Massive Reconstruction and Recovery Plans

Ukraine is negotiating an $800 billion recovery package with the U.S. and EU, aiming to rebuild infrastructure and attract foreign capital postwar. The scale and governance of these funds will define opportunities and risks for international contractors and investors.

Australia-China Trade Tensions Escalate

Rising trade tensions have prompted Australia to consider tariffs and quotas on Chinese steel imports, risking retaliation. While relations stabilized post-2022, ongoing disputes over critical minerals, security, and market access create persistent uncertainty for exporters, investors, and supply chain planners.

Geopolitical Realignment and Supply Chain Security

Saudi Arabia is deepening ties with China, the US, and regional partners, while pursuing new defense and economic alliances. These shifts impact energy flows, supply chain resilience, and market access, requiring international businesses to closely monitor evolving geopolitical risks.

Widespread Civil Unrest and Political Instability

Nationwide protests over economic collapse and political repression have resulted in hundreds of deaths and thousands of arrests. The instability has led to internet shutdowns and business disruptions, significantly raising operational and security risks for foreign firms.

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.

US-Australia Alliance Deepens Amid Indo-Pacific Shifts

AUKUS and the Pax Silica coalition strengthen Australia's role in critical technology and defense supply chains. As US policy demands greater allied burden-sharing, Australia faces pressure to increase defense spending and self-reliance, influencing investment in advanced manufacturing and security-sensitive sectors.

Political Risk and 2026 Elections

Brazil’s 2026 presidential election introduces significant political risk. The outcome could shift economic policy, regulatory frameworks, and foreign relations, with potential impacts on trade, investment, and the business climate for international firms.

Sector-Specific Tariff and Regulatory Changes

The new US-Taiwan framework includes sectoral tariff caps and exemptions, notably for semiconductors, auto parts, and pharmaceuticals. These changes alter cost structures, market access, and compliance requirements for multinational firms operating in and with Taiwan.

Renewable Energy and Green Transition

Saudi Arabia is accelerating renewable energy deployment, with solar and wind capacity in the MENA region projected to rise tenfold by 2040. Major joint ventures and new energy facilities, like CATL’s Riyadh center, support the Kingdom’s decarbonization and industrial diversification, creating new investment and supply chain opportunities.

US Retreat From Climate Treaties

The United States’ withdrawal from the UNFCCC and 65 other international organizations marks a decisive shift away from multilateral climate cooperation. This move risks isolating US firms from global climate finance, standards, and supply chains, impacting competitiveness and international investment.

Semiconductor Industry Dominance

Taiwan’s TSMC holds over 70% global market share in advanced chip manufacturing, driving AI and tech supply chains. Its expansion in the US and record profits underscore Taiwan’s critical role, but also expose it to geopolitical risks and trade policy shifts.

India’s Strategic Response to US Trade Pressure

India is recalibrating its economic strategy in response to US tariffs, focusing on boosting domestic manufacturing, attracting FDI, and diversifying export markets. The 2026 Union Budget emphasizes capital expenditure, fiscal discipline, and incentives for manufacturing to position India as a resilient, long-term investment destination.

Russia-China Trade Faces Headwinds

Bilateral trade between Russia and China dropped 6.5% in 2025, ending a five-year growth streak. Lower oil prices, reduced Chinese demand, and Russian import tariffs on cars contributed. This signals increased vulnerability to commodity price swings and policy shifts for cross-border ventures.

Energy Security and Nuclear Restarts

Japan’s restart of the Kashiwazaki-Kariwa nuclear plant, the world’s largest, marks a pivotal shift in energy policy. This move enhances energy security, reduces fossil fuel reliance, and supports emissions targets, but faces local opposition and regional security risks, especially amid tensions with China and North Korea.

US–Taiwan Strategic Trade Pact

The new US–Taiwan trade agreement lowers tariffs on Taiwanese exports to 15%, secures preferential treatment for key sectors, and cements Taiwan’s role as a strategic US partner. This enhances market access but may provoke Chinese retaliation and regulatory uncertainty.

Energy Sector Volatility and Export Risks

Despite sanctions, Iran remains a key oil exporter, especially to China. However, civil unrest, US tariffs, and regional tensions threaten output and export continuity, impacting global energy prices and the reliability of Iranian crude as a supply source.

Agricultural Supply Chain Vulnerabilities

Railway grain shipments fell 27.3% in 2025, and wheat exports dropped 25% in December due to Russian strikes on ports and logistics. These disruptions, along with delayed harvests and market competition, threaten Ukraine’s role as a global food supplier and heighten risks for agribusiness investors.

Labor Market Saudization Intensifies

New regulations require 60% Saudization in marketing and sales roles, impacting expatriate employment and raising labor costs for multinationals. While aiming to boost local employment and job quality, these policies may disrupt established supply chains and increase compliance burdens for international firms.

Geopolitical Uncertainty and Transatlantic Alliances

The UK’s foreign policy is challenged by unpredictable US actions and shifting global alliances. Diplomatic efforts to maintain strong US and EU ties are critical for security and economic stability, but volatility in American policy increases risks for UK business operations and investment.

UK Government Pursues Diplomatic Resolution

Prime Minister Starmer has ruled out immediate tariff retaliation, emphasizing dialogue and alliance unity. The UK seeks to avoid escalation, but faces political pressure to defend national interests, balancing economic stability with transatlantic and European alliances.

Agribusiness Gains, But With Caveats

Brazilian agriculture stands to benefit from tariff-free access to the EU for beef, chicken, coffee, and other products. However, quotas, safeguard mechanisms, and stringent EU standards—especially on sustainability—limit upside and introduce unpredictability for exporters, affecting long-term supply chain planning.

Political Risk and 2026 Election Uncertainty

Brazil’s presidential election in October 2026 is a major source of uncertainty for investors. Market sentiment is sensitive to potential shifts in economic policy, fiscal reforms, and institutional stability, with volatility expected in currency and asset prices as the election approaches.

Digital Finance and Stablecoin Experimentation

Pakistan’s partnership with World Liberty Financial, linked to the Trump family, on a dollar-pegged stablecoin signals a bold shift toward digital finance. The initiative aims to streamline remittances and attract blockchain investment, but raises regulatory, ethical, and geopolitical concerns.

Canada–China Tariff and Trade Reset

Canada and China have reached a landmark agreement reducing tariffs on Chinese electric vehicles and Canadian canola, seafood, and peas. This deal reopens key export markets for Canadian agriculture and signals a strategic shift toward diversifying trade away from the U.S., with significant implications for supply chains and investment flows.

AI, Misinformation, and Public Trust Challenges

The US government and major corporations are increasingly using AI for both operational efficiency and public communication. The proliferation of AI-generated content, including official government imagery, is raising concerns about misinformation and eroding public trust. This trend is prompting regulatory scrutiny and reputational risk for businesses, especially those in technology, media, and consumer-facing sectors.

AI and Data Center Infrastructure Expansion

Driven by global hyperscaler investment, South Korea is rapidly expanding AI and data center infrastructure. Government plans to triple AI spending and attract major tech firms are accelerating sector growth, supporting innovation but also intensifying competition for talent and resources.

Industrial Policy and Market Intervention

The US is intensifying industrial policy through subsidies and intervention, particularly in energy and manufacturing. While supporting domestic sectors, these measures increase market volatility and complicate international investment decisions.

Sluggish Growth and Structural Reform

Thailand’s GDP growth is projected at just 1.5–2.0% for 2026, the lowest in three years, driven by weak exports, currency appreciation, and political uncertainty. This stagnation is prompting urgent calls for structural reforms, impacting investment strategies and business confidence.

Collapse of Food and Commodity Trade

Iran’s economic turmoil and new U.S. tariffs have severely disrupted food and commodity imports and exports, notably India’s basmati rice trade. Payment delays, shipment cancellations, and rising costs are undermining established supply chains and market confidence.

Supply Chain Risks and Opportunities in Battery Reuse

The shift to a circular battery economy introduces new risks—such as validation, logistics, and regulatory compliance—but also rewards. Companies that master traceability, recycling, and second-life applications can secure supply, reduce costs, and enhance ESG performance.

US-Taiwan Trade Pact Progress

Taiwan and the US reached consensus on a trade deal lowering tariffs on Taiwanese exports to 15%. The agreement includes preferential treatment for semiconductors and expanded TSMC investment in Arizona, enhancing bilateral economic ties and supply chain resilience.

State Control, Corruption, and Business Barriers

Iran’s economy remains dominated by state-linked entities and the IRGC, with high corruption and limited private sector space. Foreign firms face opaque regulations, restricted market access, and elevated compliance and reputational risks.

Escalating U.S. Secondary Tariffs

The United States has imposed a sweeping 25% tariff on any country trading with Iran, sharply escalating secondary sanctions. This move threatens to disrupt global supply chains, deter foreign investment, and force international businesses to reassess exposure to both Iran and U.S. markets.

Financial Sector Volatility and Shadow Banking

The UK financial sector faces ongoing challenges from declining business volumes and profitability, alongside systemic risks from the booming, largely unregulated $16tn shadow banking sector. Regulatory vigilance and stress testing are crucial to safeguard stability and investor confidence.

Energy Infrastructure Under Severe Strain

Russian attacks have devastated Ukraine’s power grid, causing widespread outages and a declared energy emergency. Persistent winter conditions and infrastructure damage disrupt business operations, threaten supply chains, and require urgent imports and international support for repairs and resilience.

Regional Energy Partnerships and Gas Hub Role

Egypt is leveraging its infrastructure to become a regional energy hub, signing supply and cooperation agreements with Israel, Cyprus, Qatar, and Syria. These partnerships support energy security, regional integration, and cross-border investment, but depend on stable infrastructure and geopolitical conditions.