Energy Transition and Renewables Surge

Saudi Arabia is rapidly expanding renewable energy capacity, with solar and wind projected to deliver nearly 20% of electricity by 2029. The Kingdom’s energy transition, supported by facilities like CATL’s Riyadh hub, is critical for decarbonization, industrial competitiveness, and compliance with global standards such as the EU’s Carbon Border Adjustment Mechanism.

Tightening Export Controls and Tech Restrictions

Beijing is intensifying export controls on critical goods, including rare earths and dual-use technologies, to safeguard national security and leverage supply chain influence. These measures impact global technology access and increase compliance risks for international firms.

Labor Reform and Compliance Pressures

2026 marks a pivotal year for labor reform enforcement, including stricter inspections, reduced workweek to 40 hours, and higher minimum wages. Companies must adapt to new compliance standards under USMCA commitments, affecting cost structures and operational flexibility, especially for SMEs.

Port and Logistics System Weakness

Persistent inefficiencies in South Africa’s ports and railways, especially at Cape Town and Durban, continue to undermine export competitiveness and supply chain reliability. Despite some reforms, structural weaknesses in logistics remain a major constraint for international trade and business operations.

Geopolitical Tensions Over Taiwan

Escalating China-US and China-Japan frictions over Taiwan have led to sanctions, military drills, and trade restrictions. These developments heighten regional instability, increase compliance risks, and threaten supply chain continuity for international businesses operating in or trading with China.

Security Risks and Regional Tensions

Persistent cross-border terrorism, especially from Afghanistan, and heightened tensions with India threaten supply chains, infrastructure, and investor sentiment. Security alliances with China and Saudi Arabia aim to mitigate risks, but instability remains a critical factor for international business operations.

Escalating Security Commitments in Ukraine

France’s pledge to potentially deploy troops to Ukraine after a ceasefire, in coordination with the UK, signals a new phase of European security engagement. This move increases geopolitical risk, especially with Russia warning that Western troops would be considered legitimate targets, impacting regional stability and investment confidence.

Geopolitical Tensions and Regional Conflict

Recent military clashes with Israel and US strikes on Iranian infrastructure have heightened regional instability. These tensions threaten energy exports, insurance costs, and the safety of international operations in and around Iran.

Moderate Economic Growth, High Inflation

Brazil’s economy is projected to grow around 1.7% in 2026, with inflation remaining high at 12-12.75%. Fiscal stimulus and strong agriculture support growth, but high interest rates and external risks require cautious planning for investment and supply chain strategies.

Trade Policy Uncertainty and EU-Mercosur Tensions

Strong domestic opposition to the EU-Mercosur trade deal, especially from French farmers and parliament, has led to protests and political crises. This uncertainty affects market access, supply chains, and investment strategies for global agribusiness and exporters.

Political Instability and Coalition Uncertainty

2026 local elections test South Africa’s fragile coalition government, with the ANC’s support declining and opposition parties gaining ground. Political fragmentation risks policy inconsistency, complicating long-term investment decisions and raising concerns over governance and service delivery.

Currency Controls and Ruble Weakness

Reduced oil revenues and lower central bank FX sales are weakening the ruble. Currency controls and capital restrictions complicate cross-border transactions, profit repatriation, and risk management for foreign enterprises operating in Russia.

Greenland Sovereignty Crisis Escalates

Intense US pressure to acquire Greenland has triggered a sovereignty crisis, with Denmark and Greenland resisting both purchase and military threats. This standoff poses severe risks to NATO stability, Arctic security, and international business confidence in Danish governance.

Widespread Unrest and Political Instability

Nationwide protests over economic hardship, corruption, and governance have resulted in at least 15 deaths and hundreds of arrests. The unrest signals rising political risk, threatening business continuity and investor confidence.

Supply Chain Relocation and Resilience

Vietnam remains a top destination for supply chain relocation, with firms like Google shifting production from China. However, underdeveloped local supplier networks, logistics gaps, and regulatory bottlenecks present ongoing risks to supply chain resilience and operational efficiency for international manufacturers.

Resilient US Economic Growth Amid Global Shocks

Despite trade barriers and geopolitical uncertainty, the US economy continues to show resilience, with GDP growth above 4% in late 2025. This underpins global demand, supports the dollar, and attracts foreign investment, but also raises questions about sustainability and sectoral disparities.

Japan’s Strategic Response Options

Japan may counter China’s measures by leveraging its dominance in advanced semiconductor materials and equipment. Potential export controls on photoresists could impact China’s chip ambitions, affecting global tech supply chains and investment decisions.

Peace Negotiations and Territorial Uncertainty

Intensive peace talks continue, but Russia rejects European peacekeepers and demands territorial concessions. The lack of clarity over Ukraine’s borders and sovereignty creates significant risk for long-term investment, trade, and operational planning.

Investment Screening And Competition

Reforms in UK merger control and national security investment screening are intensifying, with stricter scrutiny of foreign investments and competition policy. This creates new compliance demands and could slow cross-border deals, affecting strategic investment planning.

Energy Transition and Mineral Security

Japan’s energy transition is challenged by global mineral scarcity and protectionist trends. Dependence on Asian imports for critical components like transformers and copper complicates infrastructure upgrades, affecting international capital flows and project timelines.

Investment Bottlenecks and EEC Land Issues

Land shortages and outdated zoning regulations in the Eastern Economic Corridor (EEC) delay industrial projects and deter foreign investment. The government is fast-tracking reforms, but infrastructure and regulatory bottlenecks remain significant barriers to scaling up high-value manufacturing and technology clusters.

Nuclear Energy Debate Reemerges

Calls for nuclear energy to complement renewables are intensifying, driven by concerns over long-term energy security, cost, and reliability. Policy shifts could reshape Australia’s energy mix, influencing investment strategies and industrial competitiveness beyond 2050.

Infrastructure Bottlenecks and Investment Gaps

Canada’s slow infrastructure planning and delivery, complex regulatory environment, and aging assets hinder competitiveness. The national infrastructure assessment highlights urgent needs in housing, transportation, and energy, affecting business growth and supply chain reliability.

Energy Transition and Cost Pressures

The UK’s energy transition is raising operating costs, particularly in manufacturing and agri-food sectors. Businesses face higher energy bills and delayed investments, underscoring the need for clear policy direction to balance decarbonization goals with affordability and supply security.

Persistent Socioeconomic and Policy Risks

Despite progress, South Africa faces ongoing risks from political uncertainty, municipal debt, and policy missteps. These factors could undermine fiscal stability, disrupt business operations, and affect long-term investment decisions.

Stagnant Growth and Deindustrialization Risks

Germany faces its third year of economic stagnation, with GDP declining by 0.2% in 2024. High taxes, energy costs, and regulatory burdens have triggered capital outflows and job losses, particularly in manufacturing, threatening Germany’s status as Europe’s industrial engine.

Energy Diversification and Security Drive

Turkey is aggressively diversifying its energy mix—expanding renewables, boosting Black Sea gas, and launching nuclear power. Strategic partnerships with ExxonMobil and Chevron, and new LNG deals, aim to reduce import dependency and enhance supply security amid global volatility.

Remote Work and Regulatory Evolution

Remote work is now a permanent fixture in South Korea, prompting new legal frameworks and compliance needs. Consulting demand is rising for digital transformation, cybersecurity, and cross-border HR solutions, directly affecting multinational operations and talent mobility.

Renewable Energy Transition Challenges

Australia’s ambitious shift to renewables is marked by rapid project approvals and grid integration successes, but also rising system costs, policy uncertainty, and continued reliance on coal for grid stability. Businesses face evolving regulatory frameworks and investment risks in the energy sector.

Defense Spending Spurs Industrial Orders

A surge in defense spending has boosted factory orders, with November 2025 seeing a 5.6% monthly increase. This trend, driven by rearmament and infrastructure investment, offers short-term relief but does not fully offset broader industrial weakness or guarantee sustained growth.

Military Dominance and Private Sector Constraints

The Egyptian military’s control over key economic sectors and financial reserves limits private sector growth and transparency. The IMF and investors continue to press for structural reforms and reduced military influence to unlock investment and sustainable growth.

Rare Earth Supply Chain Vulnerabilities

Japan’s near-total reliance on Chinese heavy rare earths for EVs and electronics exposes its supply chains to significant risk. Prolonged restrictions could cost Japan up to $17 billion annually, impacting global manufacturers and investment strategies.

Strategic Supply Chain Realignment

US efforts to reduce reliance on China for critical minerals and advanced manufacturing have accelerated. Initiatives with allies aim to diversify sourcing, but supply chain resilience remains challenged by geopolitical tensions and resource nationalism.

Strategic Green Hydrogen Partnerships Expand

Australia is deepening international cooperation in green hydrogen, exemplified by the Tasmania project with Chinese firm Guofu Hydrogen. This aligns with national policies to scale up hydrogen production, attracting foreign investment and fostering technology transfer.

Escalating Taiwan Strait Tensions

China’s sanctions on U.S. defense firms and increased military drills near Taiwan, in response to the largest-ever U.S. arms sale to the island, have intensified geopolitical risks. This escalation threatens regional stability and global supply chain continuity, impacting cross-border investments.

Energy Costs and Industrial Competitiveness

High energy costs and unreliable infrastructure continue to undermine Pakistan’s industrial competitiveness. Policymakers are considering lowering power tariffs and improving credit access for SMEs to boost manufacturing and attract foreign direct investment, contingent on IMF approval.