Energy costs and transition tensions

Regulated electricity prices rose 2.5% on August 1, while debate intensified over offshore wind, grid costs and industrial power affordability. Large projects such as the €10 billion Centre Manche complex highlight policy uncertainty affecting manufacturers, energy-intensive operations and coastal industries.

Cross-Strait Security Risk Intensifies

Satellite-linked reporting on PLA replicas of Taiwanese military and government sites signals more detailed contingency planning for conflict scenarios. Any escalation in the Taiwan Strait would threaten shipping lanes, raise insurance and logistics costs, and disrupt high-value technology supply chains.

Municipal Finance Weaknesses Persist

Treasury’s temporary withholding and later release of roughly R13 billion to poorly performing municipalities exposed deep accountability failures in local government. For business, this signals ongoing risk to water, electricity and basic services in key metros, with direct implications for operating continuity.

Fuel Security Drives Refining

Australia is backing a A$4 million feasibility study for a new Western Australia refinery after years of closures left it importing about 90% of liquid fuels. Middle East conflict-driven price spikes are intensifying inflation, energy-security planning, and industrial policy responses.

Persistent tariff volatility for exporters

Indian exports face a layered and shifting US tariff regime, including Section 301 surcharges and sector-specific duties on steel and aluminium. Repeated recalibration of rates complicates pricing, contract structures, inventory planning, and investment decisions for firms serving the US market.

Singapore-Indonesia Digital Infrastructure Expansion

The Nongsa-Changi undersea cable with 1.6 petabyte capacity was inaugurated, connecting Singapore to Batam's emerging data center hub. Deputy PM Gan Kim Yong emphasized deepening supply chain resilience and developing Batam-Bintan-Karimun as a cross-border digital corridor.

War strains civilian economy

Recent reporting shows wartime resilience masking sectoral strain: debt-to-GDP has risen from 60% to nearly 70%, while construction and tourism face labor shortages and activity losses. Higher defense spending may crowd out civil infrastructure investment and raise long-term operating costs.

SADC infrastructure integration push

As SADC chair, South Africa is prioritising energy, transport, ports, water, and digital infrastructure to lift intra-regional trade from 20% to 50%. If implementation advances, firms could benefit from improved corridors and logistics, though delivery risk remains material.

Xenophobic Violence Triggers Migrant Exodus

Over 178,000 African migrants have fled South Africa following violent anti-immigrant protests and government crackdowns, disrupting labor-dependent sectors like delivery, agriculture, and construction. Diplomatic tensions with Nigeria, Ghana, and Mozambique threaten South African companies' operations across the continent, with calls for asset seizures.

Iran Conflict Disrupts Shipping

U.S. strikes on Iran continued for nearly two weeks as Washington sought to restore shipping through the Strait of Hormuz. Reported increases in crude, jet fuel, and fertilizer costs raise freight, input, and insurance expenses for globally exposed U.S. businesses.

Drone controls disrupt commercial supply

China now requires strict case-by-case reviews for drone exports and key components to the US. Given DJI previously held about 70% of the US commercial drone market, procurement timelines, pricing, certification and inventory strategies face immediate uncertainty.

Rupiah Weakness Raises Costs

The rupiah traded around Rp17,890-Rp17,972 per US dollar amid geopolitical stress and policy uncertainty, increasing imported input costs and FX volatility for businesses. Companies exposed to foreign raw materials, debt servicing or dollar transactions face higher hedging and working-capital pressures.

Border Security Shapes Operations

Turkey’s intensified security cooperation with Iraq against the PKK, including a joint coordination mechanism, may improve border route predictability over time. However, cross-border operations and unresolved regional militancy still pose operational, insurance and personnel-security risks for investors and shippers.

Sharp economic contraction emerging

Saudi GDP contracted 4.8% year-on-year in Q2, the weakest performance since 2020, driven by a 24.7% fall in oil activity. Non-oil growth also slowed to 0.6%, signaling wider pressure on domestic demand, project execution, and corporate operating conditions.

China Shock Hits Industry

German industry groups warn a broad ‘China Shock 2.0’ is hitting automotive, machinery, chemicals, electronics and energy technology. Reported losses of roughly 400,000 to 420,000 manufacturing jobs since 2019 underscore deindustrialization risks, supplier stress and deteriorating competitiveness for export-oriented operations.

China Financing Delays Corridor Projects

Delays in Chinese financing for the $1.8 billion Karakoram Highway realignment are complicating execution of a critical CPEC route before dam submergence deadlines. If Pakistan self-finances more of the project, fiscal strain and corridor logistics risks could increase materially.

Section 301 tariff escalation

Washington has shifted to 10–12.5% Section 301 tariffs on 60 partners, covering about 99.4% of U.S. imports, with another overcapacity probe pending. The broadening tariff regime raises landed costs, complicates sourcing decisions, and increases global trade policy uncertainty for multinationals.

Energy Security Drives Policy

Taiwan’s dependence on seaborne energy imports, with natural-gas inventories reportedly covering only around ten-plus days, is sharpening business risk. Regional energy shocks and blockade scenarios are pushing debate on reserve expansion, LNG infrastructure flexibility, and possible nuclear restarts to support power reliability.

Rules of origin tighten

Washington is pressing for stricter automotive rules of origin, including proposals to raise U.S. content requirements and strengthen verification. Companies using multi-country inputs may need to redesign sourcing, certification and production footprints to preserve treaty preferences.

AUKUS Shipyards Spur Industrial Buildout

The government announced a $4.6 billion boost for Osborne shipyards, on top of $3.9 billion already committed, to support AUKUS submarine construction. The expansion should lift defence manufacturing demand, infrastructure activity, and supplier opportunities, while redirecting capital and labour across industrial sectors.

Industrial sectors face acute disruption

Machinery, footwear, textiles, furniture, ceramics, timber, sugar and ethanol are among the most exposed industries, while some sectors such as coffee, beef, crude oil, aircraft parts and over 2,000 product categories received exemptions, creating uneven operational and sourcing impacts.

Regional conflict spillover risk

Drone and missile strikes on Saudi tankers, refineries, and other infrastructure show the kingdom is increasingly exposed to broader Iran-linked regional escalation. For international business, this raises contingency planning needs around force majeure, asset protection, workforce safety, and capital allocation.

US Investment Commitments Pressure

Washington is tying trade negotiations to implementation of South Korea’s $350 billion U.S. investment pledge, while Seoul prepares initial project announcements in shipbuilding and energy. This raises capital allocation pressure, execution risk, and possible diversion of corporate investment from domestic operations.

Policy support for strategic industries

Reports cite government plans to loosen spending limits for priority growth sectors and long-term industrial investment commitments in strategic fields. Expanded state support may create opportunities in advanced manufacturing and technology, but also raises execution, subsidy-dependence, and policy consistency risks.

Indonesia partnership expands regional integration

Thailand and Indonesia adopted a 2026–2030 strategic partnership roadmap covering trade, investment, energy, food security, digital economy, and logistics links, with bilateral trade around US$17 billion and ambitions to reach US$20 billion or more by 2030.

Regional supply chain integration

Thai officials framed closer ties with Indonesia as a way to strengthen ASEAN supply chains, widen markets for Thai goods and services, and encourage two-way investment. This points to deeper regional sourcing, distribution and production linkages for internationally exposed companies.

Sanctions and policy uncertainty rise

Ukraine is pressing for tighter sanctions on Russia, while the US Senate advanced a major sanctions bill by an 86-12 vote. Businesses operating across regional trade, energy and finance channels should expect continued sanctions volatility, compliance burdens and potential countermeasure risks.

Turkey-Iraq Trade Deepening

Turkey and Iraq are expanding commercial ties through business roundtables, customs facilitation discussions and higher bilateral trade ambitions. Reported trade reached roughly $17 billion to above $20 billion in 2024, with targets rising toward $30 billion, supporting exporters, contractors and border commerce.

Steel Aluminum Lumber Exposure

Canada is seeking relief from existing Section 232 tariffs on steel, aluminum, lumber, and autos, while possible quota arrangements remain under discussion. Continued restrictions threaten export volumes, margins, and manufacturing competitiveness across North American industrial supply chains.

Critical minerals beneficiation push

Recent forums stressed moving beyond raw mineral exports toward domestic and regional processing of platinum-group metals, manganese, lithium, and battery materials. This supports longer-term manufacturing upside, yet depends on reliable power, transport, finance, and governance to avoid investment bottlenecks.

Foreign investment inflows losing momentum

France remained Europe’s top destination for foreign investment projects in 2024, yet projects fell 14% to 1,025 and associated jobs dropped 27% to about 29,000. Combined with tighter screening, this suggests a more selective and politically sensitive investment environment.

Batam gains relocation momentum

Batam is emerging as a major supply-chain diversification hub as firms shift production from China. Free-trade-zone incentives, proximity to Singapore, and rising exports—reaching about US$19.6 billion in 2025—are strengthening Indonesia’s appeal for manufacturing, logistics, and data-center investment.

Energy price inflation pressure

Escalating threats to both Bab el-Mandeb and Hormuz have lifted oil prices sharply, with Brent cited near $95 to $100 per barrel and one report noting a 3.8% daily rise. Higher energy costs can transmit quickly into transport, petrochemicals, food, and industrial margins.

Red Sea export corridor risk

Houthi attacks and blockade threats against Bab al-Mandeb and Yanbu have turned Saudi Arabia’s main alternative oil route into a major vulnerability, raising shipping risk, insurance costs, and potential delays for energy buyers, traders, refiners, and adjacent industrial supply chains.

Subsidy policy leakage concerns

German debate is intensifying over whether industrial policy is inadvertently supporting foreign producers. Reports say nearly every second new EV registration is from a foreign brand, with subsidies benefiting Tesla and Chinese manufacturers, prompting possible redesign of incentives toward local value creation.

Legal Challenges Cloud Trade Measures

Recent tariff actions face renewed legal scrutiny after the Supreme Court previously struck down broader duties, with analysts arguing Congress did not delegate such expansive authority. Ongoing litigation risk reduces policy predictability and may delay capital expenditure, pricing, and market-entry decisions.