Defence spending boom and localisation

Defence outlays are projected above €108 billion in 2026, benefiting German primes and suppliers and accelerating capacity expansion in munitions, vehicles, sensors and shipbuilding. However, EU joint-procurement rules and ‘buy-European’ politics may constrain non-EU vendors and partnerships.

Sovereign wealth and governance shift

Prabowo is pushing a high-growth agenda alongside a new sovereign wealth vehicle (Danantara, touted at $50bn annual returns) while attacking oligarch corruption. Markets remain wary after equity volatility and negative outlooks, raising governance due diligence needs for partners.

Tariff volatility and legal risk

Supreme Court invalidation of IEEPA tariffs is triggering ~$150–175B importer refund claims and a pivot to temporary Section 122 (10–15%, 150 days) plus broad Section 301/232 actions. Importers face pricing, contract, and compliance uncertainty.

State asset seizures and nationalization

Russia continues using courts and decrees to reassign assets linked to “unfriendly” jurisdictions, illustrated by the Domodedovo airport takeover. Foreign investors face heightened expropriation, governance and exit risks, including blocked divestments, forced discounts, and constrained dividend repatriation.

Base-access bargaining strains alliances

U.S. reliance on European bases for regional operations creates political bargaining and conditional access, varying by country. Businesses should model sudden changes in airspace availability, overflight permissions, and defense-driven disruptions impacting aviation cargo and mobility.

Fiscal slippage and higher debt

War-driven spending is widening deficits and pushing debt higher. Cabinet-approved defense increases (e.g., NIS 32bn plus ~NIS 13bn reserve) lift the deficit target to 5.1% of GDP; the Bank of Israel warns debt-to-GDP could reach ~70% in 2026, affecting taxes, funding costs and credit conditions.

HPAL sulphur shock from Gulf

Lebih dari 75% impor sulfur RI (2025) berasal Timur Tengah; penutupan/risiko Selat Hormuz mengancam pasokan untuk HPAL. Stok pabrik hanya beberapa minggu–1 bulan; harga sekitar US$500/ton naik 10–15%. Produksi MHP/battery materials dan margin smelter berisiko.

Geopolitical shipping shocks and insurance costs

Middle East tensions and ship-attack risk are driving rerouting and higher war-risk premiums, feeding into U.S. import timing and freight-rate volatility. Companies should expect longer lead times, inventory rebalancing, and added costs for energy-adjacent and containerized supply chains.

Shipbuilding cooperation and rearmament demand

Shipbuilding is central to the U.S. investment package, with $150bn earmarked for cooperation and low-risk financing support. Rising naval and commercial demand, plus U.S. capacity constraints, create opportunities for Korean yards, equipment exporters, and U.S.-based partnerships.

Trade facilitation, tariffs, import controls

The government signals export-led growth via tariff rationalisation and trade facilitation under IMF oversight. However, revenue pressures can revive ad-hoc duties, import compression, or refund delays. This creates uncertainty for customs planning, inventory management, and pricing for multinationals.

China tech controls and chips

U.S. semiconductor and AI policy remains mixed: licensing tweaks, tariffs on advanced computing chips, and potential congressional tightening. Export controls, end‑use scrutiny, and allied coordination raise compliance burden and can disrupt electronics, cloud, and industrial automation supply chains.

China exposure and trade rebalancing

Despite stabilisation efforts, Australia’s trade remains highly exposed to China demand for commodities and to Beijing’s capacity for informal coercion. Firms should diversify customers and inputs, stress-test for renewed restrictions, and reassess pricing power and contract enforceability in China-linked supply chains.

Middle East energy shockwaves

Strait of Hormuz disruptions and Iran conflict have trapped Japan-linked ships and forced emergency oil releases. Japan sources ~95% of crude from the Middle East; Qatar LNG outages cut ~20% of global supply, lifting fuel costs and forcing procurement reshuffles.

Data reform and AI governance divergence

UK data-use and access reforms and evolving AI governance may diverge further from the EU AI Act and GDPR interpretations. Multinationals should anticipate changing rules on lawful processing, automated decisioning, and cross-border data transfers, raising compliance and product localisation costs.

Inflation persistence and high rates

Inflation remains above the 3% target and external energy shocks are complicating Selic cuts from 15%. Elevated and uncertain rates raise funding costs, pressure demand, and increase FX volatility—key for importers, leveraged projects, and companies with BRL revenues.

Regional security integration with partners

Australia is deepening defence and logistics coordination with New Zealand and other partners, aligning readiness concepts, procurement and co-production. This reinforces Indo-Pacific operating standards, increases demand for interoperable systems, and may affect compliance, workforce clearances, and cross-border contracting for suppliers.

Trade access uncertainty: US tariffs

AGOA’s value has been diluted by new US import surcharges; South African autos now face a 15% US tariff, threatening export economics. Manufacturers are reassessing footprints (e.g., Mercedes considering plant-sharing). Firms should diversify markets, stress-test demand, and hedge against abrupt preference changes.

Nuclear file and snapback risk

IAEA reports cite large near-weapons-grade uranium stockpiles and restricted inspector access, while European powers move toward restoring UN sanctions. Heightened “snapback” probability increases legal uncertainty for trade finance, shipping documentation, and long-horizon investments in Iran-linked projects.

Turbulences budgétaires et notation souveraine

Le déficit reste élevé et la dette augmente, tandis que Fitch maintient la note A+ mais pointe des contraintes politiques limitant l’assainissement. Risques de hausses d’impôts, coupes de dépenses et volatilité des taux, affectant financement, CAPEX et demande intérieure.

Shadow fleet and illicit routing

Russia sustains crude exports via aging, lightly insured “shadow fleet” and complex shell-company trading networks masking origin and pricing. Enforcement actions and vessel listings raise freight, insurance and port-access risks, amplifying supply-chain opacity and reputational exposure.

IMF program and fiscal tightening

Ongoing IMF EFF/RSF reviews dominate policy, with a roughly $1.2bn tranche linked to tax collection, spending restraint, and governance benchmarks. Slippages risk renewed FX pressure, import curbs, delayed payments, and weaker investor confidence.

Security environment and operational continuity

IMF officials cited security concerns in cutting short in‑country meetings, underscoring persistent volatility. Corporates should plan for travel restrictions, site-security upgrades, and potential disruption around major cities, ports and key transport corridors.

Energy Transition Grid Buildout

Saudi Energy Company reports ~24 GW of generation projects under execution, with 12.3 GW renewables connected by end-2025 and 8 GWh battery storage commissioned (14 GWh under development). This drives demand for EPC, grid equipment and O&M, while tightening standards for local content and HSSE compliance.

Fiscal tightening and tax shifts

France’s high public debt (~113% of GDP) and deficit around 5% in 2026 drive recurring tax and spending adjustments. Political fragmentation complicates predictability, raising funding costs and affecting corporate tax planning, incentives, and public procurement timing for investors.

Domestic gas reservation uncertainty

Federal plans to reserve 15–25% of new gas production—covering Northern Territory LNG projects—aim to reduce domestic prices but raise sovereign-risk concerns. Energy-intensive manufacturers gain potential relief; LNG investors face contract, approval, and valuation uncertainty.

Hydrogen import corridors scale up

Japan is building long-horizon clean-fuel supply chains, exemplified by the Japan–New Zealand Hydrogen Corridor studying green hydrogen production and export logistics from FY2026, targeting early-2030s imports. Impacts include port infrastructure, shipping tech, and new contracting models.

FDI screening recalibration risk

India is reviewing Press Note 3 on FDI from bordering countries, potentially adding a de minimis threshold for small-ticket investments while keeping national-security screening intact. This could ease funding flows yet maintain uncertainty for China-linked capital structures.

Green transition and carbon markets

Thailand is scaling climate finance and market infrastructure: TFEX can list carbon-credit/allowance derivatives, and IEAT secured a $100m World Bank loan to fund renewables and sell ~1m tCO2e credits. Carbon pricing readiness will affect industrial site selection and operating costs.

Ports and logistics capacity buildout

Major port expansion plans—such as VOC Port’s ₹15,000 crore outer harbour to add 4 MTPA and handle 18‑metre draft mega-ships—signal improving transshipment and export logistics. Execution and hinterland connectivity will determine realized reductions in turnaround times and shipping costs.

US tariff risk and trade diplomacy

Thai industry groups flag uncertainty around potential US universal tariffs amid Thailand’s widening US surplus (reported $72bn in 2025). Thailand is exploring more US energy imports to support negotiations; exporters face downside risk in electronics, autos and consumer goods.

Green industrial parks become gatekeeper

Northern Vietnam expects ~5,050 hectares of new industrial land (2026–2029) plus large ready-built factory/warehouse additions, while ESG features (renewables, recycling, smart management) increasingly determine tenant selection. Multinationals face higher reporting and supplier-audit requirements but gain more scalable, compliant sites.

Ajuste fiscal e metas do arcabouço

O governo central teve superávit primário de R$86,9 bi em janeiro, mas o déficit em 12 meses ainda é R$62,7 bi (0,47% do PIB). A meta de 2026 é superávit de 0,25% do PIB. Ajustes fiscais afetam demanda pública e incentivos setoriais.

Digital infrastructure and tax nexus

Hyperscaler data-centre investment is constrained by ‘permanent establishment’ tax uncertainty. Google has reportedly paused a proposed A$20bn AI/data-centre hub due to exposure to the 30% corporate rate. The outcome will shape cloud capacity, AI supply chains, and energy procurement.

Federal budget shutdown operational risk

Recurring shutdowns and funding lapses disrupt agency processing and oversight, from trade administration to security functions, and can impair critical infrastructure support. Companies should plan for delays in permits, inspections, contracting payments, and heightened operational friction during lapses.

Customs reform raises compliance costs

Mexico’s customs reform increases joint liability for customs brokers, driving higher fees and stricter documentation requests to prove client substance and correct classifications. Mandatory digital uploads for trade data force process and IT investments, slowing onboarding and increasing risk for “sensitive” goods.

Inflation, FX and financing conditions

Inflation accelerated to about 3.35% y/y in February, with oil-price shocks raising downside risks for the dong and interest rates. Vietnam’s central bank signals flexible management. Importers and leveraged investors should tighten FX hedging, working-capital planning, and pricing clauses.