Armenia–Turkey Border Reopening Prospects

The anticipated partial reopening of the Armenia–Turkey border is set to reduce logistics costs, expand market access, and boost regional trade and investment. This development could reshape supply chains and enhance Turkey’s connectivity with the Caucasus and beyond, with positive spillovers for international business.

Disrupted Oil Exports and Geopolitical Risk

Despite sanctions, Iran remains a major oil exporter, primarily to China. However, unrest, U.S. military threats, and new tariffs have increased the risk of supply disruptions, impacting global energy prices and complicating long-term contracts and logistics for energy buyers.

Regulatory Overhaul and Compliance

Significant regulatory changes are underway in the UK, including updates to employment law, financial regulations, and business compliance regimes. Companies must adapt quickly to avoid penalties and ensure operational continuity.

China and Russia Strategic Partnerships

Iran’s economic and security dependence on China and Russia has deepened, with China absorbing over 80% of Iran’s oil exports and providing military, technological, and diplomatic support. These partnerships offer Iran lifelines but also expose foreign investors to secondary sanctions and geopolitical entanglements.

Industrial policy reshoring incentives

CHIPS/IRA-style subsidies, procurement preferences, and accelerated permitting are steering investment toward U.S. manufacturing, energy, and AI infrastructure. Multinationals must optimize site selection, local-content strategies, and subsidy compliance while anticipating partner-country countermeasures.

Strategic Technology Alliances and Controls

The US is building exclusive technology alliances and imposing strict export controls to maintain leadership in AI, semiconductors, and critical minerals. These measures reshape global value chains, affecting market access, innovation strategies, and the competitive landscape.

Tightened Foreign Investment and Land Rules

Japan is intensifying scrutiny of large-scale land acquisitions and raising barriers for foreign business visas, requiring higher capital and stricter compliance. These changes aim to protect national interests but may deter smaller foreign investors and impact market entry strategies.

Internet shutdowns and digital controls

Near-total internet blackouts and tighter censorship have cut businesses off from customers, suppliers, and payments, with reported losses from millions to tens of millions of dollars per day. Expect unreliable connectivity, mandatory use of domestic platforms, and elevated cybersecurity exposure.

SME Support and Anti-Corruption Drive

High household debt, limited SME access to finance, and persistent corruption are key policy targets. Political parties propose credit reforms, anti-corruption platforms, and business facilitation measures, which are vital for improving the investment climate and supporting supply chain resilience.

Circular Economy Initiatives Gain Momentum

France is advancing circular economy models for EV batteries, with startups and industrial players piloting second-life and recycling projects. These initiatives are increasingly supported by public policy, enhancing resource efficiency and opening new business models for investors.

Foreign Investment Decline and Decoupling

Foreign direct investment in China fell 9.5% in 2025, with many investors shifting to emerging markets due to geopolitical tensions, economic slowdown, and concerns over regulatory unpredictability. This trend challenges China’s long-term growth and integration with global capital markets.

USMCA review and tariff brinkmanship

The mandatory USMCA review and renewed U.S. tariff threats create high uncertainty for North American supply chains, especially autos, metals and agri-food. Firms should stress-test rules-of-origin compliance, pricing, and contingency routing as policy shifts can be abrupt.

Tariff volatility and trade blocs

Rapid, deal-linked tariff threats and selective rollbacks are making the U.S. a less predictable market-access environment, encouraging partners to deepen non‑U.S. trade blocs. Firms face higher landed costs, rerouted sourcing, and accelerated contract renegotiations.

Labor Market and Immigration Enforcement

Intensified immigration raids, border controls, and restrictive labor policies have disrupted workforce availability, dampened consumer demand in immigrant communities, and created compliance challenges for businesses, particularly in sectors reliant on foreign labor and diverse talent pools.

China trade ties and coercion

China remains Australia’s dominant trading partner, but flashpoints—such as Beijing’s warnings over the Chinese-held Darwin Port lease and prior export controls on inputs like gallium—keep coercion risk elevated, complicating contract certainty, market access, and contingency planning for exporters and import-dependent firms.

Western Sanctions Reshape Trade Flows

Sweeping US and EU sanctions have forced Russia to redirect over 80% of its trade and energy exports to 'friendly' nations, notably China and India. This realignment has disrupted global supply chains, increased market volatility, and complicated compliance for international businesses.

Semiconductor Supply Chain Realignment

The US-Taiwan trade deal mandates $250 billion in Taiwanese investment in US semiconductor manufacturing, aiming to relocate up to 40% of Taiwan’s chip supply to the US. This shift is reshaping global supply chains and risk management strategies for international businesses.

Export and Import Dynamics Shift

Germany’s modular building exports are rising, supported by demand for sustainable and high-quality solutions in Europe and beyond. Import trends reflect increased sourcing of advanced materials and components, impacting trade balances and supply chain strategies for global firms.

Green Transition and Cybersecurity Risks

Rapid expansion of decentralized, internet-connected renewable energy infrastructure introduces significant cybersecurity vulnerabilities. Securing the grid now requires a unified public-private security framework to mitigate risks of data manipulation and widespread outages.

Energy Sector Under Persistent Attack

Ukraine’s energy infrastructure faces repeated strikes, resulting in increased electricity imports and frequent outages. These disruptions raise operational costs for businesses, threaten industrial output, and necessitate investment in resilient and diversified energy solutions.

Critical Minerals Supply Chain Realignment

Australia is rapidly expanding its critical minerals sector, including rare earths, lithium, gallium, and scandium, to reduce reliance on China and support allied supply chains. Strategic stockpiles and new mining projects are reshaping global supply chains, attracting major international investment and government backing.

Currency Volatility and Capital Controls

The ruble’s real effective exchange rate surged 28% in 2025, driven by a trade surplus and high interest rates. While this curbed inflation, it hurt export competitiveness and budget revenues, complicating financial planning for foreign investors and multinational operations.

Russia-China Strategic Economic Partnership

Over $100 billion in joint projects with China span minerals, transport, and military technology. China supplies critical components and payment systems, helping Russia bypass sanctions. This deepening partnership shifts Russia’s trade orientation and impacts global supply chains and investment flows.

US–Taiwan Strategic Trade Pact

The new US–Taiwan trade agreement lowers tariffs on Taiwanese exports to 15%, secures preferential treatment for key sectors, and cements Taiwan’s role as a strategic US partner. This enhances market access but may provoke Chinese retaliation and regulatory uncertainty.

Geopolitical Realignment and Supply Chain Security

Saudi Arabia is deepening ties with China, the US, and regional partners, while pursuing new defense and economic alliances. These shifts impact energy flows, supply chain resilience, and market access, requiring international businesses to closely monitor evolving geopolitical risks.

Labor Market Reform and Demographic Challenges

Japan is revising pension rules in 2026 to encourage seniors to remain in the workforce, addressing acute labor shortages and an aging population. While male parental leave uptake is rising, progress on gender diversity in management remains slow, affecting long-term productivity and talent strategies.

Regulatory Reform and Ease of Doing Business

Recent legal and regulatory reforms, including the repeal of obsolete statutes and streamlined customs and tax processes, are improving India’s business climate. These measures enhance transparency, reduce compliance costs, and support foreign investor confidence in long-term operations.

High Unemployment and Labor Market Shifts

Finland’s unemployment rate has reached 10.6%, the highest in the EU, driven by weak domestic demand and structural changes. While tech and green sectors are hiring, traditional industries face layoffs, affecting consumer demand and workforce availability for international investors.

US Sanctions and Trade Risks

South Africa faces potential US financial sanctions and exclusion from trade agreements like AGOA, which could trigger capital flight, currency devaluation, and higher borrowing costs. These risks create significant uncertainty for foreign investors and multinational supply chains.

Energiepreise und Importabhängigkeit

Deutschlands Wettbewerbsfähigkeit bleibt stark energiepreisgetrieben: Gasversorgung stützt sich auf Norwegen/Niederlande/Belgien, LNG macht rund 10% der Importe aus, davon überwiegend USA. Diversifizierung (u.a. Golfstaaten) und Netzentgelte beeinflussen Standortkosten, Verträge und Investitionsentscheidungen.

Investment Climate Reforms Accelerate

Indonesia’s government has streamlined investment licensing through the OSS system and risk-based regulation, issuing 175 automatic permits in early 2026. These reforms improve investor confidence, reduce bureaucratic delays, and create a more predictable business environment.

EU Green Deal and CBAM Impact

The EU’s Carbon Border Adjustment Mechanism (CBAM) and green deal policies are reshaping Turkey’s export landscape. Sectors with high carbon intensity face new costs and compliance requirements, affecting competitiveness in key markets and driving urgent green transition needs.

America First and Investment Nationalism

The US is pursuing an 'America First' agenda, leveraging tariffs and investment controls to promote domestic industries and national security. This approach complicates relations with allies, influences defense procurement, and increases compliance burdens for multinational firms.

Labor Market Saudization Intensifies

The government has raised Saudization rates to 60% in key private sector roles, including marketing and sales, and restricted senior positions to nationals. These measures impact expatriate hiring, increase compliance costs, and require strategic workforce adjustments for international businesses.

Energy Sector Diversification and Export Strategy

Canada is scaling up LNG and renewable energy exports, targeting Asian markets and seeking Chinese investment in infrastructure. This diversification mitigates US market risk and positions Canada as a key player in the global energy transition, though it faces regulatory and environmental scrutiny.

Energy Security and Nuclear Revival

Japan has restarted the Kashiwazaki-Kariwa nuclear plant, boosting energy self-sufficiency and emissions targets. This move, amid regional security tensions, signals a shift toward stable domestic energy sources and reduced reliance on fossil fuel imports, affecting industrial competitiveness.