Market Volatility and Recession Fears

Global markets have reacted with volatility to the tariff threats, with safe-haven assets like gold surging and defense stocks rising. Analysts warn the UK could be dragged into recession, with particular risk to key sectors such as manufacturing, whisky, and automotive exports.

Digital Transformation and Data Center Expansion

Thailand is investing nearly 100 billion baht in new data centers to support digital transformation and emerging industries. This positions the country as a regional technology hub, but also raises energy demand and infrastructure challenges.

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.

Energy Sector Expansion and Transition

Recent agreements with China and Gulf states are boosting Canadian oil, LNG, and uranium exports, while also fostering collaboration in renewables and clean technology. These developments are pivotal for Canada’s energy sector, supporting both traditional exports and the transition to net-zero goals.

Currency Volatility and Inflation Management

Egypt has reduced inflation to 12.3% amid global shocks but remains vulnerable to currency volatility, external financing gaps, and import costs. Monetary policy targets further inflation reduction, while international aid and remittances provide temporary relief. Persistent macroeconomic imbalances continue to affect business planning and consumer demand.

Regulatory Adjustments Impacting Business

Recent and upcoming regulatory changes span financial markets, healthcare, and foreign labor policy. These reforms seek to enhance business transparency, streamline market operations, and adapt to demographic realities, requiring international firms to closely monitor compliance and adapt strategies.

Complex Sanctions and Regulatory Landscape

Ukraine’s regulatory environment is shaped by evolving sanctions on Russia and new trade controls. Businesses face compliance challenges, especially regarding dual-use goods and financial transactions, requiring constant monitoring of legal and operational risks.

Regulatory and Economic Reform Momentum

Recent reforms, including public-private partnerships in energy and logistics, have improved investor sentiment. South Africa’s removal from the FATF greylist and credit rating upgrades signal progress, but policy uncertainty and slow execution remain barriers to sustained investment and economic growth.

Environmental Governance and ESG Pressures

Environmental and labor issues, particularly in mining and palm oil, have led to regulatory crackdowns, including permit revocations for violators. International investors face growing ESG expectations, and Indonesia’s ability to enforce standards will shape its reputation and access to sustainable finance.

Infrastructure Safety and Operational Risks

Recent fatal crane accidents in major infrastructure projects highlight persistent safety and regulatory enforcement issues. Such incidents can delay project delivery, raise insurance and compliance costs, and affect Thailand’s reputation as a reliable investment destination.

Critical Minerals and Geoeconomic Competition

Pakistan’s rare earth and mineral sector is attracting US and Chinese interest, but faces governance, certification, and processing challenges. Despite high-value deals, lack of infrastructure and provincial disputes limit immediate supply chain impact, making the sector more a geopolitical lever than a business engine.

Supply Chain Disruptions from Conflict

Ukrainian drone and missile strikes on Russian refineries and logistics hubs in 2025 led to the lowest pipeline deliveries since 2010 and a 25% drop in energy income. Such disruptions threaten supply reliability for global partners and heighten operational risks.

Energy Transition and Russian Sanctions

Germany and nine North Sea states agreed to massively expand offshore wind capacity, aiming for energy independence from Russia by 2050. This strategic shift, reinforced by new EU sanctions on Russian gas, will reshape energy supply chains and create opportunities in renewable energy and related industries.

Political Uncertainty and Governance Risks

Upcoming municipal elections and potential leadership changes introduce policy unpredictability. While recent reforms and coalition governance have improved sentiment, concerns remain over service delivery, regulatory consistency, and the ability to sustain economic reforms, impacting long-term investment decisions.

Currency Collapse and Hyperinflation

The Iranian rial has fallen to over 1.4 million per US dollar, losing 45% of its value in a year. Inflation exceeds 42%, eroding purchasing power, raising import costs, and destabilizing the business environment for both local and foreign enterprises.

Strategic Supply Chain Diversification

Vietnam is consolidating its role as a global supply chain hub, benefiting from shifts away from China. The government is actively promoting resilience, infrastructure upgrades, and trade diversification to mitigate external shocks, making Vietnam increasingly attractive for international manufacturers and investors.

Escalating US-China Trade Tensions

Renewed tariffs and trade disputes under the Trump administration have intensified US-China economic rivalry, disrupting global supply chains and raising costs for businesses. These tensions are driving market realignments, investment shifts, and increased uncertainty for international operations.

Regulatory Reform Accelerates Modular Growth

Recent changes in state building codes, especially in NRW and Baden-Württemberg, are streamlining approvals and reducing compliance costs for modular projects. This regulatory shift is expected to boost investment, speed up project timelines, and enhance market attractiveness for international players.

Supply Chain Diversification and Resilience

Brazilian and regional supply chains are undergoing realignment due to geopolitical tensions, climate events, and infrastructure investments. Companies are investing in logistics, digital tools, and nearshoring to mitigate disruption risks and enhance operational reliability across the Americas.

Record Export Growth Driven by Chips

South Korea’s exports surged 34% year-on-year in January to $65.85 billion, led by booming semiconductor demand for AI servers and memory chips. This export momentum, especially to China and the US, underpins economic resilience but faces risks from protectionist policies and supply chain disruptions.

Dynamic Trade Policy and Export Incentives

Indonesia is leveraging trade agreements, such as the zero-tariff policy for tuna exports to Japan under IJEPA, to boost export competitiveness. Such policies open new market opportunities, particularly in key sectors like fisheries, and support diversification of export destinations.

EU-Mercosur Free Trade Agreement

The historic EU-Mercosur agreement, signed in January 2026, eliminates tariffs on over 90% of trade between Brazil and the EU, creating the world’s largest free trade area. This is expected to boost Brazilian GDP by €6 billion by 2044, expand exports, and attract investment, but also introduces European regulatory and sustainability standards.

US-Israel Strategic Partnership and Aid

The US continues to provide substantial military and economic aid to Israel, reinforcing bilateral ties and defense cooperation. This partnership underpins Israel’s security posture but also shapes the regulatory and sanctions environment, influencing international investment and technology transfer.

Escalating Western Sanctions Enforcement

Western powers have intensified enforcement of sanctions on Russian oil exports, including direct maritime interdictions and seizures of shadow fleet tankers. This escalation increases legal, operational, and reputational risks for businesses involved in Russian energy logistics or trade, and heightens global supply chain volatility.

Political Instability and Budget Deadlock

France faces persistent political fragmentation, with the 2026 budget forced through parliament using Article 49.3. This instability undermines policy predictability, complicates fiscal planning, and increases uncertainty for international investors and businesses operating in France.

Escalating US Tariff Policy Volatility

Recent months have seen the US intensify its use of tariffs as a strategic tool, with threats of 100% tariffs on Canadian goods and new sectoral levies. This volatility increases uncertainty for global supply chains and investment planning, impacting cross-border trade flows and business costs.

North American Trade Frictions and CUSMA Uncertainty

US-Canada relations are strained by tariff threats and disputes over third-party trade deals, notably with China. The US-Mexico-Canada Agreement (CUSMA) faces review and potential renegotiation, raising risks for businesses reliant on North American supply chains and market access.

Escalating Political Instability and Protests

Iran is experiencing its most significant unrest since 1979, with over 2,500 deaths and 18,000 arrests reported. The protests, sparked by economic collapse and currency devaluation, have evolved into direct challenges to the regime, severely impacting business confidence and operational continuity.

Geopolitical Realignment and Supply Chain Security

Saudi Arabia is deepening ties with China, the US, and regional partners, while pursuing new defense and economic alliances. These shifts impact energy flows, supply chain resilience, and market access, requiring international businesses to closely monitor evolving geopolitical risks.

Japan-China Tensions and Economic Security

Escalating tensions with China, including sanctions and military posturing, have led Japan to fortify its economic security laws, diversify supply chains, and boost domestic chip production. These measures are crucial for international businesses exposed to regional disruptions and coercive economic tactics.

New Tariff Regimes and Trade Policy Volatility

The US has imposed sweeping tariffs, including 25% on trade with Iran and advanced AI chips sold to China. These measures create uncertainty for multinationals, disrupt established supply chains, and may provoke legal challenges and WTO disputes.

China-Brazil Strategic Alignment

China is deepening its strategic partnership with Brazil, especially in agriculture and infrastructure, amid shifting global power dynamics. Increased Chinese imports of Brazilian soybeans and infrastructure investments strengthen bilateral economic ties and supply chain resilience.

Labor Market Tightness and Transformation

The US labor market remains tight, with low unemployment and rising wages, while technological adoption and immigration policy shifts are transforming workforce dynamics. These trends impact talent acquisition, operational costs, and long-term competitiveness for both domestic and international firms.

Rafah Crossing and Border Controls Impact Trade

The partial and conditional reopening of the Rafah crossing with Egypt, under strict Israeli oversight, restricts the flow of goods and people. These controls hinder humanitarian aid, economic recovery, and cross-border trade, directly affecting supply chain resilience and regional business operations.

Vision 2030 Drives Economic Diversification

Saudi Arabia’s Vision 2030 reforms are transforming the business landscape by reducing oil dependence, opening new sectors, and attracting record foreign investment. Over $400 billion in investment volume and a fivefold increase in FDI since 2017 underscore the scale and momentum of economic diversification.

Suez Canal Disruptions and Revenue Loss

Regional conflicts, particularly the Gaza war, have caused significant disruptions to Suez Canal traffic, resulting in an estimated $9 billion revenue loss over two years. Rerouted shipping increases global supply chain costs and reduces Egypt’s vital foreign exchange earnings, impacting trade and fiscal stability.