiveness of France for foreign investors, but also risk social unrest.

EU-India Free Trade Agreement Momentum

Negotiations for an EU-India FTA are advancing, aiming to reduce tariffs and streamline supply chains. This could open new opportunities for German exporters and manufacturers, particularly in machinery, automotive, and green technologies.

NATO Unity Threatened by US Actions

US threats to annex Greenland challenge the foundation of NATO, risking alliance fragmentation. Denmark’s security guarantees and military posture are under scrutiny, raising uncertainty for international investors and businesses reliant on transatlantic stability and defense cooperation.

India-EU Free Trade Agreement Finalization

India is set to finalize a comprehensive FTA with the EU, its largest and most complex trade deal to date. This agreement will reshape trade flows, reduce tariffs, boost exports, attract FDI, and enhance supply-chain resilience, especially amid rising global protectionism.

Domestic Infrastructure and Talent Pressures

Relocation of manufacturing and increased overseas investment may strain Taiwan’s domestic infrastructure and talent pool, potentially impacting innovation capacity and competitiveness at home, while intensifying the need for workforce development and policy adaptation.

Supply Chain Diversification and Resilience

India is positioning itself as an alternative to China for global supply chains, leveraging policy incentives, infrastructure upgrades, and trade agreements. However, external shocks—such as US tariffs and currency volatility—remain key risks for supply chain stability and export growth.

Resilient Trade Surplus and Diversification

Despite US tariffs and weakening exports to the US, China posted a record $1.19 trillion trade surplus in 2025, driven by surging exports to Africa, Southeast Asia, and Latin America. This diversification mitigates Western pressure but raises new tensions over overcapacity and market access.

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.

Digital Transformation and Data Center Expansion

Thailand is investing nearly 100 billion baht in new data centers to support digital transformation and emerging industries. This positions the country as a regional technology hub, but also raises energy demand and infrastructure challenges.

Energy Security and Diversification Drive

Egypt is stabilizing its energy sector through increased domestic production, major LNG import deals with Qatar and Israel, and regional infrastructure projects. These efforts enhance supply reliability and position Egypt as a regional energy hub, impacting industrial competitiveness and investment planning.

CUSMA Renegotiation and Trade Bloc Realignment

With Canada’s exports to the U.S. at a 30-year low, the upcoming CUSMA renegotiation is pivotal. Outcomes could range from a complete overhaul to no agreement, pushing Canada to accelerate trade diversification with the EU, Asia, and the Global South, impacting long-term investment strategies and supply chain resilience.

Inflation Slowdown and Cost Pressures

Inflation in France slowed to 0.8% in December 2025, mainly due to falling energy prices. However, persistent price increases in services and food, combined with budget uncertainty, create mixed pressures for businesses and consumers, affecting investment and consumption.

Energy Infrastructure And Mineral Scarcity

US energy transition faces hardware constraints, including transformer and copper shortages, and dependence on Asian imports. Private energy islands and methane pyrolysis are emerging, but mineral security and grid bottlenecks threaten reliability and cost for global supply chains.

Strategic Alignment with China Amid Global Shifts

Pakistan’s deepening strategic partnership with China, marked by high-level dialogues and expanded cooperation in technology, space, and finance, is reshaping its economic and geopolitical orientation. This alignment is pivotal for infrastructure, trade, and regional stability but may complicate relations with Western partners.

Weak Business Activity and Sluggish Growth

South Africa’s private sector ended 2025 with the weakest business activity among major African economies, as the PMI fell to 47.7. Weaker domestic and international demand, along with high unemployment, constrain growth prospects and limit opportunities for expansion and supply chain resilience.

Internet Blackouts and Security Crackdown

Amid protests, Iran has imposed nationwide internet shutdowns and deployed military forces, severely disrupting communications, logistics, and business continuity. The crackdown has led to hundreds of deaths and thousands of arrests, raising operational and reputational risks.

Technology Export Controls and Supply Chain Security

New US export controls and tariffs on advanced AI chips to China target national security risks and reduce reliance on foreign supply chains. These measures reshape the global tech sector, influence investment strategies, and may trigger further fragmentation of technology markets.

Brexit Frictions Persist For Trade

Despite minor resets, the UK’s refusal to rejoin the EU single market or customs union continues to cause significant trade friction, with Brexit estimated to have reduced GDP by 6-8%. Ongoing barriers hamper supply chains and investment flows, limiting economic recovery.

Collapse in Russian Energy Revenues

Russian oil exports have plunged by 440,000 barrels daily, with Urals crude prices falling below $35 per barrel. Energy income now accounts for only 23% of Russia’s budget, down from over 50%, threatening fiscal stability and investment attractiveness.

EU Tightens Oil Price Cap Measures

The European Union will lower the Russian oil price cap to $44.1 per barrel from February 2026, intensifying restrictions on Russian crude and refined products. Russia has responded with export bans under price cap contracts, further complicating global energy supply chains and compliance for international traders.