Growth Slowdown, Weak Demand

Thailand’s 2026 growth outlook has softened to around 1.5-2.1%, with first-quarter GDP seen at just 2.2% year on year and 0.1% quarter on quarter. High household debt, subdued credit and falling confidence are constraining domestic sales, hiring and expansion plans.

Gas Storage Capacity Expansion

New UK gas storage licensing for the MESH project highlights acute resilience gaps. Planned capacity could double national storage, add up to six days of supply and improve deliverability, materially affecting winter security, price volatility, infrastructure investment and offtake strategies.

Energy Import and Inflation Exposure

Japan remains highly exposed to imported fuel and LNG costs as Middle East tensions keep oil elevated and pressure the yen. Rising energy and petrochemical input prices are lifting production, transport, and utility costs across manufacturing, logistics, and consumer-facing sectors.

Credit Stability Amid Fiscal Strain

S&P reaffirmed Israel at A/A-1 with a stable outlook, citing innovation capacity and ceasefire-related de-escalation, but warned elevated defense spending and geopolitical risk will pressure public finances. This supports financing access, yet keeps sovereign-risk and borrowing-cost sensitivity high.

Defense Industry Internationalization Accelerates

Ukraine is negotiating Drone Deal partnerships with about 20 countries, with four agreements already signed, while discussing U.S. joint ventures. This expands export potential, technology transfer, and fuel financing, but also raises questions around intellectual property, regulation, and supply allocation.

Digital Infrastructure Investment Surge

Board of Investment approvals reached 958 billion baht, including TikTok’s 842 billion baht expansion and other data-centre projects. Thailand is emerging as a regional AI and cloud hub, but execution depends on grid capacity, permitting speed, and skilled-labour availability.

Investment Zones and Industrial Localization

Egypt has 12 operating investment zones with 1,277 projects and seven more under construction targeting EGP 4.11 trillion over 20 years. Streamlined licensing and digital platforms improve manufacturing and export prospects, though delivery capacity and infrastructure execution must be monitored.

Energy Export Corridor Expansion

Ottawa and Alberta are advancing a proposed one-million-barrel-per-day West Coast pipeline, linked to carbon capture and faster approvals. If realized, it would diversify exports toward Asia, but investor uncertainty, Indigenous consultations, provincial opposition and tanker-ban constraints still complicate timing and project execution.

Tariffs disrupt industrial competitiveness

U.S. Section 232 and Section 301 actions remain a major threat to Mexican exports, notably steel, aluminum, autos and parts. Existing 50% steel tariffs and potential new measures risk raising costs, distorting integrated supply chains, and undermining cross-border manufacturing economics.

Domestic Gas Reservation Reshapes Markets

Australia will require a 20% domestic gas reservation from July 2027, prioritising local supply while preserving existing contracts. The measure improves east-coast energy security but raises sovereign-risk perceptions, may reduce LNG export flexibility, and affects industrial energy costs and project returns.

US-China Managed Trade Truce

China-US trade ties remain highly consequential despite a fragile truce. Two-way goods trade fell 29% to $415 billion in 2025, while talks may cut tariffs on roughly $30 billion each way, shaping market access, pricing and sourcing decisions worldwide.

Economic Security Becomes Trade Policy

Business groups and ministers are pushing stronger economic-security tools, closer EU supply-chain deals, and protection against coercive tariffs. This points to a UK trade posture increasingly shaped by resilience, strategic sectors and allied coordination rather than purely liberal market access.

Fiscal Slippage and Debt

Brazil’s fiscal framework is under strain after a March nominal deficit of R$199.6 billion pushed gross debt to 80.1% of GDP. Higher sovereign risk can delay rate cuts, raise financing costs, pressure the real, and complicate investment planning.

USMCA Review and Tariff Uncertainty

Canada’s 2026 USMCA review has turned adversarial, with renewal odds seen as low as 10% by one analyst. Ongoing U.S. tariffs on steel, aluminum and autos are undermining integrated North American manufacturing, investment planning and cross-border supply chain confidence.

Policy reform and budget uncertainty

The new coalition is preparing tax, labor, pension and bureaucracy reforms by July, but policy execution remains uncertain. Businesses face shifting assumptions on labor costs, fiscal support and carbon pricing, even as Berlin keeps the CO2 price in a €55–65 corridor for 2027.

BOJ Tightening and Yen Volatility

The Bank of Japan’s 0.75% policy rate faces strong pressure to rise to 1.0% as traders price roughly 77% odds of a June hike. Higher borrowing costs, yield shifts, and yen volatility will affect financing, hedging, import pricing, and export competitiveness.

Digital Infrastructure Expands Beyond Java

Indonesia’s digital economy is attracting data-center investment, supported by AI demand, cloud expansion, and personal-data rules emphasizing sovereignty. New projects in eastern Indonesia and Batam aim to improve redundancy, but power availability, connectivity, green energy, and skilled labor remain key operational constraints.

Vision 2030 Drives Capital

Vision 2030 continues to anchor foreign investor interest through large-scale diversification, with over $1 trillion committed across tourism, logistics, technology, renewables, healthcare, and manufacturing. Liberalized ownership rules and special economic zones improve market entry, though execution risks remain tied to state-led megaproject delivery.

Nuclear Talks Shape Business Outlook

Ongoing US-Iran negotiations over sanctions relief, uranium stockpiles and maritime de-escalation remain unresolved, leaving the policy environment highly fluid. Any breakthrough or collapse could quickly alter oil flows, shipping access, currency stability, and the viability of foreign commercial engagement.

US-China Managed Trade Reset

Washington and Beijing are extending a fragile trade truce and discussing a managed-trade mechanism covering roughly $30-50 billion of non-sensitive goods. Bilateral goods trade fell 29% to $415 billion in 2025, sustaining tariff uncertainty and accelerating supply-chain diversification across Asia.

Slowing Growth and Cost Pressures

Russia has sharply downgraded growth expectations while inflation, high interest rates, labor shortages, and war spending intensify domestic strain. For investors and operators, this weakens consumer demand, raises financing and wage costs, and increases the likelihood of policy intervention or fiscal extraction.

Labor shortages and workforce shift

Suspension of Palestinian work permits has forced Israeli industries to replace roughly 150,000 workers with more expensive foreign labor. Construction and other labor-intensive sectors face higher wage bills, recruitment friction, language barriers and operational delays, raising project costs for investors and multinational contractors.

Non-Oil Economy Remains Resilient

Saudi Arabia’s non-oil private sector returned to growth in April, with the PMI rising to 51.5 from 48.8. Domestic demand and infrastructure activity supported recovery, signaling resilience for consumer, services, and industrial investors despite regional instability and weaker export momentum.

Trade Diversification Gains Momentum

Jakarta is accelerating trade agreements with the EU, Canada, the UK, the EAEU, and the US to offset export slowing and geopolitical uncertainty. Officials are targeting EU market access with zero tariffs from January 2027, while EAEU preferences could cover over 98% of Indonesia-Russia trade.

Gas Reservation Rewrites Energy Markets

Canberra will require LNG exporters to reserve 20% of production for domestic users from July 2027, aiming to reduce volatility and avert shortages. The reform may lower local input costs, but raises investor concerns over export economics, contract structures and policy predictability.

Overseas Fab Expansion Risks

TSMC’s global buildout in Arizona, Japan and Germany is reshaping procurement and investment decisions. While it improves resilience, it also introduces execution risk from labor, water, power, regulation and higher operating costs, affecting customers’ pricing, localization and sourcing strategies.

Data Centers and AI Expansion

France is attracting large-scale digital investment thanks to relatively low-carbon power and market scale. Amazon pledged more than €15 billion over three years, while Ile-de-France added 66 MW of data-center capacity in 2025, though land and grid connections are tightening.

Judicial reform clouds certainty

Judicial reform and its possible revision are reinforcing investor concerns over rule of law, institutional stability, and contract enforcement. Reports linking weak confidence to frozen investment and a 0.8% first-quarter economic contraction raise the risk premium for long-term manufacturing and infrastructure commitments.

Non-Oil Growth With Cost Pressures

The non-oil economy returned to expansion in April, with PMI at 51.5 after 48.8 in March, but firms faced the sharpest input-cost increase since 2009. Higher freight, raw material and wage pressures will affect pricing, margins and sourcing strategies.

Won Weakness Raises Cost Pressures

The won has hovered near 17-year lows around 1,470 to 1,480 per dollar, increasing import costs for energy, materials and equipment. For foreign businesses, currency volatility complicates pricing, hedging, contract negotiations and Korean market profitability despite export competitiveness gains.

Energy shock and import bill

The Iran war and Hormuz disruption pushed Brent sharply higher, widening Turkey’s current-account strain and lifting transport, utilities, and industrial input costs. Energy price volatility directly affects manufacturing competitiveness, logistics costs, inflation pass-through, and budget assumptions for foreign investors.

Slowing Growth, Weak Demand

Thailand’s economy likely grew just 2.2% year on year in the first quarter, while the central bank cut its 2026 growth forecast to 1.5%. Weak consumption, high household debt, and softer tourism complicate market-entry timing, sales forecasts, and domestic investment assumptions.

Rare Earth Supply Leverage

China’s dominance in processing remains a major chokepoint, refining over 90% of global rare earths. Heavy rare earth exports are still around 50% below pre-restriction levels, raising prices sharply and threatening production across autos, aerospace, electronics, wind, and defense supply chains.

Stricter origin rules pressure

Washington is pushing tighter rules of origin, more North American and U.S. content, and greater traceability, especially in autos, steel and aluminum. Businesses using Asian inputs may face higher compliance costs, sourcing shifts, and reduced tariff preferences under revised T-MEC rules.

B50 Biodiesel Reshapes Palm Trade

Indonesia plans to raise its palm biodiesel mandate to B50 from July 1, increasing domestic CPO absorption by roughly 16 million tons annually. That could tighten export availability, raise edible-oil prices, and alter procurement strategies for food, chemicals, and biofuel-linked businesses.

External Financing Conditionality Tightens

The EU’s €90 billion 2026–2027 package underpins fiscal stability, defense procurement, and budget support, but disbursements are tied to tax, IMF, rule-of-law, and accession reforms. This improves policy discipline while creating execution risk, delayed payments, and funding gaps.