Canada-China Strategic Trade Pivot

Canada’s new agreement with China lowers tariffs on Chinese EVs and secures reduced Chinese tariffs on Canadian agriculture. This shift diversifies trade but risks US retaliation, reshapes supply chains, and could attract Chinese investment in Canadian manufacturing and energy sectors.

Trade surplus masks concentration risk

Indonesia posted a US$41.05bn 2025 trade surplus (up from US$31.33bn in 2024), with December exports up 11.64% to US$26.35bn led by palm oil and nickel. Heavy commodity dependence heightens exposure to policy shifts and price cycles.

EEC land, zoning, logistics bottlenecks

Industrial land scarcity and outdated zoning in the EEC are delaying large projects; clearing public rights-of-way can take 7–8 years. Government efforts to “unlock” constraints and restart U-Tapao Airport City PPP may reshape site selection, capex timing, and logistics planning.

Japan-China Relations and Geopolitical Tensions

Japan’s hardening stance on Taiwan and maritime disputes in the East China Sea have strained relations with China, resulting in economic retaliation and heightened security risks. These tensions complicate trade, investment, and supply chain operations for international businesses with exposure to both markets.

Trade policy alignment with US partners

Ongoing US–Taiwan trade and tariff frameworks and broader partner initiatives shape market access and rules of origin. Exporters should reassess tariff exposure, documentation, and sourcing, while investors monitor regulatory convergence in digital trade, standards, and customs facilitation.

High rates, easing cycle

The Central Bank kept Selic at 15% and signaled potential cuts from March as inflation expectations ease, but fiscal uncertainty keeps real rates among the world’s highest. Credit costs, consumer demand, and project IRRs remain sensitive to policy communication and politics.

Sanctions enforcement and secondary risk

U.S. sanctions on Russia, Iran, Venezuela, and related maritime “shadow” networks are increasingly enforced with supply-chain due diligence expectations. Counterparties, insurers, shippers, and banks face heightened secondary exposure, trade finance frictions, and cargo-routing constraints for energy and dual-use goods.

Stable Growth and Investment Climate

President Prabowo projects economic growth above 5% with low inflation, driven by industrialization and the new sovereign wealth fund Danantara. The government is rationalizing state-owned enterprises and courting foreign investors, enhancing Indonesia’s appeal as a stable investment destination.

Environmental Enforcement and Permit Revocations

Indonesia has revoked permits for 28 companies, mainly in forestry, mining, and plantations, due to illegal deforestation and environmental violations. This signals stricter enforcement, affecting supply chains and compliance costs for resource-dependent industries.

IMF programme drives policy

IMF-backed reforms through 2027 anchor fiscal discipline, privatisation and revenue mobilisation, but also constrain policy flexibility. Review outcomes shape investor sentiment, sovereign risk pricing and the operating environment for imports, pricing, and capital repatriation across sectors.

Technology Sector Resilience and Global Ties

Despite regional instability, Israel’s technology and cybersecurity sectors attract substantial investment and foster international partnerships. Recent major funding rounds and cross-border collaborations, especially in cybersecurity, underscore the sector’s resilience and its centrality to Israel’s economic strategy.

Supply Chain Realignment and China-Plus-One

Rising geopolitical tensions and global supply chain disruptions have accelerated India’s emergence as a preferred alternative to China. Multinationals are increasingly adopting a 'China-Plus-One' strategy, leveraging India’s scale, skilled workforce, and improving infrastructure for diversification and risk mitigation.

Industrial Competitiveness Risks

Brazil’s industrial sector faces higher production costs than Europe, risking deindustrialization as tariff barriers fall under new trade agreements. Without robust industrial policies, Brazil may see increased imports and reduced local investment in high-value sectors.

Export-Led Growth and Trade Policy Shifts

Ambitious targets to double exports to $60 billion hinge on tax reforms, trade facilitation, and sectoral diversification. However, high energy costs, regulatory bottlenecks, and financial system distortions still hinder export competitiveness, making sustained reform execution critical for international trade expansion.

Electricity grid reform uncertainty

Eskom’s revised unbundling keeps transmission assets inside Eskom, limiting the new TSO’s ability to raise capital for urgent grid expansion. Business warns this policy “U-turn” could prolong grid constraints, delay renewables connections, and revive supply insecurity for operations.

Digital Economy and Financial Innovation

Thailand is advancing digital finance, with the SEC set to regulate crypto ETFs and futures, and hosting the 2026 IMF–World Bank Meetings. These moves aim to position Thailand as a regional financial hub, attracting fintech investment but also requiring compliance with evolving regulations.

Import quotas for fuels tighten

Indonesia’s import caps are affecting private retailers, with Shell reporting work with government on 2026 fuel import quotas amid station shortages. Coupled with policy to stop diesel import permits for private stations, firms face supply disruptions, higher working capital needs, and reliance on Pertamina.

Cross-strait security and blockade risk

Escalating PLA air‑sea operations and Taiwan’s drills raise probability of disruption in the Taiwan Strait. Any quarantine or blockade scenario would delay container flows, spike marine insurance, and force costly rerouting for electronics, machinery, and intermediate goods supply chains.

Resilient Export Growth Amid Global Shifts

Despite global headwinds, Turkey’s exports reached $296.4 billion in 2025, with robust performance in high-tech, defense, and diversified markets. However, cost pressures and shifting EU trade rules create sectoral winners and losers, requiring adaptive strategies.

Nuclear Negotiations Shape Risk Outlook

Ongoing nuclear talks with the US and regional actors in Istanbul and Oman are pivotal. Outcomes will determine the future of sanctions relief, market access, and regional stability, but the risk of breakdown or military escalation remains high, directly impacting investment strategies.

Automotive profitability under tariffs

Toyota flagged that U.S. tariffs reduced operating profit by about ¥1.45tn and reported a sharp quarterly profit drop, alongside a CEO transition toward stronger financial discipline. For manufacturers and suppliers, this implies continued cost-down pressure, reallocation of investment, and trade-policy sensitivity.

Expansion of Battery Recycling Infrastructure

Significant investments are underway in France to expand battery recycling and reconditioning facilities. Projects like Weeecycling and new reconditioning centers will boost capacity, create jobs, and support circular economy goals, directly impacting supply chains and operational costs.

Political Polarization and Nationalist Sentiment

Rising nationalist sentiment linked to border tensions with Cambodia is shaping electoral outcomes and policy direction. Persistent influence of military and conservative elites creates uncertainty for reform, regulatory stability, and the investment climate, especially during election cycles.

EU Accession Negotiations Accelerate Reforms

Ukraine’s EU accession talks are driving economic and regulatory reforms, aiming to align with European standards. While this process opens long-term market access, it also imposes transitional compliance burdens and sectoral adjustments for international investors and exporters.

Hydrogen and ammonia export corridors

Saudi firms are building future clean-fuel export pathways, including planned ammonia shipments from Yanbu to Rostock starting around 2030 and waste-to-hydrogen/SAF partnerships. These signal emerging offtake markets, new industrial clusters, and long-lead infrastructure requirements for investors.

Verteidigungsboom und Beschaffung

Deutschlands Aufrüstung beschleunigt Investitionen: über 108 Mrd. € stehen für Modernisierung bereit; zusätzlich 536 Mio. € für loitering munitions, Rahmen bis 4,3 Mrd. €. Chancen entstehen für Zulieferer, Dual-Use-Technologien und IT, aber Exportkontrollen, Compliance und Kapazitätsengpässe nehmen zu.

Carbon pricing and green finance

Cabinet approved carbon credits, allowances and RECs as TFEX derivatives reference assets, anticipating a Climate Change Act with mandatory caps and pricing. Firms face rising compliance expectations, new hedging tools, and stronger ESG disclosure demands across supply chains and financing.

Tariff Volatility and Legal Risk

U.S. tariff policy is highly fluid, with threatened hikes on key partners and the Supreme Court reviewing authority for broad “reciprocal” duties. This uncertainty raises landed-cost volatility, complicates contract pricing, and increases incentive for regionalizing production and sourcing.

German Investment Shift: US to China

German direct investment in the US fell by 45% in 2025, while investment in China surged to over €7 billion. Uncertainty from US trade policy and pressure from Chinese authorities are prompting German firms to localize production and supply chains in China, affecting global business operations.

Critical Minerals And Semiconductor Supply Chains

Vietnam is deepening partnerships with the EU and other global actors to develop its rare earths, tungsten, and semiconductor sectors. These efforts aim to diversify supply chains, reduce dependence on China, and position Vietnam as a key node in global technology manufacturing.

Post-Brexit Trade Policy Evolution

The UK's trade policy continues to evolve post-Brexit, with new trade agreements and ongoing negotiations with the EU and other partners. Shifting tariffs, regulatory divergence, and customs changes are impacting international trade flows and business planning.

Economic Stability Amid Global Volatility

Praised by the OECD, Australia’s economic management has delivered low unemployment, controlled inflation, and avoided recession. Ongoing reforms in energy, competition, and housing policy underpin a stable environment for international trade and investment, though global uncertainty and productivity challenges persist.

Persistent Foreign Exchange Pressures Remain

Egypt continues to face significant foreign exchange challenges, with external debt rising to $161.2 billion and a debt-to-GDP ratio of 44.2%. These pressures impact import costs, repatriation of profits, and overall business confidence, affecting international investment strategies.

Critical Minerals and Geopolitical Competition

Indonesia’s dominance in nickel and tin places it at the center of US-China rivalry for critical minerals. While new trade agreements promise investment, weak governance and inconsistent downstream policies risk Indonesia becoming a raw material supplier rather than a value-added manufacturing hub.

Critical Minerals and Rare Earths Competition

Ukraine’s vast lithium and rare earth reserves are drawing major foreign investments, including a $700 million lithium project. Control over these resources is a strategic priority for both Ukraine and Russia, with global implications for energy transition and technology supply chains.

Expanding sanctions and enforcement

EU’s proposed 20th package broadens restrictions on energy, banks, goods and services, adds 43 shadow-fleet vessels (≈640 total), and targets third‑country facilitators. Heightened secondary‑sanctions exposure raises compliance costs and transaction refusal risk for global firms.