Automotive Localisation Competitive Pressure

South Africa’s automotive base remains Africa’s leading manufacturing hub but faces sharper competition from Chinese and Indian entrants. Proposed CKD expansion by Mahindra and possible tariff-linked localisation measures could reshape sourcing, supplier strategies and investment decisions across regional vehicle value chains.

Trade Agreements and Market Access

EU-Thailand FTA talks have completed 11 of 24 chapters, with both sides targeting conclusion this year. Progress matters because trade diversion from the EU-India deal and Thailand’s limited FTA network could erode export competitiveness in garments, seafood, and other price-sensitive sectors.

Strong Shekel Squeezes Exporters

The shekel strengthened sharply, with the dollar falling below NIS 3 for the first time since 1995 and down about 5% in 2026. While inflation eased to 1.9%, exporters face margin compression, relocation pressure and increased hedging requirements across manufacturing and services.

Industrial stagnation and deindustrialization

Germany’s industrial output remains near 2005 levels, with GDP having contracted for two years, BASF shrinking Ludwigshafen operations, Volkswagen planning plant cuts, and 37% of firms considering offshoring. Export-oriented supply chains, suppliers, and inward investment decisions face growing pressure.

Automotive Supply Chains Under Pressure

Autos remain Mexico’s flagship export sector, but tariffs and origin requirements are biting. First-quarter exports still reached 795,631 vehicles, with 75.8% going to the U.S., yet firms including Nissan warn of cost pressures, export declines and potential job cuts.

China Dependence Limits Bargaining Power

Russia’s trade redirection has increased reliance on China for energy purchases, payments channels and intermediary trade flows. This concentration reduces Moscow’s bargaining power, compresses export margins through discounts, and raises strategic exposure for firms tied to Russia-linked regional supply networks.

Inflation, Rates, Currency Pressure

Urban inflation rose to 15.2% in March, the highest since May, while the pound weakened to about 53.3 per dollar and policy rates remain at 19%. Import costs, pricing strategies, wage pressure, and financing conditions therefore remain challenging for operators.

Agricultural Cost Pressures Intensify

Agriculture, which generated more than $22 billion of exports last year, faces sharply higher diesel and fertiliser costs, labor shortages, and fragile logistics. Farmers report cost increases of 10-30%, with some warning output and export potential could decline materially this season.

China Trade Stabilisation with Limits

Relations with China have stabilised, supporting trade recovery and possible expansion under a reviewed bilateral FTA, but dependence remains high in minerals and energy. Businesses still face strategic exposure from policy frictions, concentration risk and China’s dominant midstream processing ecosystem.

Political Cycle Shapes Business Policy

Upcoming June local elections are a significant test of President Lee’s policy momentum and could influence regulatory execution, industrial strategy, and reform pace. Businesses should monitor whether stronger political control improves policy coordination or deepens uncertainty around contested economic measures.

Balochistan Security Threats Persist

Escalating insurgent violence in Balochistan is undermining confidence in mining, infrastructure and corridor projects. Attacks affecting Gwadar and the Reko Diq area raise operating and insurance risks for foreign investors, especially in critical minerals, logistics and China-linked industrial zones.

Monetary Tightening and Yen

The Bank of Japan is moving toward further rate hikes, with markets recently pricing roughly a 60-70% chance of an April move and many economists expecting 1.0% by end-June. Yen volatility will affect import costs, financing conditions, asset prices, and export competitiveness.

Hormuz Exposure Drives Vulnerability

Belgium’s economy remains highly exposed to disruptions in the Strait of Hormuz, through which around 20% of global oil and gas trade normally passes. Any prolonged insecurity would amplify import costs, supply volatility, and inflation pressures across transport and industrial sectors.

Shadow Oil Trade Expansion

Iran continues exporting roughly 1.5-2.8 million barrels per day through dark-fleet shipping, ship-to-ship transfers and opaque intermediaries, largely to China. This sustains state revenues but heightens exposure to sanctions enforcement, shipping fraud, and reputational risk for traders and insurers.

Protectionism Clouds Import Demand

Retailers and manufacturers face weaker import visibility as tariffs, fuel costs, and consumer strain weigh on cargo bookings. U.S. first-half container imports are forecast at 12.3 million TEU, below last year, indicating softer goods demand and more cautious inventory planning.

Energy Security Drives Contingency Planning

Taiwan remains highly import-dependent for energy, with roughly one-third of LNG previously sourced from Qatar and 98% of energy needs imported. Firms should monitor fuel supply resilience, inventory policies, and energy costs as Taiwan secures alternative LNG from Australia and the United States.

Macro Stabilization Under Strain

Turkey’s disinflation program remains under pressure from 30.9% March inflation, a 37% policy rate and war-driven energy costs. Higher financing costs, weaker domestic demand and policy uncertainty complicate pricing, investment planning, working capital management and consumer-facing operations across sectors.

Water Infrastructure Systemic Failure

Water insecurity is becoming a material business risk, especially in Gauteng and smaller municipalities. Nearly half of treated water is lost before delivery, 64% of wastewater works are critical, and recurring outages are driving higher private backup, compliance and operating costs.

Inflation Risks From Oil

Middle East tensions are feeding directly into South Africa’s fuel, transport and input costs. Brent crude rose from $69.08 to $93.67 per barrel during the review period, lifting inflation risks, threatening rate hikes, and pressuring import-dependent supply chains and consumer demand.

Customs Modernization Border Frictions

Customs reforms are improving transparency, but border queues, weak crossing infrastructure, and longer clearance times still disrupt supply chains. Customs generated 22% of Q1 budget revenue, while average clearance rose to 6.9 hours and contraband increased to 17%.

China-Centric Oil Export Dependence

China remains the dominant buyer of Iranian crude, reportedly taking around 1.4-1.6 million barrels per day through teapot refiners, yuan payments, and shadow logistics. This concentration sustains Iran’s revenues but increases geopolitical exposure for energy traders and sanctions-sensitive counterparties.

Labor Costs and Regulatory Volatility

Employers report 67% of firms do not plan new hiring and 50% lack five-year expansion plans, citing global uncertainty and repeated labor-rule changes. High severance and unit labor costs versus Vietnam and Cambodia risk diverting labor-intensive manufacturing and supply-chain relocation.

Steel Trade Protectionism Intensifies

From July, the EU will cut duty-free steel quotas by 47% and raise tariff barriers, putting UK exports at risk. With the EU taking 1.8 million tonnes of UK steel annually, manufacturers face margin pressure, rerouting risks and urgent need for quota arrangements.

Energy Transition Investment Pipeline

Renewable investment is expanding and improving medium-term power resilience. Mulilo’s 337MW Middlepunt solar project reached financial close, with expected generation of 770 GWh annually under a 20-year agreement, reinforcing grid reform and opportunities in clean energy, storage and industrial power procurement.

China Supply Chain Diversification

China-origin U.S. imports fell 6.7% year on year in March, while Vietnam, Thailand, and Indonesia gained share. Businesses are accelerating China-plus-one strategies, but evidence shows alternative production bases remain slower and less complete, requiring careful transition planning, inventory buffers, and dual-sourcing investment.

Semiconductor Controls Tighten Further

Congress is advancing tighter restrictions on chipmaking equipment exports to China, especially DUV immersion lithography and servicing. The measures could deepen technology decoupling, disrupt multinational electronics supply chains, pressure allied suppliers, and affect capacity, maintenance, and China-linked revenue models.

Expanded Sanctions and Secondary Risk

The U.S. is intensifying sanctions enforcement on Iranian oil networks and signaling broader secondary sanctions on foreign banks, shipping, and traders. Companies with exposure to China, the Gulf, or energy logistics face greater counterparty screening needs and payment disruption risks.

Energy Shock and Rupee

RBI kept rates at 5.25% but cut FY2026-27 growth to 6.9% and sees inflation at 4.6% as West Asia conflict raises oil, freight, and insurance costs. With India importing about 90% of oil, rupee volatility and input inflation remain major business risks.

Tariff Circumvention Drives Enforcement

Roughly $300 billion of tariffed goods are estimated to reach the U.S. via Southeast Asia and Mexico, with suspicious transactions up 76% in early 2025. That is increasing customs scrutiny, origin-verification risk, and exposure to penalties for companies relying on transshipment or complex multi-country assembly structures.

Buy Canadian Industrial Policy

Federal and provincial Buy Canadian procurement measures are reshaping market access and supplier strategies, while drawing U.S. criticism before CUSMA talks. The policy supports domestic manufacturing, defence and construction, but may increase compliance burdens and bilateral friction.

Corporate Governance Reform Deepens

Revisions to Japan’s Corporate Governance Code are expected to push companies to deploy cash more efficiently, improve board oversight, and strengthen accountability. This should support M&A, capex, and shareholder returns, while raising scrutiny on governance quality and underperforming assets.

IMF Reforms and Financing

Egypt’s business environment remains tightly linked to IMF reviews, privatization, and fiscal reforms. Cairo may seek $1.5-3 billion in emergency funding, while upcoming disbursements depend on faster state-asset sales, shaping liquidity, policy continuity, and investor confidence.

China Pivot Complicates Market Access

Ottawa’s January deal with Beijing, including lower barriers for up to 49,000 Chinese EVs and tariff relief on some Canadian agriculture, is widening strategic friction with Washington. Businesses face heightened policy, compliance, and geopolitical risk across autos, agri-food, and investment planning.

Real Estate Rules Shape Investment

Foreign capital is increasingly targeting logistics, data centers, industrial property, and income-generating assets, supported by infrastructure growth. Yet land-use procedures, project approvals, and profit repatriation rules still create friction, affecting site selection, market entry timing, and capital deployment.

Critical Minerals Equipment Upswing

Finland’s mining expansion and updated mineral strategy are strengthening demand for mobile machinery across extraction, processing, and support services. With Finland positioned in Europe’s battery and critical raw materials chain, foreign suppliers can benefit, though permitting timelines remain commercially important.

Trade Costs Feed Inflation Risks

Recent tariff rounds have already lifted import costs and contributed to inflation persistence, with research cited in reporting showing most burden falls on US buyers. Higher input and consumer prices can weaken demand, delay rate cuts, and reduce margins for trade-exposed businesses.