Power Sector Recovery and Liberalisation

More than 365 consecutive days without load-shedding have improved operating conditions, supported by rooftop solar and independent power producers. The erosion of Eskom’s monopoly lowers outage risk, but businesses still face uneven grid resilience and must reassess energy sourcing strategies.

Won Volatility Despite Surplus

Despite a very strong external position, the won remains under pressure, complicating investment returns and procurement planning. April current-account surplus reached US$28.29 billion, with goods surplus at US$33.88 billion, highlighting resilience but not insulating firms from currency and sentiment swings.

Vision 2030 spending recalibration

Saudi Arabia is recalibrating flagship projects as financing discipline tightens. Reports of frozen payments to consultancies and scaled-back mega-projects indicate more selective capital allocation, creating execution risk for contractors while favoring commercially viable sectors such as logistics, industry, mining, tourism, and AI.

Foreign Worker Policy Shift

To offset labor shortages, companies are increasingly recruiting from India, Egypt, and Bangladesh, but only 6,272 labor migrants reportedly remain employed—just 0.14% of estimated need. Simplifying permits and residence rules will materially affect project delivery capacity and operating scalability.

US-China Managed Trade Friction

Despite summit diplomacy, bilateral trade remains under managed friction: tariff truce deadlines loom in November, Section 301 options remain active, and new trade and investment boards cover only non-sensitive sectors. Exporters and investors should plan for recurring policy volatility.

Banking Isolation and Frozen Assets

Iran’s financial system remains constrained by sanctions, restricted cross-border settlement and disputes over access to frozen overseas assets. This complicates trade finance, repatriation and supplier payments, forcing firms toward costly workarounds and increasing counterparty, transparency and enforcement risks.

Semiconductor Investment Momentum

Large-scale chip ecosystem expansion is strengthening Vietnam’s strategic role in technology supply chains. Samsung’s planned US$1.5 billion chip-testing facility, alongside Intel, Amkor, and Hana Micron operations, supports higher-value manufacturing but also raises demand for skilled labor, utilities, and policy consistency.

Tourism Weakness Drags Demand

Tourism remains a major economic driver, contributing about 13% of GDP, yet arrivals have softened under higher airfares and safety concerns. April visitors fell 7% year on year, weakening hospitality demand, consumer spending, and linked sectors from food to transport.

US Tariffs and AUKUS Uncertainty

Washington’s 10% baseline tariff on Australian imports and 50% steel and aluminium duties, alongside renewed scrutiny of the AUKUS submarine program, raise trade-cost, defence-industrial and policy-risk exposure for exporters, manufacturers and investors tied to bilateral supply chains.

Won Volatility and Capital Outflows

The won has fallen to its weakest level since 2009, prompting stabilization measures, while foreign investors reportedly withdrew about $70 billion from Korean equities in first-half 2026, complicating hedging, pricing, financing, and cross-border investment planning for businesses.

EU-China Trade Defense Push

France is backing tougher EU action against subsidized Chinese imports, including extra tariffs, anti-dumping tools and supplier diversification requirements. For companies trading through France, this raises the likelihood of stricter sourcing rules, higher compliance burdens and shifting landed-cost calculations across strategic sectors.

Labor Shortages in Key Sectors

Stricter immigration enforcement is contributing to labor shortages in construction and other migrant-dependent industries, with evidence of slower output rather than wage substitution. Businesses face project delays, higher delivery risk, and tighter operating margins, especially where domestic labor pipelines remain structurally insufficient.

US-Korea Nuclear Industrial Deal

New Seoul-Washington talks on uranium enrichment, spent fuel reprocessing, nuclear-powered submarines and shipbuilding could reshape industrial policy. If advanced, they would deepen strategic manufacturing opportunities, but also increase regulatory complexity, alliance dependence, and scrutiny of technology transfer and compliance.

Political Reform Uncertainty Persists

Constitutional reform debates and intensifying rivalry between major political blocs are prolonging uncertainty over Thailand’s governance trajectory. For investors, this raises concerns over policy continuity, regulatory predictability, and the risk that institutional conflict could delay economic reforms and strategic projects.

Cross-Strait Security Overhang

Business planning remains shadowed by Taiwan Strait tensions and uncertainty around US security commitments. Debate over a pending US$14 billion arms package, coupled with persistent Chinese pressure, elevates contingency, insurance, shipping, and board-level resilience planning for multinational firms.

Militant Threats in Balochistan

Escalating insurgent violence in Balochistan is raising risks for mining, transport and project execution. Recent attack surges, threats against foreign companies and weak border security heighten insurance, logistics and personnel protection costs, especially for projects tied to minerals and infrastructure.

Eastern Germany’s Industrial Vulnerability

Eastern Germany faces acute risks from demographic decline, skills shortages, high energy prices, and weaker private investment, despite growth potential in semiconductors, renewables, and defense. Major projects linked to TSMC, Infineon, Bosch, and Tesla depend on faster permitting, labor availability, and infrastructure upgrades.

Customs Enforcement Tightens Sharply

A new executive order directs stricter customs enforcement against transshipment, undervaluation and forced-labor imports, with higher bond requirements, deeper beneficial-ownership disclosure and tougher importer-of-record standards. Multinationals face greater audit exposure, compliance costs and potential market-access disruption.

Middle East Energy Shock Exposure

French officials are preparing for a prolonged Middle East crisis that could keep oil prices volatile and disrupt key maritime chokepoints. For companies trading through France, this heightens transport, energy and inflation risks, with direct implications for sourcing costs, inventories and demand planning.

Aggressive Trade Misinvoicing Crackdown

Authorities are intensifying scrutiny of export-import underinvoicing through customs and integrated monitoring, with sanctions including ‘yellow’ and ‘red’ cards. Officials cited discrepancies as large as 57% and bilateral trade-data gaps reaching tens of billions of dollars, increasing enforcement and audit risks.

Election cycle raises policy uncertainty

With local elections approaching and a tight Seoul mayoral race, political attention is shifting toward real estate, safety, and economic management. Businesses should watch for policy recalibration, budget reprioritization, and regulatory messaging that could affect investment sentiment and urban-market operating conditions.

Macroeconomic and Currency Pressure

Persistent war-related uncertainty is likely to keep pressure on growth, fiscal balances, inflation expectations, and the shekel despite Israel’s resilient institutions. Businesses should monitor borrowing costs, consumer demand, and exchange-rate volatility when pricing contracts, sourcing inputs, or evaluating acquisitions.

Semiconductor Concentration and AI

Taiwan remains the central hub for advanced chip production underpinning AI, data centers, and high-performance computing. Major firms continue expanding locally, but the concentration of fabrication and packaging capacity keeps global manufacturers, investors, and customers exposed to outsized geopolitical and operational concentration risk.

Energy Infrastructure Under Attack

Ukrainian drone strikes are materially disrupting Russia’s oil system, knocking out about 700,000 bpd of refining capacity and reducing exports. Damage to refineries, storage, and ports increases supply volatility, rerouting costs, and operational risk for global energy supply chains.

Energy Shock Hits Industry

Middle East conflict has lifted fuel, freight, and input costs across Thailand, squeezing manufacturers and exporters. April capacity utilization fell to 56.4%, while machinery output dropped 12.9% year on year and fertilizer production plunged 28% amid raw-material shortages.

Energy Security Drives Investment

Egypt is intensifying upstream and midstream energy deals to secure supply and attract capital. Recent approvals include four petroleum agreements worth at least $52.97 million, alongside efforts to position LNG infrastructure and pipelines as regional energy platforms for trade and re-export.

EU Investment Pivot Accelerates

The EU has put €11.5 billion behind South Africa’s clean energy, transport and pharmaceutical sectors, while negotiating better trade terms and a critical minerals pact. This could reshape financing flows, supplier ecosystems and export orientation toward Europe.

IMF-Linked Fiscal Tightening

Pakistan’s delayed FY2027 budget reflects difficult IMF negotiations over revenue, subsidies and spending. Non-compliance could delay program reviews, threaten over $9 billion in rollovers, and tighten liquidity, raising sovereign, tax and demand risks for investors and import-dependent businesses.

High Rates And Inflation

The central bank kept rates at 19% deposit and 20% lending, while headline inflation stood at 14.9% in April. Elevated borrowing costs, exchange-rate sensitivity, and imported inflation continue to pressure consumer demand, working capital, and investment planning across sectors.

Balochistan Security and Project Risk

Escalating insurgent violence in Balochistan is raising operational and security costs for mining, logistics and infrastructure projects. Recent attack surges and explicit threats to foreign companies heighten risks around Gwadar, Reko Diq, transport corridors and staff mobility.

Critical Minerals Value-Chain Push

Australia is moving beyond raw mineral exports as Quad partners mobilise $20 billion for critical-minerals supply chains, creating opportunities in refining, processing and trusted-partner sourcing while intensifying competition to reduce dependence on China-linked downstream capacity.

Domestic Unrest And Operating Stability

Economic hardship and political repression increase the probability of renewed protests, labor disruption and abrupt security crackdowns. Analysts warn inflation near 80% could trigger further unrest, creating significant operational continuity risk for employers, distributors and investors with exposure inside Iran.

Resource Nationalism in Nickel

Indonesia continues tightening state influence over strategic minerals, especially nickel, while accelerating downstream processing and battery supply-chain ambitions. This strengthens domestic value capture but increases policy intervention risk, permitting complexity and concentration exposure for manufacturers reliant on Indonesian metal inputs.

Defense buildup boosts industrial demand

South Korea’s plan to launch a domestically built nuclear-powered submarine by the mid-2030s would channel spending into shipbuilding, nuclear engineering, and defense supply chains. It creates opportunities for industrial contractors, but adds regulatory, budgetary, and geopolitical complexity for foreign partners.

Sanctions Evasion Compliance Exposure

Turkey remains a prominent transit jurisdiction in Russia- and Iran-related sanctions cases, increasing compliance scrutiny for banks, shippers and industrial traders. Firms face elevated dual-use, beneficial-ownership and payments risk, especially where intermediaries obscure Russian or Iranian end-users.

Supply Chain Diversification Requirements Loom

EU policymakers are considering legal tools that could require companies to diversify suppliers in high-risk sectors such as chips and rare earths. Germany-based multinationals may face higher compliance costs but also stronger incentives to regionalize sourcing and build resilience.