Import Dependence in Inputs

Vietnam’s manufacturing strength still relies heavily on imported inputs and equipment. Domestic refining meets about 70% of fuel demand, electronics localization is only around 15-20%, and many sectors remain exposed to supply shocks, currency volatility, and geopolitical disruption across upstream sourcing markets.

Power Supply Recovery, Grid Limits

Electricity reliability has improved sharply, with Eskom reporting more than 350 consecutive days without load shedding and lower diesel use. Yet transmission bottlenecks still block new renewable connections, keeping energy-intensive investors exposed to grid constraints and localized supply risk.

SPS Reset Reshapes Market

U.K.-EU negotiations on a sanitary and phytosanitary accord could sharply reduce food and agri border friction, but would likely require dynamic regulatory alignment. That would alter compliance obligations across food, packaging, and feed supply chains, with implementation expected from mid-2027.

Judicial reform clouds rulebook

Judicial changes and broader concerns about legal certainty are weighing on capital allocation. Investors fear shifting interpretation of contracts, permits, and tax enforcement, increasing discount rates for long-term projects and weakening Mexico’s appeal versus competing nearshoring destinations.

Gwadar And CPEC Security Deterioration

Security around Gwadar has worsened as Baloch insurgents expanded attacks from land to sea, including an April 12 assault near Jiwani. Combined with threats to Chinese-linked infrastructure, this raises insurance, routing, and project-security costs for logistics, shipping, and infrastructure operators.

Semiconductor Supply Chain Focus

AI-driven chip investment is lifting attention on Japanese niche suppliers such as factory automation and materials firms. Activist pressure on companies like SMC underscores strategic value creation opportunities, while Japan’s semiconductor ecosystem remains central to regional technology supply chains.

Tax and Investment Facilitation

Taiwanese firms continue pushing for U.S. double-tax relief and practical investment support, including trade centers in Phoenix and Dallas and an initial US$50 billion guarantee program. These measures improve outward investment execution but also reinforce offshore production incentives.

Semiconductor Controls and AI Decoupling

US restrictions on shipments to Hua Hong and broader chip-tool controls are deepening technology decoupling. China is accelerating domestic substitution, yet computing shortages persist, raising equipment costs, delaying capacity expansion, and complicating cross-border R&D, cloud, advanced manufacturing and compliance decisions.

High-Tech FDI Upgrading Supply Chains

Vietnam remains a major diversification hub as FDI shifts toward semiconductors, electronics, AI, data centres and advanced manufacturing. Registered FDI reached US$15.2 billion in Q1 2026, up 42.9% year on year, supporting deeper integration into higher-value global supply chains.

Power Transition and Infrastructure Gaps

India’s energy transition is accelerating, but grid bottlenecks, storage shortages and import dependence remain material business risks. With nearly 90% crude import dependence and renewable transmission constraints, investors in manufacturing, mobility and data centers must plan for power reliability, cost volatility and policy-driven infrastructure expansion.

Logistics Infrastructure Transformation

Vietnam is expanding expressways, ports, airports, and multimodal freight links to reduce logistics costs and improve resilience. Projects such as Long Thanh Airport, Lien Chieu deep-sea port, and southern port integration could strengthen export competitiveness, though road dependence still raises costs and vulnerability.

Importers Manage Refund Disruption

Businesses are seeking roughly $166 billion in tariff refunds after the Supreme Court ruling, but reimbursement is uneven and temporary. More than 3,000 firms have pursued claims, while many expect new duties soon, complicating pricing, working capital and contract negotiations.

IMF-Driven Reform and Financing

Egypt’s IMF programme remains central to macro stability, with a review under way that could unlock $1.6 billion. Subsidy cuts, market pricing, privatisation and fiscal tightening improve long-term credibility, but near-term operating costs, compliance burdens and social sensitivity remain elevated.

CUSMA Review and Tariff Uncertainty

Canada’s top business risk is rising uncertainty around the July 1 CUSMA review, as U.S. demands on dairy, digital policy and China exposure collide with existing Section 232 tariffs, weakening investment visibility across autos, metals, energy and cross-border manufacturing.

Trade Diversification Accelerates Rapidly

Australia is expanding trade and economic-security agreements with Japan, India, the UAE, Indonesia, the UK and the EU to reduce single-market dependence. The strategy strengthens resilience after Chinese coercive measures and new US tariff pressures, creating fresh market-entry and supply-chain rerouting opportunities.

Electrification and Nuclear Competitiveness

France is using low-carbon electricity as an industrial advantage, targeting a cut in fossil fuels from about 60% of energy use to 40% by 2030. Industrial electrification, reactor life extensions and new nuclear plans could improve long-term manufacturing competitiveness.

Commerce extérieur et Mercosur

L’entrée provisoire en vigueur de l’accord UE-Mercosur ouvre un marché de plus de 700 millions de consommateurs et réduit des droits sur autos, vins et pharmaceutiques. Mais l’opposition française et agricole accroît l’incertitude politique, réglementaire et sectorielle autour de sa mise en œuvre.

Persistent Inflation Currency Risk

Annual urban inflation remained elevated at 14.9% in April after 15.2% in March, while the pound trades near 51 per dollar. Imported input costs, wage pressure, and exchange-rate volatility continue to complicate contracts, procurement, treasury management, and market-entry strategies.

US-Taiwan Supply Chain Realignment

Twenty Taiwanese firms signaled roughly US$35 billion of new U.S. investment, while Taiwan expanded financing guarantees and industrial park planning. The shift deepens U.S.-Taiwan supply-chain integration, but may gradually relocate capacity, talent, and supplier ecosystems away from Taiwan.

Food and Import Cost Pressures

Rising fuel, food, rent, and transport costs are adding operational strain. Fuel may reach 8.07 shekels per liter, inflation forecasts have risen toward 2.3%-2.5%, and import shortages linked to halted supplies from Turkey, Jordan, and Gaza are increasing sourcing and retail risks.

Automotive Supply Chain Realignment

Mexico’s automotive industry faces pressure from U.S. tariff policies and changing rules of origin, even as producers keep investing. With about 770,000 direct jobs tied to the sector, output shifts could ripple through suppliers, logistics providers, and regional export volumes.

Reserve Depletion Spurs Regulatory Risk

Officials warn Indonesia’s 5.9 billion tons of nickel reserves could be exhausted in about 11 years at unchecked production rates near 500 million tons annually. That outlook raises the probability of stricter conservation measures, permit reviews, and sudden policy interventions affecting long-term projects.

Eastern Mediterranean Gas Linkages

Israel’s gas exports are increasingly important for Egypt, which reportedly allocated $10.7 billion for gas and LNG imports in 2026-27 and now receives volumes above pre-war levels. This strengthens Israel’s regional energy role but heightens geopolitical exposure for counterparties.

Selective Opening to Chinese FDI

India is easing FDI restrictions for firms with up to 10% Chinese ownership and fast-tracking approvals in 40 manufacturing sub-sectors within 60 days. The move could unlock capital and technology, but security screening, Indian-control rules and execution risks remain important.

Supply Chain Security Nationalized

Trade and industrial decisions in the United States are increasingly framed through national security, extending scrutiny to pharmaceuticals, displays, AI chips, and critical infrastructure components. Businesses should expect more sector-specific restrictions, localization pressure, and government intervention in procurement and sourcing choices.

Data Center Investment Surge

Thailand approved 958 billion baht in projects, including TikTok’s 842 billion baht expansion and additional UAE and Singapore-backed facilities. This strengthens Thailand’s role in regional cloud and AI infrastructure, while raising urgency around power, permitting, and digital supply capacity.

Choc énergétique et inflation

La flambée des carburants, avec une hausse de 14,2% selon l’Insee, renchérit transport, production et logistique. L’augmentation des coûts énergétiques pèse sur les marges, entretient l’inflation à 2,2% et fragilise les secteurs intensifs en carburants.

Market Access Through Managed Trade

China may selectively reopen access in non-sensitive sectors through purchase commitments and targeted licensing, including beef, soybeans, energy and aircraft. This creates tactical opportunities for exporters, but access remains politically contingent, transactional and vulnerable to abrupt reversal if broader tensions intensify.

Battery Investment Model Under Pressure

Korean battery makers face weaker electric-vehicle demand and changing US incentives, pressuring overseas investment plans. Samsung SDI and GM paused a $3.5 billion Indiana project, highlighting execution risks for joint ventures, capacity planning, suppliers and North American localization strategies.

Energy Shock Hits Logistics Costs

Iran-related disruptions and Strait of Hormuz insecurity are lifting oil, diesel, freight, and shipping costs across the U.S. logistics system. Transportation prices surged while capacity tightened, increasing supply-chain expenses for importers, exporters, manufacturers, and distributors operating through U.S. gateways.

Defense spending reshapes industry

The National Assembly approved a defense trajectory rising by €36 billion to €436 billion for 2024-2030, lifting annual spending to €76.3 billion or 2.5% of GDP by 2030. This supports aerospace, munitions, drones, cybersecurity, and strategic supply-chain localization.

Rupee Weakness Raises Costs

The rupee fell to a record 94.92 per dollar, reflecting higher energy-import costs and foreign outflows. Currency volatility is raising import, hedging, and financing costs, while increasing the risk of tighter monetary policy and more cautious bank lending conditions.

War Economy Weakens Civilian Growth

Despite energy windfalls, Russia’s broader economy is near stagnation, with first-quarter GDP reportedly down 0.3% and growth constrained by military prioritisation. For foreign firms, this means weaker consumer demand, state-directed procurement distortions, shrinking commercial opportunities, and rising concentration in defense-linked sectors.

Won Weakness Inflation Pressure

The won has repeatedly crossed 1,500 per dollar as oil shocks, capital outflows and the US-Korea rate gap unsettle markets. Import prices jumped 16.1% in March, increasing hedging costs, squeezing margins and complicating pricing, treasury and investment decisions.

Critical Minerals and Energy Leverage

Washington has signaled interest in deeper cooperation with Canada on energy and critical minerals, while Ottawa is also discussing selective ‘Fortress North America’ integration. These sectors are becoming central to supply-chain security, project finance and industrial policy alignment.

EU Trade Dependence and Integration

The EU remains Turkey’s largest export market, with shipments reaching $35.2 billion in the first four months and total exports at $88.63 billion. Automotive alone contributed $10.284 billion, underscoring Turkey’s importance in European nearshoring, customs alignment and industrial supply chains.