War-driven infrastructure disruption

Russian strikes continue to damage power, gas and transport infrastructure, forcing periodic industrial restrictions, blackouts and higher operating costs. More than 9 GW of generation was hit, with only about 4 GW restored, raising acute continuity and logistics risks for investors and manufacturers.

EU-Mercosur Market Access Shift

The EU-Mercosur agreement is moving toward provisional application from May, potentially lowering tariffs across a market of roughly 720 million people. For Brazil, this could expand agribusiness and industrial exports, but ratification disputes and compliance conditions still complicate planning timelines.

Trade Diversion and FDI Repositioning

US-China trade frictions are redirecting manufacturing and sourcing toward Southeast Asia, and Thailand is positioning itself as an alternative production base. This creates export and FDI upside, but also raises scrutiny over transshipment practices, rules compliance, and infrastructure readiness.

Energy Shock Through Hormuz

Japan imports roughly 90% of its crude from the Middle East, leaving industry exposed to Strait of Hormuz disruption. Higher oil, LNG, freight and input costs are squeezing margins, lifting inflation and raising contingency planning needs across supply chains.

FDI Surge Into High-Tech

Registered FDI reached about US$15.2 billion in Q1 2026, up 42.9% year on year, while disbursed capital hit US$5.41 billion. Investment is shifting toward semiconductors, AI, data centres and greener manufacturing, reinforcing Vietnam’s role in supply-chain diversification and higher-value production.

CPEC and Infrastructure Reform Uncertainty

Pakistan continues to court Chinese and other foreign investment, but delays in privatisation, power-sector restructuring, and project execution complicate the investment climate. Infrastructure opportunities remain substantial, yet investors face slower timelines, regulatory uncertainty, and elevated implementation risk.

Oil Boom Lifts External Accounts

Oil exports to China nearly doubled to US$7.19 billion in Q1, supported by Middle East disruption and pre-salt output. Higher crude revenues strengthen Brazil’s trade balance and FX inflows, but deepen commodity reliance and expose planning to geopolitical price swings.

EV Transition Reshapes Industry

Electric vehicles are rapidly changing Thailand’s automotive base as Chinese manufacturers expand local production and finance demand rises. Yet policy clarity matters: investors are watching post-subsidy frameworks, charging infrastructure, electricity costs, and competitive pressure on incumbent auto supply chains.

National Security Regulation Expanding

US regulators are broadening restrictions on Chinese telecom and technology firms, including possible bans on data centres, interconnection, and equipment sales. Combined with tighter semiconductor-related controls, this expands compliance burdens for cross-border tech operations, cloud architecture, vendor choices, and investment screening.

High Rates Suppress Investment

Tight monetary policy, weakening profits and falling business activity are undermining capital formation. Investment fell 2.3% last year and is expected to decline further, while high borrowing costs and softer demand reduce expansion plans, financing availability and corporate resilience.

Fiscal Strain and Ratings

France’s fiscal position remains a leading business risk: Moody’s kept Aa3 but with negative outlook, while the 2025 deficit was 5.1% of GDP and 2026 is targeted at 5.0%. High debt, weaker growth and possible tax increases could raise financing costs.

Sanctions Relief Negotiation Volatility

Ceasefire and nuclear talks have reopened debate on phased sanctions relief, frozen assets and limited waivers, but policy remains highly unstable. Companies face abrupt compliance, payment and contract risks as U.S., Iranian and allied positions remain far apart.

Strong Shekel Squeezes Exporters

The shekel strengthened sharply, with the dollar falling below NIS 3 for the first time since 1995 and down about 5% in 2026. While inflation eased to 1.9%, exporters face margin compression, relocation pressure and increased hedging requirements across manufacturing and services.

Water Stress Challenges Chip Production

Western Taiwan suffered its driest winter in 75 years, prompting water rationing and emergency diversion measures for Hsinchu and Taichung. TSMC has activated conservation steps; prolonged shortages would raise operational risk for semiconductors, electronics manufacturing, and industrial expansion plans.

Shadow Finance And Payment Barriers

Iran’s isolation from mainstream banking continues to push trade into yuan settlement, smaller regional banks, shell companies, and barter structures. Payment opacity, higher transaction costs, and enforcement risk complicate receivables, due diligence, treasury operations, and supplier onboarding for foreign firms.

Power Market Reform Accelerates

Ministers are moving to weaken gas-linked electricity pricing by shifting older renewable assets onto fixed-price contracts and raising the generator levy from 45% to 55%. The reform could stabilize bills and support investment, but changes revenue assumptions across energy-intensive and power sectors.

Cross-Strait Blockade Risk Rising

China’s pressure around Taiwan is intensifying, with nearly 100 naval and coast guard vessels reported near regional waters, versus a more typical 50–60. Businesses should plan for shipping delays, higher insurance costs, rerouting, and potential disruptions to semiconductor and container flows.

Real Estate Rules Shape Investment

Foreign capital is increasingly targeting logistics, data centers, industrial property, and income-generating assets, supported by infrastructure growth. Yet land-use procedures, project approvals, and profit repatriation rules still create friction, affecting site selection, market entry timing, and capital deployment.

Rare Earths and Critical Inputs

U.S. trade officials have stressed the need to preserve access to Chinese rare earth minerals even as tariffs remain in place. This exposes manufacturers to concentrated upstream dependency in magnets and advanced components, making stockpiling, supplier diversification, and geopolitical contingency planning increasingly important.

Housing Weakness and Debt Drag

Housing markets remain split: Toronto and Vancouver prices are falling while Quebec and Atlantic regions stay firmer. High household debt, softer consumer confidence, and elevated mortgage sensitivity are constraining spending, commercial activity, and real estate-linked investment decisions across major urban markets.

Non-Oil Export Base Deepens

Non-oil exports reached a record SR624 billion in 2025, up 15%, lifting their share of total exports to 44%. Growth in services, re-exports, machinery, fertilizers, and food signals broader trade diversification and stronger opportunities for manufacturing and logistics firms.

Macroeconomic Stabilization and Lira Risk

Turkey’s high-inflation, high-rate environment remains the top operating risk, with March inflation at 30.9%, policy rates effectively near 40%, and continued lira management. FX volatility, reserve depletion and expensive local funding raise hedging, pricing and working-capital costs for importers and investors.

Foreign Capital Flows and Debt Risk

Regional conflict triggered major portfolio outflows, with estimates ranging from $4 billion to $8 billion since late February. Although Moody’s kept Egypt at Caa1 with positive outlook, external financing sensitivity, high yields, and refinancing pressures remain important considerations for investors and lenders.

Rising Labor and Regulatory Costs

Businesses are absorbing higher wage bills, labor-market softening, and new worker-related compliance costs. Combined with limited pricing power, these pressures can compress margins, delay expansion, and reduce the attractiveness of labor-intensive UK operations and investments.

Industrial Policy and Export Support

The state is channeling support toward manufacturing and tradables, including EGP90 billion for production, manufacturing, and export promotion, with EGP48 billion in export subsidies. This may improve local sourcing, import substitution, and market-entry prospects across industrial value chains.

Rare Earth Supply Leverage

China’s dominance in rare earth mining and processing is a major strategic supply-chain risk. Export controls, licensing delays, and politically contingent approvals are disrupting automotive, electronics, defense, and clean-tech sectors, forcing firms to diversify sourcing despite higher costs and limited near-term alternatives.

Rising U.S. trade irritants

U.S. officials are escalating pressure over Canada’s dairy regime, provincial alcohol bans, procurement rules and aircraft certification. With U.S. goods exports to Canada at US$336.5 billion in 2025, these disputes could widen market-access frictions and complicate bilateral commercial operations.

Energy Supply Chains Face Rerouting

Port damage, Druzhba disruptions, and cargo diversions are reshaping regional supply chains. Rosneft redirected crude from Novorossiysk to Tuapse, while flows to Hungary, Slovakia, and Germany face interruptions, forcing refiners, shippers, and traders to adjust sourcing, inventories, and transit planning.

Balochistan Security and Project Risk

Escalating insurgent attacks in Balochistan are directly affecting strategic assets including Gwadar and the Reko Diq mining project. The violence heightens operational, insurance, and personnel-security risks for investors, threatening logistics corridors, minerals development, and infrastructure projects linked to external partners.

Hormuz Maritime Disruption Risk

Iran’s control over Strait of Hormuz transit is the most immediate business risk. Crossings reportedly fell about 95%, around 800 ships were stranded, and crude flows dropped from roughly 20 million to 2.6 million barrels per day, sharply raising freight, insurance, and delivery uncertainty.

Automotive Sector Competitiveness Pressure

Mexico’s auto industry is under direct strain from 25% US tariffs, with exports to the US already falling nearly 3% in 2025 and around 60,000 jobs lost. Investment timing, plant utilization, and model allocation decisions now face elevated uncertainty.

Suez and Red Sea Disruptions

Renewed Red Sea security risks threaten Suez Canal traffic, a route carrying about 15% of global trade. Earlier disruptions cut canal traffic by more than 50%, lengthened voyages by 10-14 days, and sharply raised freight insurance, affecting routing and delivery reliability.

Semiconductor Concentration Drives Opportunity

TSMC posted record first-quarter revenue of NT$1.134 trillion, up 35.1%, as demand for 3nm AI chips stayed tight. Taiwan remains indispensable in advanced semiconductors, creating major upside for suppliers but amplifying global exposure to any operational disruption on the island.

Logistics Corridor Expansion Accelerates

Saudi Arabia Railways launched five new freight corridors linking Gulf ports, Red Sea gateways, and inland hubs, while Red Sea ports can handle over 17 million containers annually. This improves rerouting capacity, shortens transit times, and strengthens supply-chain resilience.

Semiconductor Manufacturing Scale-Up

India approved Tata’s ₹91,000 crore chip fabrication SEZ in Dholera, expected to create about 21,000 jobs, alongside Micron and other projects. The build-out strengthens electronics supply-chain localization, lowers import dependence, and improves India’s attractiveness for advanced manufacturing investment.

Slowing Growth and Stagflation Risk

Thailand’s macro outlook is weakening as higher energy costs, softer external demand, and fragile domestic activity converge. Official and private forecasts now place 2026 GDP growth around 1.2-1.6%, with inflation potentially rising toward 3.5-5.8% under more adverse conflict scenarios.