Regional conflict and security risk

Israel’s exposure to Gaza and Iran-linked escalation remains the primary business risk. Ceasefire implementation is fragile, Israeli strikes continue, and reconstruction is stalled, sustaining elevated political violence, insurance, compliance, staffing, and operational continuity risks for investors and multinationals.

Fuel Prices and Logistics Stress

Oil above $100 and disruption around the Strait of Hormuz are pushing up French fuel prices and raising supply-chain risk. Paris is offering targeted aid to transporters, farmers, and fishers, but rejecting broad rebates, leaving freight, distribution, and operating costs exposed to volatility.

Semiconductor Investments Move Upstream

Samsung is considering chip testing and packaging investment, reportedly including a possible $4 billion northern Vietnam project. This would deepen Vietnam’s electronics ecosystem, raise demand for skilled labor and utilities, and improve its position in higher-value technology supply chains.

Imported Cost Pressures Intensify

Vanuatu remains highly exposed to imported fuel, food, machinery, and construction inputs. With Middle East tensions lifting shipping and aviation costs across the Pacific, cruise private island projects face margin pressure through higher freight, energy, maintenance, and guest-experience operating expenses.

Manufacturing and Auto Sector Softness

Despite electronics resilience, broader industry is uneven: February manufacturing was flat year on year and down 2.1% month on month, while automotive output fell 1.3%. High appliance inventories and refinery maintenance signal patchy demand and capacity-planning challenges for suppliers.

EU Trade Deal Market Opening

The newly concluded EU-Australia free trade agreement covers €89.2 billion in annual trade and removes tariffs on most goods, including critical minerals. It should improve market access and investment flows, though parliamentary ratification and agricultural sensitivities may delay full business benefits.

US Trade Frictions Escalate

Washington’s Section 301 investigation, 30% South Africa-specific tariffs layered on top of a 15% universal tariff, and AGOA uncertainty are raising export risk, compliance costs, and policy unpredictability for firms exposed to US-bound manufacturing, agriculture, and metals trade.

Expanding Sector-Specific Import Barriers

Washington is replacing invalidated broad tariffs with targeted barriers on pharmaceuticals, steel, aluminum, and copper. New rules include up to 100% duties on some branded drugs and 25-50% metal tariffs, raising landed costs for manufacturers, healthcare suppliers, and industrial importers.

Retaliation Risk Expands Globally

US tariff and trade actions are provoking countermeasures from major partners, especially China, which launched six-month trade-barrier probes into US restrictions. Businesses face elevated risks of retaliatory tariffs, regulatory friction, delayed market access, and more politicized cross-border commercial relationships.

Financial Regulation Competitiveness Questions

The UK’s appeal as a financial hub faces scrutiny as banking licence applications fell to zero in 2025 from 11 in 2020. Perceived regulatory complexity may deter foreign entrants, potentially limiting fintech expansion, cross-border capital formation and broader services-sector investment momentum.

Digital Infrastructure Investment Surge

Microsoft plans to invest more than US$1 billion in Thai cloud and AI infrastructure, while major data-centre financing is expanding. This strengthens Thailand’s digital ecosystem, supports higher-value services, and improves long-term attractiveness for regional technology and business operations.

Digital infrastructure and AI buildout

Data-center capacity has expanded sixfold since Vision 2030, with more than SR16 billion invested and over 60 operating sites. Saudi plans for 1.8 GW by 2030 and major AI spending improve cloud and tech opportunities, while increasing competition, data demand, and localization expectations.

Energy Supply Gap and Import Dependence

Domestic gas output remains below demand, with production near 4.1 bcf/day against roughly 6.2 bcf/day consumption. Disruptions to Israeli gas and rising LNG reliance are lifting input costs, raising outage risks, and pressuring energy-intensive manufacturers and industrial supply chains.

Shadow Banking Distorts Payments

Iran remains largely cut off from SWIFT, so trade increasingly relies on yuan settlements, small banks, shell companies, and layered accounts spanning Hong Kong, Turkey, India, and beyond. Payment opacity complicates receivables, sanctions screening, financing, and cross-border settlement for legitimate businesses.

Cross-Strait Security Escalation Risk

Rising PLA air and naval activity, blockade rehearsals, and gray-zone coercion keep Taiwan Strait disruption risk elevated. More than 420 Chinese military aircraft operated around Taiwan in Q1, threatening shipping, insurance costs, export reliability, and investor confidence.

Foreign investment rules improve

Saudi Arabia’s 2025 Investment Law allows full foreign ownership and strengthens investor protections, supporting capital inflows despite regional turbulence. Incentives including tax exemptions, fee reductions, and easier capital flows improve entry conditions for multinationals in selected sectors.

Labor shortages and project delays

Acute worker shortages, especially in construction and infrastructure, are delaying projects and raising costs. Official reviews cited a construction shortfall of about 37,000 foreign workers, highlighting execution risk for real estate, transport and industrial expansion plans requiring dependable labor supply.

Security and Cargo Theft Exposure

Cargo theft remains a material supply-chain threat, particularly in trucking corridors where criminal groups use violence and diversion tactics. For foreign companies, this raises insurance, private security and route-planning costs, while undermining delivery reliability in a binational logistics network central to North American manufacturing.

Semiconductor Industrial Policy Push

India’s planned Rs 1.2 lakh crore Semiconductor Mission 2.0 deepens incentives beyond assembly into R&D, chip design and advanced nodes. The policy could attract strategic capital, localize electronics supply chains, and build long-term manufacturing depth for high-value sectors.

Power Security Becomes Constraint

Electricity demand exceeded 1.005 billion kWh on March 31, unusually early, while officials warn southern shortages could emerge in 2027–2028 amid falling domestic gas output and LNG constraints. Energy reliability is becoming a decisive factor for manufacturers, data centers, and investors.

Inflación persistente y tasas

La inflación anual subió a 4.59% en marzo, máximo de 17 meses, mientras Banxico recortó la tasa a 6.75% en una votación dividida. Las presiones en alimentos, energía y servicios pueden frenar nuevas bajas y encarecer financiamiento corporativo y consumo.

Middle East Energy Shock

Conflict-related disruption around the Strait of Hormuz is pushing up oil and naphtha costs, cutting crude and LNG import volumes, and hurting Middle East-bound exports. Energy-intensive manufacturers, logistics operators, and importers face higher costs, shortages, and greater supply-chain uncertainty.

Housing, Transit and Cost Pressures

Ontario and Ottawa’s C$8.8 billion housing-infrastructure pact and tax relief aim to lower development charges and support transit. Over time this may ease labour and real-estate pressures, but near-term construction costs and municipal funding trade-offs remain material for businesses.

Energy and Infrastructure Deals

Indonesia signed major Japan and South Korea investment agreements worth about US$33.8 billion across LNG, geothermal, solar, carbon capture, and downstream minerals. These projects improve long-term infrastructure and energy security, while opening opportunities in engineering, equipment supply, and industrial services.

War Damage Weakens Infrastructure

Strikes on energy, industrial, transport, and banking assets are increasing reconstruction needs and operational fragility. Damage to factories, bridges, railways, petrochemical sites, and payment infrastructure raises outage risk, delivery delays, labor disruption, and capex requirements for businesses with Iran exposure.

Infrastructure Buildout Accelerates Fast

Vietnam is advancing a vast infrastructure push worth about US$200 billion, with more than 550 projects launched and plans for ports, airports, rail, and power. Better connectivity could lower logistics costs, but execution, debt, land clearance, and corruption risks remain material.

Defense Buildup Reshapes Industry

France plans an extra €36 billion in defence spending by 2030, lifting military outlays to 2.5% of GDP and annual spending to €76.3 billion. This supports aerospace, electronics, cybersecurity, and advanced manufacturing, but competes with wider fiscal priorities.

Chip Controls Tighten Further

Washington’s proposed MATCH Act would expand restrictions on semiconductor equipment, software, and servicing to Chinese fabs including SMIC and YMTC. With China accounting for 33% of ASML’s 2025 sales, tighter controls threaten electronics supply continuity, capex plans, and technology localization strategies.

State asset sales acceleration

Cairo is advancing privatizations, including four divestment deals worth $1.5 billion, temporary listings for 20 state firms, and airport concessions. This expands entry opportunities in logistics, renewables, finance and infrastructure, but execution risk and valuation transparency remain material for investors.

Import Costs Hit US Buyers

Recent analyses show foreign exporters absorb only about 5% of US tariff costs, leaving American firms and consumers to bear most of the burden. Higher landed costs, margin compression, and selective price increases will continue shaping procurement, pricing, and contract strategies.

Won and Capital Market Volatility

Foreign investors pulled record sums from Korean securities, including about $29.78 billion from stocks in March, while the won weakened and daily FX swings widened. Elevated market volatility raises hedging costs, complicates capital planning, and can deter portfolio and direct investment decisions.

Giga-Project Spending Recalibration

Recent Neom contract cancellations show Riyadh is reassessing giga-project pacing, costs, and priorities. For international contractors, suppliers, and lenders, this raises execution uncertainty, payment-timing sensitivity, and a greater need to distinguish politically favored projects from vulnerable discretionary developments.

Higher-for-Longer Financing Costs

Federal Reserve officials are signaling that rate cuts may be over as inflation risks rise from tariffs and energy. Markets briefly priced more than 50% odds of a 2026 hike, lifting yields and increasing financing, inventory, and investment costs for businesses.

FDI Shifts Toward High-Tech

Vietnam attracted US$15.2 billion in registered FDI in Q1, up 42.9% year on year, with US$5.41 billion disbursed. Capital is concentrating in electronics, semiconductors, AI data centers, energy, and green manufacturing, reinforcing Vietnam’s role in higher-value regional supply chains.

Critical Minerals Equipment Upswing

Finland’s mining expansion and updated mineral strategy are strengthening demand for mobile machinery across extraction, processing, and support services. With Finland positioned in Europe’s battery and critical raw materials chain, foreign suppliers can benefit, though permitting timelines remain commercially important.

Labor shortages and cost pressures

An ageing workforce and structurally tighter labor supply are raising business costs and limiting Germany’s recovery capacity. Industry groups are pressing for lower non-wage labor costs, higher participation by older workers and women, and more labor-market flexibility to sustain investment and operations.