Investment Incentives and Tax Overhaul

Ankara unveiled a major reform package featuring a 9% corporate tax rate for manufacturing exporters, 100% service-export exemptions and expanded Istanbul Financial Center benefits. The package could improve FDI appeal, regional headquarters decisions and export-oriented manufacturing, though execution and legal predictability remain critical.

Oil Export Resilience Under Pressure

Russia’s seaborne crude exports recovered to 3.52 million barrels per day on a four-week basis, with weekly flows at 3.79 million. Revenues remain substantial, but logistics depend on fragile shadow-fleet arrangements, waivers and ports vulnerable to Ukrainian strikes and policy tightening.

Shadow Fleet Compliance Exposure

Iran relies heavily on opaque shipping structures, AIS spoofing, front companies and multi-flag tanker networks spanning jurisdictions such as Panama, Cameroon and the Marshall Islands. For insurers, ports, traders and charterers, beneficial-ownership screening and cargo-traceability risks are rising materially.

China Dependence Versus Diversification

Vietnam is deepening trade, rail, energy and technology ties with China, its largest trading partner at roughly US$256 billion in 2025. While this supports inputs and infrastructure, it heightens exposure to geopolitical pressure, transshipment accusations and supply-chain concentration risk for foreign investors.

Fuel Import Vulnerability Intensifies

Australia remains highly exposed to external fuel shocks as import dependence stays extreme and refining capacity remains limited. Recent disruptions forced emergency diesel procurement from Brunei and South Korea, underscoring risks to transport, mining, aviation, agriculture and manufacturing operations.

US Trade Pact Recalibration

India-US trade talks have reset after Washington imposed a temporary 10% tariff on all countries, eroding India’s earlier advantage. Ongoing Section 301 probes add compliance risk, making tariff outcomes and market-access terms critical for exporters, sourcing strategies, and investment planning.

Election Cycle Delays Dealmaking

US political uncertainty is influencing bilateral trade negotiations and corporate timing decisions. Trading partners such as India are slowing commitments until after the November 2026 midterms, while businesses defer long-term tariff, tax and market-entry bets pending clearer policy signals.

China Decoupling Through Rerouting

US-China trade friction remains structurally significant, but trade is being rerouted rather than fully reduced. Roughly $300 billion in tariff-exposed goods reportedly bypass duties annually, while suspicious USMCA-related transactions rose 76%, intensifying customs, compliance, and supplier-traceability demands.

Iran Sanctions Hit Energy Trade

Expanded US sanctions on Iran-linked networks and Chinese buyers are widening secondary-sanctions exposure for banks, refiners, shippers and insurers. With China buying more than 80% of Iran’s shipped oil, enforcement can disrupt energy flows, payments, freight routes and broader commercial relationships.

Fiscal Credibility Under Scrutiny

The government proposed a 2027 primary surplus of R$73.2 billion, but broad fiscal exclusions reduce the effective surplus to roughly R$8 billion. Ongoing doubts over rule credibility may sustain higher risk premiums, currency volatility, and cautious investor positioning.

Reshoring Incentives Policy Reset

The government plans to broaden reshoring eligibility and ease subsidy requirements as investment slows. Reshoring firms have generated about 7 trillion won and 8,000 jobs since 2014, and new incentives could redirect supply chains, site selection, and domestic manufacturing investment decisions.

Sanctions Broaden Secondary Exposure

US sanctions on Iran-linked trade are widening compliance risks for global firms, especially in shipping, energy and finance. Recent measures targeted a 400,000-barrel-per-day Chinese refinery, dozens of shippers and 19 vessels, increasing due-diligence demands across cross-border transactions.

Energy Import Shock Exposure

Japan’s heavy dependence on imported fuel remains a first-order business risk. Roughly 95% of crude imports come from West Asia, while LNG prices in Asia have reportedly surged 70%, raising power costs, compressing margins, and threatening manufacturing continuity.

Payment Channels Face Tighter Controls

Washington is sharpening scrutiny of financial intermediaries facilitating Iran-linked transactions, including possible pressure on regional and Asian banks. This raises settlement risk, compliance burdens and delays in cross-border payments, complicating trade finance, repatriation and supplier relationships.

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.

Selective FDI Rule Liberalisation

India is easing FDI rules for overseas firms with up to 10% Chinese shareholding while excluding China-registered entities. Faster 60-day approvals in key manufacturing segments could unlock projects, but investors still face screening complexity, political sensitivity, and ownership diligence requirements.

Consolidation budgétaire et croissance

Paris gèle 6 milliards d’euros de dépenses pour contenir un déficit visé à 5% du PIB, tandis que la croissance 2026 est ramenée à 0,9%. Cela accroît le risque de fiscalité, de coupes sectorielles et de demande domestique plus faible.

Energy Security Costs Escalating

Heatwaves, rapid industrial demand, and global fuel disruption are lifting Vietnam’s energy risk. April LNG imports jumped to about 276,000 tonnes from 70,000 in March, raising power costs and highlighting vulnerability to external shocks and supply interruptions.

Monetary Tightening and Inflation

Turkey’s central bank held the policy rate at 37% and overnight lending at 40%, while March inflation was 30.87%. Elevated financing costs, softer domestic demand, and delayed rate cuts raise borrowing, hedging, and working-capital pressures for importers, exporters, and investors.

Supply Chain Ecosystem Deepening

Vietnam is moving from low-cost assembly toward deeper industrial ecosystems, especially in Bac Ninh’s electronics cluster. More than 3,500 foreign-invested projects worth over US$49 billion support scale, but low localisation and limited Tier-1 domestic suppliers remain constraints on resilience and value capture.

Red Sea Logistics Rewiring

Saudi Arabia is expanding alternative trade corridors through Neom, Red Sea ports and multimodal links, including 13 added shipping services and faster cargo release below 24 hours, reducing some chokepoint exposure while reshaping routing, warehousing and distribution strategies across the region.

Industrial Licensing Rules Easing

Authorities are considering reforms to simplify industrial licensing, reduce fees, and ease compliance burdens, including wider payment cycles and clearer land-use rules. If implemented effectively, these changes could improve manufacturing timelines, project execution, and Egypt’s competitiveness for new plants.

Electrification drives infrastructure buildout

A new electrification plan channels about €4.5 billion annually through 2030, targeting transport, industry, buildings, and digital uses. France also plans to expand charging points from 4,500 to 22,000 for cars and add 8,000 truck chargers by 2035.

Trade Liberalization and Tariff Recast

Pakistan plans to remove more than 2,660 non-tariff barriers and cut import duties from June 2026, including changes across 76 HS codes. This should improve raw-material access and market entry, but intensify competition for local manufacturers and alter pricing strategies.

Middle East Shipping Exposure

Conflict-linked disruption around the Strait of Hormuz has sharply raised UK business concern over logistics and supply continuity. ONS data showed 29.4% of transport firms worried about conflict impacts, while manufacturers and retailers also reported steep rises in supply-chain risk.

Industrial Stagnation and Offshoring

Germany’s economy remains structurally weak, with industrial production near 2005 levels, two years of contraction, and unemployment nearing three million. BASF downsizing, Volkswagen plant closures and 37% of firms considering relocation signal supply-chain and investment risks.

Tariff Circumvention Enforcement Intensifies

US authorities are scrutinizing transshipment through Mexico and Southeast Asia more aggressively. Altana estimates roughly $300 billion in tariffed goods avoid levies annually, while suspect transactions rose 76% in the first 10 months of 2025, increasing customs, audit, and origin-verification risks.

Customs Modernization Border Frictions

Customs reforms are improving transparency, but border queues, weak crossing infrastructure, and longer clearance times still disrupt supply chains. Customs generated 22% of Q1 budget revenue, while average clearance rose to 6.9 hours and contraband increased to 17%.

Automotive Export Dependence Shifts

Automotive exports remain a core trade pillar, but performance is mixed across segments and destinations. First-quarter commercial vehicle exports rose 9.3% to $1.55 billion, while passenger-car exports fell 6.3%, underscoring dependence on European demand cycles and changing model mix across Turkish plants.

Steel Tariffs Disrupt Supply

New EU steel safeguards from July will cut duty-free quotas by 47% and impose 50% tariffs above caps, threatening UK exports into its largest steel market. Origin rules and UK countermeasures could materially disrupt metals, automotive and industrial supply chains.

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.

Foreign Business Climate Deterioration

Immediate implementation of new rules without consultation, plus restrictions on foreign software and broad anti-discrimination enforcement, are worsening the operating environment for foreign firms. Companies face higher regulatory unpredictability, greater pressure to localize, and more difficult China derisking strategies.

Samsung Labor Unrest Risk

Samsung unions, now representing over 70% of domestic staff, plan a general strike from May 21. Earlier action cut foundry output 58.1% and memory output 18.4%, highlighting material disruption risks for chip supply chains and global customer confidence.

War and Security Disruption

Continuing Russian attacks on energy and transport infrastructure, alongside unresolved security risks, remain the dominant constraint on trade, logistics, insurance, and project execution. Reconstruction costs are estimated near $600-800 billion, keeping operating conditions volatile for investors and cross-border supply chains.

Infrastructure Execution Imperative

India’s business case is improving, but logistics efficiency still depends on faster execution of industrial land, transport links and utility support. Large visible projects are viewed as necessary to unlock board-level confidence, scale export manufacturing and reduce friction in national supply chains.

Secondary Sanctions Compliance Expands

Treasury is intensifying secondary sanctions on Iran-linked trade, targeting refineries, shippers, banks and shadow-finance networks. With roughly 1,000 Iran-related actions since February 2025, multinational firms face higher screening, payment, shipping and beneficial-ownership compliance burdens across energy and commodities.