Labor Market and Talent Dynamics

Taiwan’s advanced manufacturing sector is experiencing labor shortages and competition for engineering talent, exacerbated by global expansion. Demographic trends and workforce development are critical factors for sustaining innovation and operational resilience.

Energy Sector Liberalization and Investment

Mexico is negotiating with global oil majors like Chevron and BP to attract private capital for offshore projects, aiming to halt declining output. The evolving regulatory framework offers opportunities but also poses risks due to ongoing policy shifts and Pemex’s dominant state role.

Domestic Demand and Consumption Upgrades

China is pivoting towards boosting domestic consumption and service-led growth, with initiatives like 'Shopping in China' and digital trade reforms. This transition supports economic stability and creates new market opportunities for global brands, but requires adaptation to evolving consumer preferences.

Sanctions and Secondary Trade Restrictions

The US continues to use sanctions as a foreign policy tool, recently targeting Iran and imposing secondary tariffs on countries trading with sanctioned states. These actions complicate compliance for global firms and can disrupt cross-border investment and trade.

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.

Defense Spending Spurs Industrial Orders

A surge in defense spending has boosted factory orders, with November 2025 seeing a 5.6% monthly increase. This trend, driven by rearmament and infrastructure investment, offers short-term relief but does not fully offset broader industrial weakness or guarantee sustained growth.

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.

USMCA Uncertainty and Trade Tensions

The upcoming review of the USMCA and threats of renegotiation or expiration by the US create uncertainty for Mexico’s trade stability, supply chains, and investment planning, with potential tariff hikes and regulatory changes impacting cross-border business operations.

Regulatory and Compliance Pressures

A wave of new regulations—including the Chair Law, digital labor rights, and whistleblower portals—has increased compliance demands. Enhanced inspections and evolving labor, environmental, and investment rules require businesses to strengthen risk management and adapt to a more stringent regulatory environment.

France’s Opposition to EU-Mercosur Deal

France’s rejection of the EU-Mercosur trade agreement, driven by agricultural sector protests and concerns over unfair competition, highlights deep domestic resistance to further market opening. This stance risks isolating France within the EU and complicates supply chain diversification for international businesses.

Major Infrastructure and Capital Relocation Push

Significant investments are flowing into Indonesia’s new capital, IKN, with new projects in commercial, culinary, and office sectors. This development signals increased investor confidence and aims to establish IKN as a new economic growth hub by 2028, influencing long-term investment strategies.

Energy Independence and Downstreaming Push

Indonesia is accelerating its drive for energy independence, targeting a five-year timeline to reduce fuel imports through new refineries, solar energy, and downstream projects. This policy shift will reshape energy supply chains, investment flows, and local sourcing requirements.

Agricultural Export Reforms and Modernization

The government is implementing a five-year strategy to boost agricultural exports through farmer education, research investment, and compliance with international standards. These reforms target higher yields and value addition, but success depends on overcoming infrastructure and policy bottlenecks.

Gold Reserves Offset Sanctions Impact

Russia’s gold holdings, now 43% of reserves, have surged in value by $216 billion since 2022, offsetting losses from frozen Western assets. This financial buffer supports Russia’s war effort and complicates the effectiveness of sanctions, influencing global reserve management strategies.

Declining Foreign Direct Investment Inflows

Foreign direct investment and portfolio flows into China have slowed sharply, with investors shifting to other emerging markets due to geopolitical risks, post-COVID changes, and concerns over economic transparency. This trend raises questions about China’s long-term attractiveness for international capital.

Resilience Initiatives and Defense Modernization

Taiwan is accelerating defense modernization, including asymmetric warfare capabilities and joint production of critical munitions with the US. These resilience measures aim to mitigate supply shocks and operational risks, but also signal a more entrenched and costly security environment for global business operations.

USMCA Uncertainty and Trade Tensions

The 2026 review of the USMCA (T-MEC) creates major uncertainty for Mexico’s trade and investment climate. US threats to let the agreement lapse or impose new tariffs could disrupt supply chains, especially in automotive and manufacturing, impacting billions in cross-border trade.

Massive Western Financial and Security Aid

The EU approved a €90 billion loan and the US is negotiating an $800 billion postwar recovery package for Ukraine. These funds, tied to reforms and military needs, are vital for budget stability, reconstruction, and investor confidence, but are contingent on ongoing anti-corruption efforts.

Agriculture and Resource Export Volatility

Canadian agriculture, especially canola, seafood, and pork, remains highly exposed to tariff disputes. The reopening of the Chinese market is a relief for producers, but ongoing trade tensions highlight the need for diversified export destinations and robust risk management in agri-food supply chains.

100% FDI Liberalization in Insurance

India's new policy allowing 100% foreign direct investment in insurance is expected to attract global capital, boost innovation, and expand market coverage. This reform enhances competition but requires careful regulatory oversight to manage risks and ensure local benefits.

State-Level Competition for Investment

States like Andhra Pradesh, Odisha, and Maharashtra are aggressively attracting investment, with Andhra Pradesh capturing 25.3% of proposed investments in FY26. This regional competition, driven by policy clarity and infrastructure, is reshaping India’s industrial geography and offering new opportunities for international investors.

Push for Self-Reliance and Local Production

Pakistan is emphasizing local production, value-added exports, and indigenization to reduce import dependence and strengthen foreign exchange buffers. Initiatives span agriculture, manufacturing, and shipping, aiming to double exports and avoid future IMF programs, but require sustained policy execution.

Infrastructure Investment and Industrial Policy

Continued emphasis on infrastructure upgrades and industrial policy supports domestic growth and supply chain localization. However, protectionist measures and vertical integration strategies may raise costs, limit market access, and require strategic adaptation for foreign investors and partners.

Currency Volatility and Inflation Management

Egypt has reduced inflation to 12.3% amid global shocks but remains vulnerable to currency volatility, external financing gaps, and import costs. Monetary policy targets further inflation reduction, while international aid and remittances provide temporary relief. Persistent macroeconomic imbalances continue to affect business planning and consumer demand.

China Remains Pivotal Trade Partner

Despite global tensions, China continues as South Korea’s largest trading partner, with bilateral trade reaching nearly $299 billion in 2025. Ongoing FTA negotiations on services and investment signal deepening economic integration, but also expose Korean firms to geopolitical risks and regulatory shifts.

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.

Green Transition and ESG Imperatives

Vietnam is investing heavily in green infrastructure, renewable energy, and sustainable finance, with Ho Chi Minh City alone planning nearly $40 billion for green transition. Compliance with global ESG standards and carbon border adjustment mechanisms is becoming critical for export competitiveness and investment attraction.

Tech Sector Investment Amid Uncertainty

Despite geopolitical turmoil, Israel’s government and private sector continue to invest heavily in technology, with initiatives like the Yozma Fund and major projects such as Nvidia’s new campus. These investments sustain Israel’s global tech leadership but are vulnerable to regional instability and global capital flow shifts.

Semiconductor Sector Faces Geopolitical Pressure

South Korea’s semiconductor industry is under pressure from evolving US tariff policies and investment demands, as well as competition with Taiwan for favorable US trade terms. These dynamics threaten Korea’s global market share and could force further US-based investment by Korean firms.

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.

Crypto Asset Regulation Tightens

From January 2026, all UK crypto transactions must be reported to HMRC, ending privacy and imposing strict compliance on exchanges. This reform increases regulatory oversight, tax collection, and transparency, but may deter investment and innovation in the sector.

Innovation, AI, and Digital Transformation

India is accelerating its digital economy through AI, tech innovation, and digital asset regulation. The government is fostering R&D, digital infrastructure, and responsible AI, positioning India as a global leader in digital services and technology-driven growth.

Labor Market And Productivity Gains

Labor productivity increased by 6.8% in 2025, supported by workforce upskilling and digital transformation. Vietnam’s young, tech-savvy population underpins growth in manufacturing and services, but ongoing skills development and social security reforms are vital for sustainable competitiveness.

Sanctions Enforcement and Geopolitical Risk

France has escalated enforcement of Russia-related sanctions, including high-profile maritime interdictions. This raises compliance risks for energy, shipping, and finance sectors, and signals a stricter stance on trade with sanctioned entities, impacting supply chain security.

Growing Dependence on China

As Western markets close, Russia’s trade dependence on China has deepened, with China accounting for 27% of exports and 45% of imports. However, bilateral trade is also weakening, with a 7.6% decline in oil exports and 11% in coal, creating structural vulnerabilities.

Sanctions, Export Controls, and Compliance Risk

The US is intensifying sanctions enforcement, especially on Iran and entities linked to protest crackdowns. New secondary sanctions and export controls, including on advanced technology, raise legal and operational risks for global businesses, requiring robust compliance systems and constant monitoring of regulatory changes.