Currency Watchlist and Baht Volatility

The US Treasury has placed Thailand on its currency monitoring list due to trade and current account surpluses. The Bank of Thailand is tightening gold trading rules to curb speculative capital flows, which may impact exchange rates, compliance costs, and cross-border financial operations.

Circular Economy Initiatives Gain Momentum

France is advancing circular economy models for EV batteries, with startups and industrial players piloting second-life and recycling projects. These initiatives are increasingly supported by public policy, enhancing resource efficiency and opening new business models for investors.

Energy exports and LNG geopolitics

US LNG is central to allies’ energy security, but export policy and domestic political pressure can affect approvals, pricing, and availability. For industry, this shapes energy-intensive manufacturing siting, long-term contracts, and Europe-Asia competition for cargoes, with knock-on logistics and hedging needs.

Surge in Foreign Investment in Germany

Foreign direct investment in Germany more than doubled to €96 billion in 2025, surpassing German outbound investment for the first time since 2003. Political stability, EU market access, and legal certainty make Germany increasingly attractive for international investors, supporting growth and supply chain resilience.

Power stability, grid bottlenecks

Eskom reports 200+ days without load-shedding and higher availability, boosting operational continuity. However, slow transmission expansion and contested unbundling constrain new generation connections, risking future curtailment for energy-intensive firms and delaying renewable-led decarbonisation plans.

Sustainable Energy Transition and Industrialization

Saudi Arabia is scaling up renewable energy, with solar and wind capacity expected to rise tenfold by 2040. Large-scale projects and energy storage are reshaping the power mix, supporting green industrialization and attracting investment in sectors aligned with global decarbonization trends.

Retaliatory Tariffs and Trade War Risks

The EU is preparing a €93bn retaliatory tariff package and considering activating its ‘trade bazooka’ anti-coercion instrument. A tit-for-tat tariff spiral could significantly disrupt UK supply chains, raise costs, and depress cross-border investment, with global recession risks rising.

Sectoral Divergence: Defense Gains, Cyclicals Suffer

While export-driven sectors like automotive and luxury goods face losses, defense companies such as Rheinmetall and Renk have seen stock gains amid heightened geopolitical tensions. This divergence underscores shifting investor sentiment and the growing importance of security-related industries in Germany’s economic landscape.

Belt and Road Initiative Under Strain

China’s Belt and Road Initiative faces mounting challenges as partner countries struggle with debt repayments and project sustainability. This has led to increased renegotiations, reduced influence, and scrutiny over the long-term viability of China’s overseas infrastructure investments.

OECD Accession and Global Integration

Indonesia’s accelerated bid to join the OECD involves aligning with international standards on governance, regulation, and competitiveness. This process is expected to improve the investment framework, enhance transparency, and facilitate deeper integration with global markets, benefiting international business operations.

Accelerating Industrialization and Downstreaming

Indonesia’s aggressive push for industrialization, especially in nickel and battery materials, is transforming its export profile and attracting global investment. However, replicating nickel’s success in other sectors like copper faces economic and operational challenges, impacting long-term investor strategies and resource sustainability.

Legal and Institutional Unpredictability

Despite ongoing conflict, investors cite legal uncertainty and institutional inefficiency as greater deterrents than war itself. Prolonged court proceedings, lack of transparency, and unpredictable regulatory enforcement undermine trust, affecting investment decisions and long-term supply chain planning.

Monetary Policy and Interest Rate Stability

The Federal Reserve is expected to hold interest rates steady in early 2026, with a 95% probability, as inflation moderates and employment stabilizes. This policy provides predictability for global investors, although future rate cuts remain possible depending on economic data and labor market trends.

Natural gas expansion, export pathways

Offshore gas output remains a strategic stabilizer; new long-term contracts and export infrastructure (including links to Egypt) advance regional energy trade. For industry, this supports power reliability and petrochemicals, but geopolitical interruptions and regulatory directives can still trigger temporary shutdowns.

US-China Trade Tensions Escalate

Renewed tariff threats and secondary sanctions on China, especially over Iranian oil, have reignited US-China trade tensions. US imports from China dropped 28% and exports fell 38% in 2025, disrupting global supply chains and prompting sourcing shifts to Southeast Asia.

Infrastructure Expansion and Logistics

Major investments in logistics, such as the BR-163 highway extension (R$10.6 billion), are improving connectivity for agribusiness and exports. Persistent delays in rail projects highlight ongoing challenges, but road upgrades support supply chain efficiency and export competitiveness.

Tariff Policy and Global Trade Uncertainty

The US continues to use tariffs as a central economic tool, reducing its trade deficit but creating market uncertainty and diplomatic friction. Tariff adjustments have altered trade flows, increased costs, and complicated supply chain planning for international businesses operating in or with the US.

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.

Supply Chain Disruptions and Labor Shortages

Sectors like agriculture face acute labor shortages, especially for durian exports, and logistical bottlenecks at border crossings. These challenges are compounded by stricter Chinese inspections and container shortages, impacting supply chain reliability and export competitiveness.

Challenging Investment Climate and M&A

Brazil’s investment environment is marked by high interest rates, fiscal constraints, and political polarization. M&A activity remains subdued, but the Mercosur-EU agreement and foreign interest in mining, energy, and technology sectors could stimulate strategic investments and sectoral shifts.

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.

Tech export controls tighten supply

Expanded controls on AI chips, advanced semiconductors, and tooling constrain sales into China and other sensitive markets, while raising compliance burdens worldwide. Firms must redesign products, segment customer access, and harden end‑use diligence to avoid penalties and sudden shipment stoppages.

Critical minerals export controls

China’s expanding controls on dual-use goods and critical minerals (rare earths, gallium) and licensing slowdowns—seen in Japan-related restrictions and buyers diversifying to Kazakhstan—create acute input risk for semiconductors, EVs, aerospace, and defense-linked manufacturing worldwide.

Sanctions, Export Controls, and Security Concerns

The UK’s alignment with Western sanctions on Russia and scrutiny of Chinese investments heighten compliance risks. Export controls, especially in technology and dual-use goods, require robust due diligence and may affect cross-border operations and partnerships.

India-EU Free Trade Agreement Impact

The India-EU FTA, finalized after 18 years, will eliminate tariffs on over 90% of goods and liberalize services, unlocking up to $11 billion in new exports. It strengthens India’s integration into global value chains, but compliance costs and EU carbon taxes remain challenges.

Foreign Investment Scrutiny in Strategic Sectors

Australian authorities have intensified scrutiny of foreign—especially Chinese—investment in critical minerals and infrastructure. Recent court actions and forced divestments signal a tougher regulatory stance, affecting deal structures, ownership risks, and market access for international investors.

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.

Major Infrastructure and Logistics Expansion

Record infrastructure investment, especially in transport and logistics, is transforming states like Uttar Pradesh and Madhya Pradesh into key hubs. Platforms like PRAGATI enable efficient project execution, reducing bottlenecks and enhancing India’s competitiveness as a manufacturing and export base.

Investment Climate and SME Funding Gap

Renewed investor confidence is evident, with FDI pipelines growing, especially in renewables and tech. However, a R350 billion SME funding gap persists, as stricter governance and financial controls limit access to capital for smaller, informal businesses.

Black Sea conflict logistics risk

Ongoing Russia–Ukraine war sustains elevated Black Sea war‑risk premia, periodic port disruption, and vessel damage reports. Businesses face higher insurance, longer routes, unpredictable inspection or strike risk, and tougher contingency planning for regional supply chains.

IMF-linked reforms and fiscal tightening

Ongoing engagement with the IMF and multilaterals supports macro stabilization but implies subsidy reforms, tax enforcement, and constrained public spending. These measures affect consumer demand, project pipelines, and pricing. Investors should track review milestones that can unlock financing and market confidence.

Geopolitical Tensions With China Escalate

Japan faces heightened diplomatic and economic tensions with China, including export controls on rare earths and dual-use items. These frictions, triggered by Japan’s pro-Taiwan stance, threaten supply chains for high-tech and automotive sectors, raising operational risks for international businesses.

Defence exports and geopolitical positioning

Turkey’s defence industry is expanding exports and co-production, exemplified by a reported $350m arms agreement with Egypt and large-scale drone manufacturing capacity growth. This supports industrial upgrading and regional influence, but can elevate sanctions, licensing and reputational due-diligence requirements.

Gas and LNG project constraints

New EU measures include bans on maintenance and services for LNG tankers and icebreakers, tightening pressure on Russian LNG export projects and Arctic logistics. This increases delivery uncertainty, reduces long‑term offtake reliability, and complicates energy‑intensive investments.

Currency strength amid weak growth

The rand has rallied roughly 13% year-on-year despite sub-50 manufacturing PMI readings, reflecting global liquidity and carry dynamics more than domestic fundamentals. For multinationals, volatility risk remains: earnings translation, import costs and hedging needs can shift quickly on risk-off shocks.

Critical Minerals Supply Chain Realignment

Australia is rapidly expanding its critical minerals sector, including rare earths, lithium, gallium, and scandium, to reduce reliance on China and support allied supply chains. Strategic stockpiles and new mining projects are reshaping global supply chains, attracting major international investment and government backing.