Energy Shock and Freight Costs

The Iran conflict and Strait of Hormuz disruption are lifting U.S. fuel, diesel, and logistics costs. More than 34,000 shipping routes were reportedly diverted, while higher transport and input costs are feeding through supply chains, squeezing margins for trade-dependent sectors.

Weather Disrupts Mining Logistics

Persistent heavy rain, humidity near 99%, and lower ore grades in key mining areas such as Morowali and Halmahera are slowing extraction, drying and transport. These operational constraints tighten feedstock availability and raise delivery risks for metals, smelters and exporters.

Reindustrialisation and tariff debate

Calls for broader tariffs on Chinese imports and a tougher review of the China-Australia trade framework signal growing pressure for industrial policy. Even without immediate policy change, companies should monitor rising risks of protectionism, localization incentives, and sector-specific import restrictions.

Fuel import security shock

Middle East disruption has exposed Australia’s reliance on imported refined fuels, with around 80-90% imported and only two refineries operating. Higher diesel and petrol costs, shipment rerouting, and low reserves are raising inflation, logistics risk, and contingency planning needs.

US-Japan Policy Coordination Signals

Japanese officials signaled close coordination with the United States and G7 counterparts on foreign-exchange stability. For multinationals, this reduces tail-tail risk of disorderly markets but underscores that geopolitical and macro shocks can quickly influence Japan-related trade and investment conditions.

Customs And Digital Efficiency Gains

Customs clearance times have fallen from nine hours to under two hours in key channels, supported by pre-clearance and digital systems, improving import reliability and inventory turnover, although firms must still adapt to evolving regulatory standards and local reporting requirements.

Fiscal Credibility Clouds Investment Outlook

Fitch shifted Indonesia’s outlook to negative, citing weaker policy credibility, subsidy pressures and possible off-budget spending. With the 2026 deficit baseline at 2.9% of GDP and rupiah pressure persisting, investors face higher macro, financing and policy predictability risks.

Regulatory and Tax Policy Fluidity

Recent policy shifts, including levy increases, targeted consumer support and evolving industrial transition measures, show a more interventionist operating environment. Businesses face faster-moving regulatory and fiscal changes affecting energy contracts, compliance costs, investment appraisals and sector-specific profitability.

Currency Volatility and Hot Money

The pound remains vulnerable to regional shocks and portfolio flows. Egypt saw roughly $8 billion of outflows during recent turmoil, although later debt inflows of $1.78 billion offered support. Businesses face foreign-exchange uncertainty, repricing risk, and potentially volatile import costs.

USMCA Review and Tariff Reset

Mexico faces its most consequential trade negotiation in years as formal USMCA talks begin May 25. Washington signaled 25% auto tariffs and 50% steel duties may persist, raising costs, compressing margins, and undermining export-led manufacturing decisions.

Logistics Constraints Hit Export Capacity

Sanctions on shipping, insurance and financing continue to restrict Russia’s export efficiency, especially in LNG and coal. Arctic LNG 2 remains underutilized due to tanker shortages and unwilling buyers, while higher freight and rail tariffs erode margins and delivery reliability.

Regional Proxy Conflict Spillovers

Iran’s support for Hezbollah, the Houthis, Hamas, and Iraqi militias remains a major sticking point in negotiations. Continued attacks across Lebanon and surrounding theaters increase the probability of sudden transport interruptions, infrastructure damage, and broader operational risks for regional business footprints.

Labor Shortages and Migration Curbs

Russia issued about 475,000 work patents in the first quarter, down 22% year on year, as regions widened migrant-work bans across transport, retail and services, worsening labor shortages in construction, logistics and utilities and raising operating costs.

Semiconductor Export Controls Expansion

Congress is advancing tighter semiconductor equipment controls aimed at Chinese fabs, including possible new restrictions on ASML DUV tools and servicing licenses. This could further fragment technology supply chains, constrain China-linked sales, and raise compliance burdens for chip, equipment, and electronics firms.

Industrial Power and Green Transition

Taiwan’s advanced manufacturing buildout is colliding with electricity and decarbonization constraints. TSMC’s five planned 2nm fabs in Kaohsiung may consume about 11.2 billion kWh annually, intensifying pressure on grids, renewable procurement, environmental permitting, and ESG expectations for global customers.

Suez Economic Zone Manufacturing

The Suez Canal Economic Zone is attracting export-oriented industrial investment, including a proposed $2 billion Chinese aluminium complex creating about 3,000 jobs. This strengthens Egypt’s role as a manufacturing and re-export base serving Europe, the Gulf, and African markets.

Real Estate Rules Shape Investment

Foreign capital is increasingly targeting logistics, data centers, industrial property, and income-generating assets, supported by infrastructure growth. Yet land-use procedures, project approvals, and profit repatriation rules still create friction, affecting site selection, market entry timing, and capital deployment.

Non-oil economy loses momentum

The non-oil private sector contracted for the first time since 2020 as orders, exports, and client confidence weakened. New orders fell sharply, with the subindex at 45.2, signaling softer near-term demand conditions for consumer markets, industrial suppliers, and service providers.

Energy Price Exposure Reform

The government is redesigning electricity pricing to reduce gas-linked volatility, offering fixed-price contracts for roughly one-third of supply and raising the generator levy to 55%. For manufacturers and investors, energy costs, margins and project economics remain a first-order UK risk.

Agricultural export cost pressure

Agriculture remains Ukraine’s main export engine, generating over $22 billion last year, but farmers face severe diesel, fertiliser and logistics pressures. Rising input costs, fuel import dependence and labor shortages could cut output, weaken export volumes and disrupt food-related supply chains.

War Damage to Logistics

Ukrainian long-range attacks on Tuapse, Primorsk, Ust-Luga and other export nodes are disrupting oil loading, refining and port throughput, with reported daily shipment losses near 880,000 barrels, creating mounting physical supply-chain disruption and insurance complications for counterparties.

Suez Revenue Shock Persists

Red Sea insecurity continues to divert vessels from the canal, cutting Egypt’s foreign-exchange earnings and complicating supply planning. Recent reporting cites roughly $10 billion in lost Suez revenues, while rerouting adds 10–15 days and materially raises freight and insurance costs.

Energy Infrastructure Under Persistent Attack

Russian strikes continue to damage power and heating assets, delaying winterization and forcing reliance on internal resources while EU funds remain partially blocked. For business, this raises outage risk, backup-power costs, insurance premiums, and operational continuity challenges across industrial sites.

High-Tech and Digital FDI Momentum

Approved foreign investment reached 324 billion baht in 2025, up 42% year on year, with momentum in semiconductors, cloud, AI, and related infrastructure. Interest from firms such as ASML and Microsoft signals growing opportunities for technology suppliers, industrial real estate, and skilled-labor strategies.

US Trade Probe Tariff Risk

Washington’s Section 301 overcapacity probe and revised Section 232 metals tariffs are sustaining uncertainty for Korean exporters. Although some products may benefit and affected tariff lines fall about 17%, manufacturers still face compliance costs, possible tariff expansion, and planning volatility.

US Trade Pact Recalibration

India-US trade negotiations are nearing a first tranche, but US tariff changes and Section 301 probes have forced redrafting. The outcome will shape tariff competitiveness, agricultural access, export growth and supply-chain decisions for firms using India as a US-facing production base.

Labor Uncertainty in Platform Economy

Conflicting court decisions and stalled legislation on app-based work keep labor classification uncertain, while companies spent over R$50 billion on labor litigation in 2025. The ambiguity increases legal risk, staffing costs, and automation incentives for digital, logistics, and service businesses.

China Pivot Complicates Market Access

Ottawa’s January deal with Beijing, including lower barriers for up to 49,000 Chinese EVs and tariff relief on some Canadian agriculture, is widening strategic friction with Washington. Businesses face heightened policy, compliance, and geopolitical risk across autos, agri-food, and investment planning.

Logistics Corridor Expansion Accelerates

Saudi Arabia Railways launched five new freight corridors linking Gulf ports, Red Sea gateways, and inland hubs, while Red Sea ports can handle over 17 million containers annually. This improves rerouting capacity, shortens transit times, and strengthens supply-chain resilience.

Industrial Competitiveness Under Pressure

High power prices are accelerating deindustrialisation risks in chemicals, bioethanol and basic materials. Industry reports energy can exceed 50% of manufacturers’ cost base, with UK facilities facing far higher costs than US peers, undermining local production, exports and supply-chain resilience.

Industrial Security Regulation Deepens

US trade, export-control and national-security tools are increasingly converging, affecting semiconductors, critical minerals, autos and industrial goods. For companies, compliance is now a strategic function as market access, supplier qualification and M&A execution depend on shifting security-driven regulations.

Foreign Investment Climate Improving

Egypt is intensifying its investment pitch with a $60 billion FDI target for 2026-2030, streamlined licensing, tax and customs incentives, and expanded private investment zones. Opportunities are growing, though execution risks, FX constraints, and regulatory consistency remain decisive.

Defensive Trade Powers Emerging

Britain is developing anti-coercion powers to counter pressure from major economies, including possible sanctions, export controls, import restrictions and investment limits. For multinationals, this signals a tougher trade-security environment, especially regarding exposure to China and potentially the United States.

Strong shekel pressures exporters

The shekel has strengthened sharply, briefly moving below 3 per dollar for the first time in decades, cutting export competitiveness. Dollar-earning sectors, especially technology, face compressed margins, higher local labor costs and stronger incentives to shift hiring and R&D abroad.

Foreign Investment Momentum Strengthens

Approved foreign direct investment reached THB324 billion in 2025, up 42% year on year and extending five consecutive years of growth. Semiconductor, cloud and AI investments, including Microsoft’s US$1 billion plan, reinforce Thailand’s appeal for regional manufacturing and digital operations.

Oil Revenues Defy Price Cap

Russian oil exports remain commercially significant despite Western caps. Urals crude reportedly reached $94.5 per barrel in March, far above the $44.1 EU-UK cap, while Indian purchases rose sharply, underscoring persistent enforcement gaps and ongoing volatility in global energy trade.