US Secondary Tariffs Escalate Isolation

The US has imposed a 25% tariff on all countries trading with Iran, targeting key partners like China, India, and Turkey. This unprecedented move intensifies Iran’s economic isolation, disrupts supply chains, and forces global firms to reassess cross-border operations.

Regional Security and Military Risk

US and Israeli military actions, including strikes on Iran’s nuclear facilities, and threats of further intervention, heighten regional tensions. The risk of conflict escalation or disruption of the Strait of Hormuz threatens global shipping and energy flows.

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.

International ‘Board of Peace’ Governance Experiment

The US-led ‘Board of Peace’—involving multiple global actors—aims to oversee Gaza’s reconstruction and security. Israel’s recent agreement to participate marks a policy shift. However, questions over legitimacy, authority, and buy-in from Palestinians and Hamas create operational and reputational risks for international businesses.

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.

Israel’s Strategic Expansion in the Red Sea

Israel’s recognition of Somaliland and moves to secure maritime access in the Horn of Africa signal a major strategic shift. This enhances Israel’s security and logistics options but risks regional backlash, complicates relations with China, Turkey, and Arab states, and introduces new geopolitical uncertainties for international business operations.

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.

Complex China-Australia Relationship Persists

Despite trade frictions, China remains Australia’s largest trading partner. Bilateral relations have stabilized post-2022, but strategic tensions over security, critical minerals, and regional influence continue to shape business risk and investment decisions.

Trade Diversification Amid US Tariffs

Despite increased US tariffs, South Korea has diversified its export markets, expanding shipments to ASEAN, the EU, and India. This strategy reduces vulnerability to US policy shifts and enhances resilience in the face of rising global protectionism, impacting trade flows and investment decisions.

Geopolitical Risks and Policy Volatility

India faces heightened geopolitical risks, including US sanctions threats, trade deal delays, and shifting global alliances. These factors create policy volatility, impacting FDI flows, supply chain strategies, and the predictability of the business environment for international firms.

International Security Guarantees for Ukraine

Ukraine’s allies, including the US, France, and UK, are finalizing robust security guarantees and peacekeeping arrangements. These legal commitments aim to deter future Russian aggression and stabilize the business environment, crucial for investor confidence and long-term operations.

US-Israel Strategic Aid Recalibration

Recent US legislative debates and Israel’s stated intent to reduce military aid dependence signal a shift in the bilateral relationship. The $38 billion aid package expiring in 2028 and negotiations for a new 20-year deal impact Israel’s defense sector, technology partnerships, and investor risk assessments.

UK Industrial Strategy and Investment Zones

The UK’s 10-year growth plan focuses on attracting investment in finance, life sciences, clean energy, and manufacturing. New investment zones, freeports, and public-private partnerships are designed to enhance competitiveness and supply chain innovation.

Semiconductor Tariffs and Industrial Pressure

The US is leveraging tariffs to coerce Korean chipmakers into expanding US-based manufacturing. Taiwan secured exemptions with $250 billion investment, while Korea faces pressure for similar commitments. These developments threaten Korea’s semiconductor sector, a cornerstone of its export economy.

Hamas Disarmament and Security Dilemmas

The demilitarization of Hamas remains a central, unresolved issue. US and Israeli insistence on full disarmament is met with resistance, and the lack of clear enforcement mechanisms heightens the risk of renewed conflict, affecting supply chains, insurance costs, and investment planning.

Evolving Foreign Investment Climate

China’s M&A market is rebounding, with deal value projected to rise 13% in 2026. Regulatory reforms and improved market conditions are attracting strategic and financial investors, though persistent geopolitical and legal risks require careful due diligence for foreign entrants.

Humanitarian Crisis and Aid Access Constraints

Israel’s control over Gaza’s borders and restrictions on humanitarian aid have led to severe shortages and a potential famine. The reopening of the Rafah crossing is anticipated but not guaranteed. These dynamics disrupt logistics, increase compliance risks, and heighten reputational concerns for multinationals.

Brexit Frictions Persist For Trade

Despite minor resets, the UK’s refusal to rejoin the EU single market or customs union continues to cause significant trade friction, with Brexit estimated to have reduced GDP by 6-8%. Ongoing barriers hamper supply chains and investment flows, limiting economic recovery.

Surge in M&A and Privatization Activity

Mergers and acquisitions doubled in 2025, reaching $11.8 billion, with foreign investors—especially from Germany and France—leading 55 deals. Privatizations, notably in energy and infrastructure, offer new entry points and competitive dynamics for global investors.

Infrastructure Investment and Financing Innovation

India is targeting $2.2 trillion in infrastructure investment by 2030, launching risk guarantee funds and PPP models to unlock private capital. Major rail, logistics, and energy projects promise improved connectivity, reduced costs, and new opportunities for foreign investors and supply chain operators.

Geopolitical Tensions and Maritime Risks

US-Russia standoffs over tanker seizures and sanctions enforcement are escalating geopolitical risks in key shipping lanes. Businesses face heightened exposure to asset seizures, legal disputes, and retaliatory measures, impacting global operations and insurance costs.

Massive Western Financial and Security Aid

The EU approved a €90 billion loan and the US is negotiating an $800 billion postwar recovery package for Ukraine. These funds, tied to reforms and military needs, are vital for budget stability, reconstruction, and investor confidence, but are contingent on ongoing anti-corruption efforts.

Logistics, Ports, and Infrastructure Strain

Chronic underinvestment and operational challenges in logistics, ports, and transport infrastructure continue to disrupt supply chains. Flight delays, port congestion, and rail bottlenecks undermine export competitiveness and increase costs for international businesses operating in or sourcing from South Africa.

Macroeconomic Stabilization and Investor Confidence

The Egyptian pound has appreciated, inflation slowed to 12.3%, and remittances rose 42.5% to $37.5 billion. These improvements, alongside rising FDI and portfolio inflows, reflect cautious optimism but remain vulnerable to external shocks and reform momentum.

Inflation Moderation and Currency Stability

Annual inflation fell to 10.3% in December 2025 from 23.4% a year earlier, mainly due to lower food prices. However, non-food inflation remains high, and the Egyptian pound is under pressure from debt and import needs, affecting consumer demand and business costs.

IMF Program Constraints and Policy Flexibility

Pakistan is negotiating with the IMF for greater fiscal flexibility in the 2026–27 budget, seeking to relax primary balance and deficit targets. Strict IMF conditions have constrained growth, prompting calls for lower taxes and tariffs to stimulate investment and exports.

Ambitious Double-Digit Growth Targets

Vietnam is targeting sustained GDP growth of over 10% annually through 2030. This aggressive goal is tied to deep economic reforms, industrial upgrading, and infrastructure investment, but its feasibility is challenged by global trade headwinds, tariff risks, and the need for innovation-driven growth.

Tourism Sector Recovery and Rebranding

Thailand targets a record 3 trillion baht in tourism revenue for 2026, leveraging global icons and digital campaigns to attract high-spending visitors. However, safety concerns, border tensions, and slow recovery in some regions continue to impact tourism flows and sector stability.

Crypto Asset Regulation Tightens

From January 2026, all UK crypto transactions must be reported to HMRC, ending privacy and imposing strict compliance on exchanges. This reform increases regulatory oversight, tax collection, and transparency, but may deter investment and innovation in the sector.

Infrastructure Megaprojects and Financing

Saudi Arabia raised $13 billion for infrastructure projects in power, water, and utilities, with a 2026 borrowing plan totaling $57.9 billion. These investments underpin economic growth, supply chain resilience, and private sector participation, crucial for international business operations.

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.

Energy Sector Diversification and Deals

Egypt signed landmark gas import deals with Israel ($35 billion) and Qatar (24 LNG cargoes for 2026), responding to declining domestic output. These agreements secure energy supplies, support regional hub ambitions, and affect industrial competitiveness and investor confidence.

Data Protection and Regulatory Scrutiny

High-profile incidents like the Coupang data breach have intensified regulatory scrutiny on data protection and corporate transparency. International companies must strengthen compliance, risk management, and stakeholder communications to navigate South Korea’s evolving regulatory landscape.

Geopolitical Realignment and Indo-German Partnership

Germany is deepening its strategic partnership with India, signing 19 agreements on defense, technology, critical minerals, and green energy. This realignment aims to reduce reliance on China and Russia, enhance supply chain resilience, and position Germany as a key player in the Indo-Pacific region.

Escalating Western Sanctions Pressure

Western sanctions on Russia, especially targeting energy, finance, and technology, have intensified in 2025-2026. These measures have led to a 24% drop in oil and gas revenues and a 35% weekly loss in oil export income, severely constraining Russia’s budget and global trade integration.

Major Gulf Investments Reshape Economy

Qatar’s $3.5 billion initial payment for a $29.7 billion coastal development signals a surge in Gulf investment. These mega-projects offer hard currency and jobs, but raise questions about long-term economic sustainability and the government’s reliance on asset sales.