EU-Mercosur Deal Sparks Unrest

France’s opposition to the EU-Mercosur trade agreement, driven by farmer protests and political divisions, delays ratification and threatens supply chain stability. The deal’s fate will shape market access, regulatory risks, and strategic raw materials sourcing for years.

Advanced Manufacturing and Automation

Japan's leadership in semiconductor equipment, packaging, and automation is reinforced by robust growth in AI-driven demand. Investments in high-end manufacturing and automation support global supply chain reliability, with Japanese firms commanding key positions in advanced technology markets.

Export-Led Growth Amid Weak Demand

China’s 2025 growth was driven by record exports and a $1.2 trillion trade surplus, offsetting a 20% drop in US-bound shipments. However, domestic demand remains subdued due to a prolonged property crisis and weak consumer confidence, raising sustainability concerns.

Consumption tax reform rollout

Implementation of the new dual VAT (CBS/IBS) and selective tax advances, with a testing phase starting in 2026 and long transition. Firms face significant ERP, pricing, contracting and cash‑flow changes as non-cumulativity expands and sectoral carve‑outs evolve.

Port and logistics mega-projects

Brazil is accelerating port and access upgrades, exemplified by the Santos–Guarujá immersed tunnel PPP (R$7.8bn capex; 30-year concession). Better access can reduce dwell times, but construction, concession terms and local stakeholder risks affect supply-chain resilience.

Cybersecurity Regulation and Investment Surge

Israel is advancing comprehensive cyber laws and attracting significant investment in cybersecurity startups. New regulations will require real-time reporting of attacks, affecting hundreds of critical companies and shaping compliance, risk management, and business continuity strategies.

National Privatization Strategy Expands PPPs

The new National Privatization Strategy aims to sign over 220 public-private partnership contracts and mobilize $64 billion in private investment by 2030. This initiative opens infrastructure, health, education, and logistics to foreign investors, enhancing competitiveness and operational efficiency.

Belt and Road Initiative Expansion

China signed a record $213 billion in new Belt and Road deals in 2025, focusing on energy, mining, and infrastructure in Africa and Central Asia. This expansion strengthens China’s global economic footprint but raises debt and dependency concerns in partner countries.

Sanctions Enforcement Targets Russian Oil

France’s aggressive enforcement of sanctions against Russia’s shadow oil fleet, including high-profile tanker seizures, heightens geopolitical risk in maritime trade. This robust stance, coordinated with allies, may provoke Russian retaliation and impact global energy supply chains.

Critical Infrastructure and Supply Chain Vulnerabilities

Sanctions, sabotage, and decentralization of import authority to border provinces have disrupted Iran’s logistics and energy infrastructure. Businesses face heightened risks of supply interruptions, regulatory unpredictability, and challenges in securing essential goods and services.

Tariff Reductions and Trade Diversification

Taiwan secured a reduction of US tariffs to 15%, matching Japan and South Korea, in exchange for massive investments. This levels the playing field for Taiwanese exports, enhances competitiveness, and encourages diversification of trade partners amid shifting global alliances.

Suez Canal Security and Trade Disruptions

Despite partial recovery, Red Sea and Suez Canal traffic remains volatile due to ongoing regional security threats, especially Houthi attacks. This unpredictability disrupts global supply chains, increases insurance costs, and threatens Egypt’s vital foreign currency revenues.

Black Sea Grain Exports Remain Volatile

Ukraine’s grain exports through the Black Sea are subject to ongoing security threats and corridor disruptions. The uncertainty around export agreements and maritime safety continues to affect global food prices and the reliability of agricultural supply chains.

Green Energy and Ammonia Investments Accelerate

South Korea is investing heavily in green ammonia and renewable energy, aiming to retrofit 24 coal plants for ammonia co-firing and expand clean energy exports. These initiatives support decarbonization goals and position Korea as a leader in Asia’s green transition.

Critical Minerals and Geopolitical Competition

Indonesia’s dominance in nickel and tin places it at the center of U.S.-China competition for critical minerals. While new trade frameworks with the U.S. offer market access, there are risks of resource dependency and the need for robust industrial policy to ensure domestic value addition and supply chain security.

Pending Supreme Court Ruling on Tariff Authority

A forthcoming Supreme Court decision will determine the executive branch’s authority to impose sweeping tariffs. The outcome could reshape the US trade landscape, affecting the predictability of future trade policy and the legal environment for international business operations.

Snap Election and Policy Uncertainty

Prime Minister Takaichi’s snap election on February 8, 2026, introduces significant policy uncertainty. Key campaign issues include fiscal stimulus, tax cuts, and defense spending, with the election outcome set to shape Japan’s economic and regulatory environment for years, impacting investor confidence and market stability.

Supply Chains Strained by Workforce Loss

Widespread displacement, conscription, and casualties have reduced Ukraine’s workforce and damaged logistics infrastructure. These factors contribute to ongoing supply chain disruptions, limiting service coverage and production capacity, with a challenging outlook for 2026.

Semiconductor and Technology Sector Push

Vietnam is prioritizing the development of its semiconductor and technology industries, including chip fabrication and critical minerals processing. Collaboration with the EU and other partners aims to move Vietnam up the value chain, supporting high-tech investment and innovation ecosystems.

Fiscal outlook and debt path

Brazil’s primary deficit was R$61.7bn in 2025 (0.48% of GDP), while gross debt ended near 79.3% of GDP and is projected higher. Fiscal rules rely on exclusions, raising risk premiums, FX volatility and financing costs for investors and importers.

Centralization of Political Power

General Secretary To Lam is consolidating authority, possibly merging party chief and presidency roles. This centralization may enable swift reforms but raises concerns about institutional checks, policy continuity, and long-term governance risks for international investors.

Technology Export Controls and Decoupling

The US maintains and expands technology export controls, particularly targeting China and sensitive sectors like semiconductors and AI. These measures drive supply chain decoupling, compliance complexity, and strategic realignment for technology firms and global investors.

Mining Sector Emerges as Strategic Pillar

Saudi Arabia is investing $110 billion to develop its $2.5 trillion mineral reserves, including rare earths, gold, and copper. The Kingdom seeks to become a regional processing hub, partnering with US firms and reducing global supply chain dependence on China for critical minerals.

Manufacturing and Chemicals Structural Weakness

Despite modest GDP growth, Germany’s manufacturing and chemicals sectors face persistent output declines, plant closures, and job losses. Global competition, high energy costs, and regulatory burdens threaten long-term competitiveness, requiring strategic adaptation for international investors.

Supply Chain Integration and Infrastructure Push

India’s infrastructure development, including new metro lines and expressways, and focus on logistics efficiency are unlocking new industrial and residential hubs. These efforts are critical for deeper supply chain integration and attracting multinational investment in manufacturing and services.

Global Supply Chain Realignment

US tariff policies and geopolitical frictions have accelerated the diversification of supply chains away from China. Southeast Asian countries, notably Indonesia and Thailand, gained significant US sourcing share in 2025, reshaping manufacturing and logistics strategies for international businesses.

Surge in Green Energy Investment

A landmark $2 billion Saudi-Turkish solar energy deal will add 2,000 MW capacity, supplying 2.1 million homes and boosting local industry. This reflects Turkey’s drive to reach 120,000 MW renewable capacity by 2035, attracting foreign capital and supporting energy transition.

Foreign real estate ownership opening

New rules effective Jan. 22 allow non-Saudis to own property across most of the Kingdom via a digital platform, boosting foreign developer and investor interest. This supports regional HQ and talent attraction, while restrictions in Makkah/Madinah and licensing remain key constraints.

Human Rights, Sanctions, and Diplomacy

China’s use of sanctions in response to foreign criticism—especially on human rights—remains a diplomatic lever. Recent lifting of sanctions on UK politicians signals selective engagement, but ongoing concerns over governance and rights continue to affect reputational and operational risks.

Modernization of Trade and Tariff Policy

Recent reforms target the National Tariff Commission and broader trade policy, aiming to enhance trade-remedy tools, liberalize tariffs, and improve export competitiveness. These changes are designed to align with global trade norms and support private sector growth, but implementation remains key.

Critical Minerals and Battery Supply Chains

Major investments in domestic lithium refining and battery materials, backed by the Canada Growth Fund, BMW, and Breakthrough Energy, aim to secure Canada’s role in the global EV supply chain. These efforts reduce reliance on overseas processing and support North American clean energy ambitions.

EU-Mercosur Trade Deal Backlash

The imminent EU-Mercosur trade agreement faces strong opposition from French farmers and political factions, who fear market flooding by cheaper imports and threats to food security. Protests and government support measures highlight deep divisions, affecting agricultural supply chains and broader trade policy.

Accelerated Trade Policy Reforms

India’s government has rapidly expanded free trade agreements with the UK, New Zealand, Oman, and EFTA, recalibrating trade policy to diversify export markets and attract FDI. These reforms enhance global market access but also expose India to external risks, including US tariffs and global trade disruptions.

Defense budget politics and capability delivery

Parliamentary standoffs over a roughly US$40bn defense plan and proposed cuts create uncertainty around procurement timelines, mobilization readiness, and resilience investments. Heightened political risk can affect ratings, contractor pipelines, and business continuity planning for critical suppliers.

Security Risks and US-Mexico Tensions

Escalating cartel violence and threats of US military intervention heighten operational and reputational risks. Security remains a top concern for international businesses, with border volatility, supply chain disruptions, and diplomatic tensions affecting investment confidence and cross-border logistics.

Immigration Policy and Labor Market Volatility

Australia's high immigration rate—31.5% foreign-born—fuels economic growth but also political debate amid cost-of-living and housing crises. Rising populist rhetoric and calls for policy reform create uncertainty for workforce planning, talent mobility, and social stability, affecting business operations and investment climate.