Post-Brexit UK-EU Trade Realignment

The UK government seeks closer economic ties with the EU without rejoining the customs union, balancing regulatory alignment and trade benefits. Ongoing negotiations and political volatility create uncertainty for businesses, particularly regarding customs, standards, and future market access.

$350 Billion Investment Pact Stalled

A $350 billion South Korean investment commitment in the US, central to a new trade deal, faces delays due to parliamentary gridlock and currency concerns. The uncertainty undermines investor confidence and complicates cross-border business planning in key sectors such as technology and manufacturing.

LNG Export Expansion and Energy Policy

US LNG export capacity is expanding, with new projects and regulatory filings, aiming to supply global markets and support allies’ energy security. This growth strengthens US influence in energy geopolitics but raises questions about domestic energy costs and environmental impacts.

Inflation, Cost Pressures, and Consumer Demand

US inflation remains above the Fed’s 2% target, driven by tariffs, wage pressures, and supply chain adjustments. Persistent cost increases are prompting companies to cut jobs and automate, while consumer confidence has dropped to its lowest since 2014. These dynamics are reshaping pricing strategies, profit margins, and investment decisions, with downstream effects on global supply chains and export competitiveness.

Landmark India-EU Free Trade Agreement

India’s comprehensive FTA with the EU, concluded in January 2026, eliminates tariffs on 90% of Indian exports and expands market access for goods and services. This deal will significantly boost bilateral trade, attract FDI, and enhance supply chain resilience, positioning India as a key alternative to China.

Political Pressure on Federal Reserve Escalates

President Trump’s attempts to influence the Federal Reserve, including legal threats against Chair Powell, have raised concerns about central bank independence. This politicization risks 1970s-style inflation, market volatility, and diminished global investor confidence in US monetary policy.

Inflation Moderation and Economic Stability

After peaking at 64% in 2023, inflation is projected to fall below 20% by end-2026. Economic growth continues, with GDP expanding 3.7% in early 2025. Stabilizing inflation and steady growth support a more predictable business environment for international operations and investment planning.

Severe Disruption of Export Logistics

Russian attacks on port infrastructure have reduced Ukraine’s export earnings by about $1 billion in Q1 2026. Grain and metals exports have been rerouted via rail, but overall volumes are down 47% year-on-year, creating significant supply chain and revenue challenges for exporters and partners.

Vision 2030 Giga-Projects Acceleration

Saudi Arabia’s giga-projects, such as Qiddiya and NEOM, are advancing rapidly, with major infrastructure and entertainment investments. These projects aim to diversify the economy, create up to 85,000 jobs by 2030, and generate significant non-oil revenue, attracting global investors and supply chain partners.

Tariff Preferences and Market Access

Taiwan secured preferential tariff treatment for semiconductors, auto parts, and more, aligning with Japan, Korea, and the EU. This levels the playing field for Taiwanese exports, enhances competitiveness, and provides clarity for long-term investment and supply chain planning.

Labor Reform and Compliance Pressures

Sweeping labor reforms—including a reduced 40-hour workweek, higher minimum wages, and stricter inspections—are reshaping Mexico’s labor market. These changes increase compliance costs and operational complexity, particularly for manufacturing, logistics, and digital platform employers, with direct implications for competitiveness and labor relations.

Green Transition and E-Mobility Expansion

Mexico’s electric vehicle market is set to triple by 2032, supported by government incentives, urban pollution concerns, and major automaker investments. However, limited charging infrastructure and high upfront costs remain barriers, while sustainability goals reshape automotive and energy sectors.

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.

Political Risk and 2026 Election Uncertainty

Brazil’s presidential election in October 2026 is a major source of uncertainty for investors. Market sentiment is sensitive to potential shifts in economic policy, fiscal reforms, and institutional stability, with volatility expected in currency and asset prices as the election approaches.

Global Supply Chain Realignment

China’s supply chains have reallocated through third-party countries like Vietnam and Mexico, maintaining effective access to US and Western markets despite tariffs. This rerouting complicates compliance, origin tracing, and risk management for international businesses.

Yuan Internationalization and Financial Strategy

China is promoting the yuan’s global usage, expanding offshore liquidity hubs and payment frameworks. This financial strategy aims to reduce dollar dependence, enhance China’s influence in cross-border transactions, and provide alternatives for international businesses.

Geopolitical Tensions Disrupt Trade

Escalating US–China and US–Venezuela tensions heighten global trade uncertainty, impacting Thai exports, energy prices, and supply chains. Businesses face increased logistics costs and market volatility, especially in energy-intensive and export-oriented sectors, requiring robust risk management and market diversification strategies.

Accelerated Economic Reform Agenda

Vietnam’s leadership has committed to sweeping economic and administrative reforms, targeting over 10% annual GDP growth through 2030. This includes bureaucratic streamlining, private sector empowerment, and innovation, with significant implications for investment climate and business operations.

Currency Collapse and Hyperinflation

Iran's rial has plunged to record lows, now trading at 1.4–1.5 million per US dollar, with inflation nearing 50%. This currency crisis, driven by sanctions, mismanagement, and corruption, has triggered mass protests, eroded purchasing power, and created severe import and operational challenges for businesses.

Record Infrastructure Concessions Drive Growth

Brazil has accelerated infrastructure concessions, with 50 auctions for ports, airports, and roads through 2025 and 40 more planned for 2026. Private investment now accounts for 84% of infrastructure funding, enhancing logistics, supply chains, and business competitiveness, though some legacy projects face operational challenges.

Eastern Economic Corridor Bottlenecks

Land and zoning constraints in the Eastern Economic Corridor (EEC) have delayed major industrial projects, prompting urgent regulatory reforms. The government is also considering opening new regions for investment, which could reshape the industrial landscape and supply chain dynamics.

Strategic US-Japan Alliance Coordination

The trade dispute tests US support for Japan, with Tokyo seeking closer coordination with Washington and G7 partners. The evolving alliance dynamics influence regional stability, investment decisions, and the global technology ecosystem.

Restrictive Immigration and Labor Policy

US net migration turned negative in 2025 and is projected to remain so, driven by restrictive policies. This trend constrains labor force growth, dampens consumer demand, and poses long-term risks to economic dynamism and talent acquisition.

Infrastructure Delays Challenge Competitiveness

Major infrastructure projects, such as the Fehmarnbelt tunnel, face significant delays and cost overruns. Persistent issues with transport and logistics modernization threaten Germany’s long-term competitiveness and the efficiency of European supply chains, impacting international trade and investment.

Sustainable Agribusiness and Compliance

The new EU-Mercosur deal and global trends are pushing Brazilian agribusiness toward higher sustainability, traceability, and quality standards. Only sectors and companies meeting these requirements will fully benefit, making ESG compliance a strategic imperative for international competitiveness.

Sectoral Reforms in Gems, Jewellery, and Services

India’s gem and jewellery sector, valued at $28.7 billion, seeks duty cuts, SEZ reforms, and policy changes to maintain competitiveness amid global demand shifts. Services and technology sectors are also expanding, with India’s GCCs expected to reach $100 billion in annual revenue by 2030.

Supply Chain Realignment for Shelter Materials

The new legal requirements are driving increased demand for specialized construction materials, ventilation, and reinforced concrete. This is prompting supply chain adjustments, nearshoring strategies, and opportunities for international suppliers, but also risks of bottlenecks and price volatility.

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.

IMF-Driven Privatisation and Reforms

Pakistan is selling state assets and implementing governance reforms to meet IMF bailout conditions. These measures aim to reduce fiscal deficits and attract investment, but also raise concerns about job losses, social impact, and national control over strategic sectors, affecting investment strategies and market entry.

China-Japan Rare Earth Tensions

China’s restrictions on rare earth and dual-use exports to Japan threaten critical supply chains in automotive, electronics, and defense. Potential GDP losses could reach $17 billion if curbs persist, pressuring Japanese industry and prompting diversification efforts.

Monetary Policy Shifts and Inflation

Turkey’s central bank has shifted to a cautious easing cycle, lowering the policy rate to 37% as inflation fell to 30.9% in December 2025. While investor confidence is improving, inflation volatility and policy uncertainty remain significant risks for business planning and financing.

EU-UK Relations and Market Access

The UK government is exploring closer alignment with the EU single market to offset Brexit-related losses. Improved EU ties could boost UK GDP and productivity, but ongoing trade tensions and regulatory divergence continue to hamper seamless access for UK firms to the EU market.

Persistent Political and Corruption Risks

High-profile anti-corruption raids, including against opposition leader Yulia Tymoshenko, highlight ongoing governance challenges. Political infighting and corruption allegations can delay reforms, undermine EU accession, and complicate the investment climate, despite progress in institutional reforms and external oversight.

Canada–China Tariff and Trade Reset

Canada and China have reached a landmark agreement reducing tariffs on Chinese electric vehicles and Canadian canola, seafood, and peas. This deal reopens key export markets for Canadian agriculture and signals a strategic shift toward diversifying trade away from the U.S., with significant implications for supply chains and investment flows.

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.

Foreign Capital Inflows Remain Resilient

Despite global volatility, Indonesia attracted Rp1.44 trillion (US$93 million) in foreign capital inflows in early 2026, mainly into equities and securities. Steady inflows reflect investor confidence in Indonesia’s macroeconomic fundamentals and growth prospects.