Labour Market Strains and Skills Shortages

Unemployment in the UK has risen to 5.1%, the highest in nearly a decade, with youth joblessness and skills gaps posing challenges for business operations. Companies must adapt workforce strategies to mitigate risks from AI adoption and demographic shifts.

Natural Disaster Preparedness and Infrastructure

Japan's vulnerability to earthquakes, tsunamis, and typhoons necessitates robust disaster preparedness and resilient infrastructure. This reality affects insurance costs, supply chain continuity, and investment risk assessments, prompting companies to incorporate disaster risk management into their operational frameworks.

Agribusiness Drives Export Growth

Agribusiness accounted for 22% of Brazil’s exports in 2025, with coffee, soy, corn, and meat leading. The sector grew 7.1%, but faces volatility from global commodity prices, sanitary barriers, and sustainability demands, especially in EU and Asian markets.

Geopolitical Stability

Regional tensions and Saudi Arabia's involvement in Middle Eastern conflicts affect investor confidence and trade routes. Stability in the kingdom is crucial for maintaining secure supply chains and fostering a favorable business environment for international investors.

Persistent Inflation and Policy Uncertainty

Despite strong GDP growth, inflation remains elevated, fueled by tariffs, a weaker dollar, and policy ambiguity. Businesses face higher input costs and pricing pressures, with monetary policy divided between supporting growth and containing inflation, complicating planning for investment and operations.

US-China Tech Rivalry Impact

South Korea faces strategic challenges amid escalating US-China tensions, particularly in semiconductor and technology sectors. This rivalry influences South Korea's export policies, supply chain alignments, and foreign investment flows, compelling firms to navigate complex geopolitical risks and diversify markets to mitigate dependency on either superpower.

Geopolitical Risks and Security Concerns

Heightened geopolitical tensions, including relations with Russia and China, impact UK trade policies and investment climates. Security concerns influence supply chain resilience strategies and necessitate careful risk assessment for businesses engaged in sensitive sectors or reliant on global sourcing.

Fiscal Discipline and Tax Reform Challenges

Thailand’s Medium-Term Fiscal Framework targets deficit reduction and public debt control, with phased VAT increases and tax reforms. Political will is crucial; delays or reversals risk credit downgrades, higher funding costs, and reduced fiscal space for crisis response.

Mexico’s Strategic Role in Regional Geopolitics

Mexico’s humanitarian oil shipments to Cuba and its diplomatic stance on US interventions highlight its growing influence in Latin American geopolitics. US pressure to end fuel exports and regional instability could impact Mexico’s foreign policy, trade, and energy relations.

Energy Transition Challenges

South Korea faces challenges transitioning to renewable energy while maintaining industrial competitiveness. Energy security concerns and investments in green technologies impact operational costs and attract foreign investors focused on sustainable practices, influencing long-term business planning.

Labor Market and Wage Trends

Rising wages and labor reforms aimed at improving worker rights impact manufacturing costs and competitiveness. Enhanced labor protections under USMCA also influence multinational corporations' investment strategies and supply chain decisions.

Rare Earth Supply Chain Vulnerabilities

Japan’s heavy reliance on Chinese rare earths—still 60-70% of supply—faces new threats as Beijing considers tighter export permit reviews. Prolonged restrictions could cost Japan up to $17 billion annually, impacting global supply chains for EVs, electronics, and defense.

Political Instability and Security Risks

Widespread protests, opposition crackdowns, and increased military influence have heightened political uncertainty. These factors disrupt business operations, complicate regulatory predictability, and pose reputational and operational risks for international investors and supply chains.

Energy Sector Transformation and Risks

Ongoing reforms and privatisation in energy, including refinery upgrades and power sector restructuring, seek to address chronic inefficiencies. However, supply disruptions, financial fragility, and regulatory uncertainty continue to threaten energy reliability and investment returns.

Labor Market Dynamics and Skill Development

India's large labor force offers a competitive advantage, but skill gaps and labor market rigidities remain challenges. Government programs aimed at skill development and vocational training are crucial for improving workforce quality, impacting productivity and the success of foreign enterprises.

Labour-Intensive Sector Tax Incentives

The government will cover personal income taxes for workers in labour-intensive industries until 2026, supporting household income and economic stability. This stimulus benefits sectors like textiles, footwear, and tourism, enhancing resilience and competitiveness for international investors.

Political Stability Amid Regional Shifts

Mexico’s government, led by President Sheinbaum, faces mounting external pressures but maintains domestic stability and high-level dialogue with the US. The broader Latin American shift toward market-friendly policies is boosting investor sentiment, but geopolitical risks remain elevated.

Regulatory Modernization and Market Governance

Recent reforms have simplified foreign investor access, eliminated complex qualification barriers, and improved market transparency. However, challenges persist around regulatory clarity, governance standards, and foreign ownership limits, requiring ongoing attention from international investors and partners.

Trade Policy and Tariff Uncertainties

Frequent changes in trade policies, tariffs, and regulatory frameworks create an unpredictable trade environment. This volatility complicates supply chain management and increases compliance costs for exporters and importers, affecting Pakistan's integration into global value chains.

Energy Import and Infrastructure Risks

China's recent military exercises simulated blockades targeting Taiwan's ports and energy routes. With 96% of Taiwan's energy imported, any disruption could severely affect manufacturing, logistics, and business continuity, making energy security a key concern for international investors and supply chain managers.

State-Level Competition for Investment

States like Andhra Pradesh, Odisha, and Maharashtra are aggressively attracting investment, with Andhra Pradesh capturing 25.3% of proposed investments in FY26. This regional competition, driven by policy clarity and infrastructure, is reshaping India’s industrial geography and offering new opportunities for international investors.

Global Competition for Critical Minerals

Australia is central to G7-led efforts to diversify global critical minerals supply chains, countering China’s dominance. International collaboration and investment in Australian mining and processing are accelerating, with implications for technology, defense, and clean energy industries worldwide.

EU Accession and Regulatory Alignment

Ukraine’s push for EU membership is accelerating, with Cyprus’s EU presidency prioritizing negotiations. Progress on accession will drive regulatory reforms, improve market access, and enhance investor confidence, but faces resistance from some EU members.

Political Instability and Governance Challenges

Pakistan faces ongoing political instability marked by frequent government changes and governance issues. This uncertainty undermines investor confidence, disrupts policy continuity, and complicates long-term business planning, thereby increasing country risk for international investors and multinational corporations operating in Pakistan.

Vision 2030 Economic Diversification Drive

Saudi Arabia continues to shift from oil dependency by investing in sectors like tourism, technology, mining, and renewable energy. Vision 2030 reforms drive non-oil GDP growth, foster innovation, and create new opportunities for international trade and supply chain integration.

ESG Standards and Green Transition Pressures

Vietnam is developing tailored ESG standards to enhance compliance and transparency, with major cities and industrial projects prioritizing green and high-tech development. ESG adoption is seen as a competitive advantage, but implementation costs, data transparency, and access to green finance remain hurdles for local and foreign businesses.

Financial Sector Stability and Regulation

France's robust financial sector, underpinned by regulatory reforms, supports international banking and investment activities. Stability in this sector is crucial for capital flows and risk management for multinational enterprises operating in Europe.

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.

Infrastructure Investment and Industrial Policy

Continued emphasis on infrastructure upgrades and industrial policy supports domestic growth and supply chain localization. However, protectionist measures and vertical integration strategies may raise costs, limit market access, and require strategic adaptation for foreign investors and partners.

Trade Diversification Efforts

Iran is actively seeking to diversify its trade partners beyond traditional Western markets, focusing on Asia and regional neighbors. This shift opens new opportunities but also requires navigating complex regional trade agreements and varying regulatory environments.

Digital Sovereignty and Tech Regulation

France is advancing policies to enhance digital sovereignty, including stricter data protection and support for domestic tech firms. This regulatory environment affects international tech companies' operations, cross-border data flows, and investment strategies in the European digital market.

Rare Earth Export Controls Threaten Industry

Japan’s near-total reliance on Chinese heavy rare earths for EVs and electronics faces disruption, with potential GDP losses up to 0.43% if restrictions persist. This jeopardizes automotive, electronics, and defense sectors, forcing global firms to seek alternative suppliers.

Venezuelan Oil Threatens Canadian Exports

The U.S. takeover of Venezuela’s oil sector could rapidly revive heavy crude exports, directly competing with Canadian oil in American refineries. While short-term displacement is limited, long-term risks include market share loss, price discounts, and urgent need for export diversification.

Trade Policy and International Agreements

Brazil's trade policies and participation in regional and global trade agreements shape market access and tariff structures. Changes in trade relations, including with major partners like China and the US, directly impact export-import dynamics and investment attractiveness.

USMCA Uncertainty and Trade Tensions

The upcoming review of the USMCA agreement injects significant uncertainty into North American trade. Potential renegotiations or expiration could disrupt tariff-free access, supply chains, and investment planning, with heightened risks from ongoing US protectionist rhetoric and tariff threats.

Geopolitical Alignments and External Relations

Pakistan's strategic geopolitical position influences its trade and investment landscape. Relations with major powers and regional alliances impact foreign aid, trade agreements, and investment flows, shaping the broader economic environment for international businesses.