Evolving Foreign Investment Regulations

Recent reforms, including new real estate laws and capital market liberalization, make Saudi Arabia more accessible to foreign investors. Enhanced ownership rights and streamlined procedures are expected to boost FDI inflows, but regulatory adaptation remains crucial for entrants.

Tech Sector Growth and Foreign Investment

Israel’s high-tech sector, including AI, cybersecurity, and fintech, continues to attract major foreign investment. Projects like Nvidia’s new campus and robust M&A activity underscore Israel’s role as a global innovation leader, though infrastructure and regulatory adaptation are ongoing challenges.

Global Supply Chain Realignment

US tariff policy has accelerated the diversification of supply chains away from China, with countries like Indonesia and Thailand seeing import growth of 34% and 28% respectively. Businesses are reconfiguring sourcing and logistics, impacting investment strategies and operational resilience.

Asian Markets Dominate Russian Energy

With EU demand collapsing, Russia’s energy exports to China and India surged but now face volatility as India reduces imports under Western pressure and China negotiates deeper discounts. This shift exposes international firms to price swings and evolving regulatory risks in Asian markets.

Capital Controls Tighten Amid Fiscal Strain

New regulations require declarations for cash exports over $100,000 and restrict gold bar movements. These controls aim to curb capital flight, increase transparency, and stabilize the ruble, but may deter foreign investment and complicate international financial operations in Russia.

Climate Transition and Fossil Fuel Dependence

Despite climate commitments, South Africa is expanding domestic gas and coal projects, risking stranded assets and exposure to carbon border taxes. This tension between energy security and sustainability creates regulatory uncertainty and reputational risks for international partners and investors.

Energy Diversification and Security Drive

Turkey is aggressively diversifying its energy mix—expanding renewables, boosting Black Sea gas, and launching nuclear power. Strategic partnerships with ExxonMobil and Chevron, and new LNG deals, aim to reduce import dependency and enhance supply security amid global volatility.

EU Customs Union Modernization Stalled

Despite strong business and diplomatic calls to update the EU-Turkey Customs Union, negotiations remain stalled. The outdated framework limits Turkey’s access to EU markets for services and agriculture, constraining trade growth and supply chain expansion for international firms.

Automotive Sector Faces Structural Pressures

Germany’s auto industry is hit by US tariffs, fierce Chinese competition, and the costs of electrification. New EV subsidies help, but also benefit Chinese brands, raising concerns about domestic market share and the effectiveness of industrial policy.

2026 Presidential Election and Policy Volatility

The 2026 US presidential election introduces significant policy uncertainty, especially regarding trade, tariffs, and foreign investment. Shifts in administration priorities could rapidly alter the regulatory landscape, impacting global business strategies and risk assessments.

China-Brazil Strategic Alignment

China is deepening its strategic partnership with Brazil, especially in agriculture and infrastructure, amid shifting global power dynamics. Increased Chinese imports of Brazilian soybeans and infrastructure investments strengthen bilateral economic ties and supply chain resilience.

EU-Mercosur Free Trade Agreement

The historic EU-Mercosur agreement, signed in January 2026, eliminates tariffs on over 90% of trade between Brazil and the EU, creating the world’s largest free trade area. This is expected to boost Brazilian GDP by €6 billion by 2044, expand exports, and attract investment, but also introduces European regulatory and sustainability standards.

Labor Market and Workforce Realignment

Global tech and financial firms are shifting jobs to India amid US layoffs and AI adoption. Over 50% of surveyed companies plan to expand hiring in India in 2026, reflecting India’s growing role as a global talent hub and the impact of labor market reforms and skilling initiatives.

Escalating US-Mexico Security Tensions

US pressure for joint military action against Mexican cartels and fentanyl labs has intensified, raising sovereignty concerns and currency volatility. While Mexico resists intervention, ongoing cartel violence and security cooperation remain critical risks for business operations and cross-border logistics.

German Investment Pivot to China

German direct investment in China surged 55% in 2025, reaching over €7 billion. Firms are localizing supply chains in China to hedge against US trade volatility, deepening economic ties with Beijing and complicating EU efforts to reduce China dependence.

Inflation and Monetary Policy Uncertainty

US inflation held steady at 2.7% in December 2025, above the Federal Reserve’s 2% target. The Fed is expected to hold rates steady, but persistent cost-of-living concerns and political pressures create uncertainty for global investors and business planning.

Selective Human Rights Stance and Policy Risk

South Africa’s foreign policy inconsistencies—especially its selective approach to human rights and alliances with authoritarian regimes—raise reputational and policy risks. This undermines diplomatic credibility and could impact international partnerships, sanctions exposure, and investor confidence.

Divergent Energy Transition Strategies

The US is prioritizing fossil fuel expansion and rolling back clean energy incentives, while China and the EU accelerate renewables. This divergence risks ceding global clean-tech leadership to China, impacting long-term competitiveness and investment flows.

Canada’s Strategic Autonomy and Defense Spending

Canada is doubling defense spending by 2030 and building domestic resilience in critical sectors. This policy aims to strengthen sovereignty and reduce vulnerability to external coercion, impacting procurement, industrial partnerships, and the defense supply chain landscape.

EU-Mercosur Trade Deal Implementation

The EU-Mercosur free trade agreement, signed in January 2026, will eliminate tariffs on over 90% of bilateral trade, opening a market of 700 million people. This landmark deal is expected to reshape Brazil’s export profile, boost agribusiness, and attract investment, but faces ratification hurdles and opposition from European farmers and environmental groups.

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.

Critical Minerals Supply Chain Resilience

Mexico is central to trilateral efforts with the US, EU, and Japan to secure critical mineral supply chains. Coordinated policies, investment, and new trade frameworks aim to mitigate vulnerabilities, diversify sources, and support strategic industries such as EVs and electronics.

Regulatory Uncertainty and National Security

China’s regulatory environment has become more unpredictable, with heightened enforcement on national security, technology, and data. Foreign businesses face stricter compliance requirements, greater scrutiny, and potential exposure to sudden policy shifts, impacting investment and operational planning.

US-China Trade Decoupling Dynamics

Despite high US tariffs, China’s exports have surged by reallocating supply chains through third-party countries. US efforts to reduce reliance on Chinese goods are being circumvented, impacting sourcing, pricing, and competitive positioning for international businesses.

Record Trade Surplus and Overcapacity

China posted a historic $1.2 trillion trade surplus in 2025, up 20% year-on-year, driven by high-tech and green exports. However, this surplus reflects weak domestic demand and rising global concerns about Chinese overcapacity and potential protectionist backlash.

Regional Security Tensions and Military Threats

U.S. threats of military intervention, ongoing proxy conflicts, and the weakening of Iran’s regional alliances have heightened security risks. The potential for escalation jeopardizes cross-border trade, energy transit, and the safety of international personnel and assets.

US-China Decoupling and Supply Chain Realignment

US-China trade relations have deteriorated, with tariffs and technology restrictions prompting companies to diversify supply chains. China’s exports to the US dropped 20% in 2025, but rerouting through third countries maintains indirect flows, complicating decoupling efforts and global sourcing strategies.

US-Taiwan Strategic Technology Partnership

A historic US-Taiwan agreement will see at least $250 billion in Taiwanese investment in US chip manufacturing, with reciprocal tariff reductions. The deal aims to enhance supply chain resilience, secure advanced manufacturing, and deepen bilateral technology cooperation amid geopolitical tensions.

Energy Security and Nuclear Revival

Japan has restarted the Kashiwazaki-Kariwa nuclear plant, boosting energy self-sufficiency and emissions targets. This move, amid regional security tensions, signals a shift toward stable domestic energy sources and reduced reliance on fossil fuel imports, affecting industrial competitiveness.

Escalating US-China Trade Tensions

US-China trade has contracted sharply, with US imports from China down 28% and exports down 38% in 2025. Tariffs and retaliatory measures have shifted supply chains toward Southeast Asia, increasing costs and uncertainty for global businesses.

Supply Chain Diversification and Resilience

Amid US tariffs and rising protectionism, China has diversified export markets and supply chains, boosting trade with ASEAN, Africa, and Latin America. However, supply chain ‘reallocation’ through third countries keeps China central to global manufacturing, complicating true decoupling efforts.

Dollar Weakness and Currency Volatility

The US dollar’s decline, driven by policy choices favoring export competitiveness, is reshaping global trade dynamics. While aiding US exporters, it raises inflation risks, complicates foreign investment, and prompts currency realignment, impacting multinational financial strategies and pricing models.

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.

Critical Minerals and Mining Policy Shifts

USMCA renegotiation is spotlighting critical minerals, with Mexico and the US seeking alignment on definitions and supply chain security. Delays in environmental permitting and regulatory clarity hamper mining investment, but reforms could unlock new opportunities in lithium, silver, and other strategic resources.

Infrastructure Investment and Development Hubs

A historic infrastructure plan allocates 5.6 trillion pesos to energy, transport, health, and education projects through 2030. The strategy seeks to boost growth, regional development, and social equity, with mixed public-private models and streamlined regulatory frameworks.

Gulf Rivalry and Regional Instability

Intensifying competition with the UAE over influence in Yemen, Sudan, and Africa is fueling regional instability and media confrontations. This rivalry complicates diplomatic relations and could impact trade, investment flows, and supply chain security across the broader Gulf region.