Sanctions Evasion via Regional Networks

Thousands of Iranian companies are registered in Georgia, often at single addresses, raising concerns about sanctions evasion. These entities engage in diverse sectors, potentially facilitating illicit financial flows and circumventing international restrictions. This network complicates enforcement of sanctions and poses reputational risks for businesses involved in regional trade with Iran.

Resistance Economy and Domestic Adaptation

In response to sanctions, Iran pursues a 'resistance economy' focused on self-sufficiency, domestic production, and trade with non-Western partners like China and Russia. While this strategy aims to mitigate external pressures, structural vulnerabilities and limited market access constrain its effectiveness, impacting long-term economic resilience and foreign trade opportunities.

Taiwan Semiconductor Manufacturing Constraints

TSMC, Taiwan's semiconductor giant, confirms moving fabs off-island is impossible due to 80-90% production concentration in Taiwan. Despite geopolitical risks, Taiwan remains critical to global chip supply, especially for AI applications. Discussions with clients about relocation highlight supply chain vulnerabilities but underline Taiwan's irreplaceable role in advanced semiconductor manufacturing.

Agribusiness Environmental Scrutiny

Brazil's agribusiness, the largest greenhouse gas emitter and a key economic sector, faces increasing global scrutiny ahead of COP30. Despite efforts to showcase sustainable practices, the sector's role in deforestation and environmental impact poses risks to exports and international trade relations, especially with the EU and US imposing stricter environmental compliance requirements.

Housing Shortage Threatens Recovery

Germany faces a severe housing shortage exceeding 1.2 million units, particularly in urban centers. This crisis restricts labor mobility, deters skilled immigration, and suppresses economic growth by limiting workforce availability. High rents and construction bottlenecks exacerbate social inequality and dampen consumer spending, posing a significant drag on Germany's fragile economic recovery.

Investment in High-Value Sectors and FDI

Despite economic headwinds, Thailand attracts foreign direct investment in high-value sectors like electric vehicles, data centers, and clean energy. Government initiatives and coordinated policies aim to transform the economy, fostering innovation and sustainable growth, which could offset short-term weaknesses and enhance long-term competitiveness.

Indian Banking Sector Resilience

Indian banks demonstrate strong resilience to global economic shocks, with low exposure to tariff-affected sectors and improved corporate deleveraging. Despite expected softening asset quality and rising credit costs, banks maintain robust capital buffers and credit growth prospects. This financial stability underpins India's capacity to absorb external shocks and sustain credit flow to the economy.

Rare Earth Minerals Supply Chain Risks

China's dominance in rare earth element mining and processing, combined with export controls and US tariff responses, threatens critical supply chains for technology and defense industries. This dynamic pressures companies to seek alternative sources, invest in strategic reserves, and navigate increased costs and regulatory complexities.

Economic Recovery Fragility and Fiscal Challenges

Despite recent macroeconomic stabilization supported by IMF programs and improved foreign exchange reserves, Pakistan’s recovery remains fragile. Fiscal mismanagement, inflationary pressures, flood-related reconstruction costs, and global shocks threaten to reverse gains, complicating efforts to achieve sustainable growth.

German Economic and Industrial Decline

Germany is experiencing a structural economic downturn marked by industrial production losses of nearly 25% since 2018, widespread insolvencies, and significant job cuts in manufacturing. The hospitality sector also suffers declining revenues. This deindustrialization trend threatens the broader economy, reducing consumer spending and undermining Germany's global competitiveness.

Cybersecurity Vulnerabilities

South African firms are increasingly exposed to cyber attacks due to infrastructure weaknesses, skills shortages, and regulatory complexities. Frequent ransomware and data breaches threaten business continuity and national security, underscoring the need for enhanced cybersecurity investments and regulatory compliance to protect sensitive data and maintain investor confidence.

Current Account Deficit and Trade Imbalances

Turkey faces a substantial current account deficit, forecasted at $3.1 billion for November and $10.5 billion for 2024. High domestic demand drives imports, while export growth remains constrained. Persistent deficits pressure foreign exchange reserves and may limit Turkey's ability to finance external obligations, impacting trade sustainability and investment flows.

Currency Volatility and Yen Depreciation

The Japanese yen has weakened to multi-month lows against the US dollar, driven by expectations of continued monetary easing and fiscal expansion under Takaichi’s administration. This depreciation boosts export competitiveness but raises import costs, fueling inflationary pressures. The government has signaled readiness to intervene in currency markets to curb excessive volatility, reflecting the delicate balance policymakers face between supporting growth and maintaining currency stability.

Supply Chain Vulnerabilities and Rare Earths

South Korea faces significant supply chain risks due to China's tightening export controls on rare earth minerals essential for semiconductors and electric vehicles. The government is actively coordinating interagency efforts to mitigate disruptions, highlighting the strategic importance of securing critical materials for technology sectors and maintaining global competitiveness.

Investor Concerns over Taxation and Regulatory Environment

High effective corporate tax rates, sudden policy reversals, and inconsistent regulatory enforcement increase the cost and risk of doing business. These factors discourage long-term investment and complicate strategic planning for multinational and domestic firms alike.

Private Sector Investment Growth

Private sector investments surged by 73% in the last fiscal year, leading Egypt’s economic expansion. This growth signals a shift towards a more dynamic, market-driven economy, boosting manufacturing, tourism, and IT sectors. It enhances Egypt's attractiveness for investors and supports diversification of the economy, positively impacting supply chains and business operations.

Logistics Sector Pressures and Digital Transformation

German logistics firms face a challenging 2026 with marginal growth expected amid economic uncertainty and geopolitical risks. The sector anticipates increased cyber threats and is banking on automation, digitalization, and AI to improve efficiency and resilience, but investment and adaptation remain critical concerns.

End of AGOA and Trade Diversification

The expiration of the African Growth and Opportunity Act (AGOA) marks a pivotal shift in South Africa's trade relations with the US. SA is pursuing new trade agreements with Brazil and Japan, emphasizing market diversification and SME engagement to mitigate risks from US trade policy shifts and enhance export competitiveness.

Geopolitical Trade Fragmentation Risks

South Africa faces economic vulnerability due to global trade fragmentation and rising US-China tensions. The country’s neutrality in emerging trade blocs risks marginalization, threatening supply chain stability and export markets. Strategic inertia in adapting to this new multipolar trade environment could undermine South Africa’s industrial and mineral wealth potential, impacting investment and growth.

Low Investment Resilience and Risk Profile

Pakistan ranks among the least resilient countries globally in the Global Investment Risk and Resilience Index, reflecting weak governance, political instability, and limited adaptive capacity. This poor ranking highlights entrenched vulnerabilities that deter investors and complicate efforts to achieve sustainable economic growth.

Cybersecurity Risks and Economic Impact

The Jaguar Land Rover cyberattack, with an estimated £1.9 billion economic cost, highlights the growing threat of cyber incidents to UK businesses. Cybersecurity vulnerabilities pose significant risks to supply chains, operational continuity, and investor confidence, necessitating increased investment in digital defenses and risk management frameworks.

Political Risk and Investment Protection

Increasing global political instability, nationalism, and conflicts necessitate political risk insurance (PRI) for multinational firms. PRI mitigates losses from expropriation, political violence, and regulatory changes, becoming essential for managing uncertainties in cross-border investments and safeguarding profits.

Fiscal and Debt Challenges

Brazil's government grapples with high public debt and fiscal deficits exacerbated by pandemic spending. Rising borrowing costs and market volatility signal investor concerns, pressuring the government to implement fiscal reforms. Corporate leverage is also high, with 25% of large companies struggling with debt, impacting investment and economic stability.

Diamond Industry Crisis

Israel’s historic diamond export sector faces an existential crisis due to U.S. tariffs, global competition, and declining demand. The imposition of a 15% tariff on Israeli diamonds, contrasted with tariff exemptions for European competitors, threatens thousands of jobs and export revenues. Government intervention is urgently needed to preserve this strategic industry and maintain global market share.

Political Instability and Governance Crisis

France faces significant political instability marked by fragmented parliament, frequent government changes, and no-confidence votes. This paralysis undermines policy effectiveness, delays budget approvals, and heightens uncertainty, negatively impacting investor confidence, business planning, and economic growth prospects, with potential spillover effects on the Eurozone's political cohesion and financial markets.

Impact of Energy Supply Disruptions on Europe

Russian attacks on Ukraine’s gas infrastructure necessitate increased gas imports from European neighbors, exerting pressure on regional energy markets. Although abundant LNG supplies mitigate price spikes, the situation underscores Europe's energy interdependence and the need for coordinated policy responses to ensure supply security during winter.

Impact of Internet Suspensions on Digital Economy

Government-imposed mobile internet shutdowns during protests disrupt the digital economy, halting income for gig workers and freelancers reliant on connectivity. This exacerbates economic hardship, reduces foreign exchange earnings, and undermines the growth potential of Pakistan’s IT and digital service sectors.

Rising Sovereign Debt and International Funding

Saudi Arabia's debt has surged due to mega-project financing and lower oil revenues, pushing government debt to over 36% of GDP by 2030. Domestic liquidity constraints have led to increased reliance on international debt markets, with sovereign and corporate bond issuances rising sharply, signaling structural dependence on foreign capital for economic transformation.

Corporate Debt and Financial Sector Risks

Emerging market corporate bond distress, including in Turkey, signals rising credit risks amid high borrowing costs and inflation. Investigations into major conglomerates and deteriorating bank asset quality increase financial sector vulnerabilities, potentially undermining investor confidence and access to capital, which are crucial for sustaining business operations and economic growth.

Textile Industry Decline Due to Imports

Indonesia's textile sector struggles with competition from cheap imported goods, including illegal and secondhand products, leading to an 80% drop in sales and closure of 40% of small and medium garment producers since the pandemic. Despite regulatory efforts to tighten import controls, the sector faces significant challenges in reviving domestic manufacturing and protecting local businesses.

Coal Industry Crisis and Economic Weakness

Russia's coal sector faces a severe crisis with plummeting global prices, soaring costs, and sanctions-induced export challenges. Losses have surged, threatening regional employment and tax revenues. Transportation bottlenecks and discounted exports to Asia exacerbate financial strain. This sector's collapse signals broader industrial contraction and socio-economic risks, undermining Russia’s economic resilience and regional stability.

Robust Economic Growth

Vietnam's GDP growth of over 8% in 2025, despite global trade tensions and tariffs, underscores its economic resilience. Driven by strong industrial output, manufacturing, and services recovery, this growth positions Vietnam as a leading emerging economy in Asia, attracting sustained foreign investment and supporting expanding domestic consumption and export diversification.

International Isolation Risks

Israel faces growing diplomatic and economic isolation due to ongoing conflict and regional tensions. Reduced foreign direct investment, withdrawal of international partnerships, and potential trade restrictions threaten economic growth, innovation, and supply chain stability, compelling businesses to reassess risk exposure and operational dependencies in Israel.

Critical Minerals Supply Chain Shift

Australia is emerging as a strategic hub for rare earths and critical minerals, driven by U.S. investments totaling billions to reduce reliance on China. Projects like VHM’s Goschen and Sunrise Energy Metals’ Syerston receive significant funding under the U.S. Supply Chain Resiliency Initiative, enhancing Australia’s role in global supply chains for EVs, defense, and clean energy.

Currency Volatility and Won Depreciation Risks

The Korean won has experienced sustained weakness against the US dollar, exacerbated by US-China trade tensions and domestic political instability. The Bank of Korea has issued verbal interventions and is monitoring risks closely, as prolonged depreciation could increase import costs, inflation, and capital outflows, impacting investment and economic stability.

US Dollar Dominance and Currency Diversification

Despite the US dollar's dominant role in global reserves and trade finance, there is a gradual shift towards diversification, with increased use of alternative currencies like the Chinese yuan. Central banks are developing cross-border settlement systems to reduce dollar reliance, impacting international finance and currency risk management.