Clean Energy Investment Acceleration

Ministers are doubling down on renewables, grid upgrades, planning reform and public-land energy projects, with potential for up to 10GW of additional capacity. This supports medium-term investment in infrastructure, storage and clean technology, while creating transition risks for legacy industrial assets.

High-Tech FDI Expansion Wave

Vietnam is attracting larger, more technology-intensive investment, with annual FDI projected at US$38-40 billion over five years and 2026 inflows near US$29 billion. Semiconductors, AI, digital infrastructure, and advanced electronics are becoming central to site-selection and supplier strategies.

Lira Stability and Reserve Management

Currency stability remains a core business issue as authorities defend the lira through tight liquidity and reserve management. Central bank total reserves reached $174.5 billion on April 17, then slipped to $171.1 billion, highlighting persistent sensitivity to external shocks and capital flows.

Supply Chains Exposed Again

Risks linked to Strait of Hormuz disruption and broader Middle East instability are threatening inputs for chemicals, construction, and manufacturing. German officials warn bottlenecks could halt production, making inventory strategy, routing diversification, and supplier resilience more important for multinationals operating locally.

Macro Stability with Residual Risk

Headline indicators improved before the latest regional shock, with reserves at a record $52.8 billion, inflation down to 11.9%, and first-half GDP growth at 5.3%. Yet currency pressure, foreign-debt reduction needs and conflict spillovers still complicate planning.

Fiscal Resilience Masks Slowdown

Canada’s 2025/26 deficit improved to C$66.9 billion from a C$78.3 billion forecast, but growth was trimmed to 1.1% for 2026. Tariffs are expected to keep output about 1.6% below its pre-tariff path by 2029, weighing on investment decisions.

Persistent USMCA Tariff Regime

Mexico faces a structural shift away from zero-tariff North American trade as Washington signals tariffs on autos, steel and aluminum will remain after the USMCA review. This raises export costs, complicates pricing, and weakens Mexico’s manufacturing advantage versus rival producers.

Grid Constraints Curb Renewables

Transmission bottlenecks are increasingly limiting renewable integration, with some solar output curtailed and key interstate projects delayed by 6-12 months. This affects power reliability, industrial decarbonisation planning, and project returns, especially for manufacturers depending on stable green electricity access.

Nickel Quotas Reshape Supply Chains

Tighter 2026 nickel RKAB approvals, a planned output cap near 250 million tons, and Weda Bay maintenance are lifting input costs and prices. For battery, stainless and mining investors, Indonesia remains pivotal but policy-driven supply disruptions now materially raise procurement and project risk.

Semiconductor Export Supercycle

April exports rose 48 percent year on year to $85.9 billion, with semiconductor shipments reaching $31.9 billion and memory prices surging sharply. Strong AI-driven demand supports trade and investment, but heightens concentration risk across Korea’s export base and supplier networks.

Immigration Retrenchment Reshapes Labor

Canada’s sharp cuts to temporary migration, foreign workers, and international students are easing rental pressure but tightening labor availability in sectors reliant on imported talent. Companies must reassess hiring pipelines, wage expectations, university partnerships, and regional expansion strategies as population growth slows.

Logistics Hub and Infrastructure Push

Officials highlighted roughly $300 billion invested in transportation and $200 billion in energy infrastructure, alongside efforts to capture Middle Corridor trade flows. This strengthens Turkey’s role as a regional manufacturing and transit base, while improving resilience and route diversification for multinational supply chains.

Choc énergétique et inflation

La flambée des carburants, avec une hausse de 14,2% selon l’Insee, renchérit transport, production et logistique. L’augmentation des coûts énergétiques pèse sur les marges, entretient l’inflation à 2,2% et fragilise les secteurs intensifs en carburants.

Weak Growth and Demand Risks

UK growth expectations are softening as energy shocks and tight financial conditions weigh on activity. Official and think-tank forecasts point to roughly 0.8% to 0.9% growth, with rising unemployment risk, implying weaker domestic demand and more cautious corporate expansion decisions.

Aggressive Tax Audits Escalate

Multinationals are reporting harsher audits from Mexico’s tax authority, including challenges to credits, deductions and appeals. With tax collection having risen about 5% in real terms last year, foreign companies face growing fiscal exposure, documentation burdens and higher risk of prolonged disputes.

Reserve Depletion Spurs Regulatory Risk

Officials warn Indonesia’s 5.9 billion tons of nickel reserves could be exhausted in about 11 years at unchecked production rates near 500 million tons annually. That outlook raises the probability of stricter conservation measures, permit reviews, and sudden policy interventions affecting long-term projects.

European Trade Relationship Pressure

Israel’s access to European markets faces rising political pressure as EU states debate partial suspension of preferential trade terms. With the EU accounting for 32% of Israel’s goods trade in 2024, any tariff changes or restrictions would materially affect exporters and investors.

Trade Policy and Strategic Screening

Germany is backing a more defensive European trade posture amid tariff pressure, unfair-competition concerns and strategic dependency risks. Policymakers favor stronger investment screening, local-content preferences and diversified trade agreements, shaping market access, M&A reviews and sourcing decisions for foreign firms.

High cost base hurts competitiveness

Israel’s cost of living and operating environment continue to outpace many peer economies, with food and housing particularly expensive. Import barriers, high VAT, market concentration and regulatory burdens increase consumer prices and business costs, weighing on profitability and location decisions.

Militarized Economy Crowds Investment

Defense spending is absorbing about 7-8% of GDP and roughly 30% of federal spending, supporting output but distorting labor and capital allocation. For foreign businesses, this weakens civilian-sector opportunities, raises operational costs and increases dependence on state-directed industrial priorities.

Weak domestic demand persists

China’s headline growth remains supported by exports and infrastructure, but household demand is still fragile. First-quarter GDP rose 5%, while retail sales increased only 2.4%, limiting consumer-facing opportunities and raising the risk of prolonged deflationary pressure on corporate earnings.

Critical Minerals Supply Diversification

Japan is accelerating critical minerals partnerships with Australia, including expected agreements on six projects covering nickel and rare earths. The push reflects mounting concern over Chinese shipment restrictions and strengthens supply-chain resilience strategies for electronics, batteries, and advanced manufacturing investors.

Trade Defence and Strategic Policy

UK trade strategy is becoming more defensive, with greater attention on anti-coercion tools, tariff responses and economic security. For international firms, this raises the importance of monitoring market-access rules, politically sensitive sectors, and potential divergence from both US and EU trade measures.

B50 Biofuel Mandate Disrupts Palm

Jakarta plans nationwide B50 biodiesel implementation from 1 July 2026, requiring roughly 1.5-1.7 million extra tons of CPO this year. That supports energy security and reduces diesel imports, but may tighten export availability, lift palm prices, and complicate food and oleochemical supply planning.

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.

Slowing Growth and Public Investment

Mexico’s economy expanded only about 0.8% in 2025, while public investment reportedly fell 28%, pointing to weaker domestic demand and infrastructure constraints. Slower growth can moderate consumer markets, delay logistics upgrades, and reduce confidence in medium-term expansion plans.

EV Ecosystem Expands, Rules Wobble

Toyota’s CATL-linked battery investment and planned battery exports underscore Indonesia’s EV manufacturing momentum, supported by strong electrified vehicle sales growth. Yet regulatory inconsistency, including local taxation uncertainty for electric cars, risks undermining consumer adoption, investor confidence, and regional competitiveness against Vietnam and Thailand.

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.

Fragile Food and CO2 Supply

Government contingency planning warned that prolonged disruption in the Strait of Hormuz could reduce UK CO2 supplies to 18% of current levels, affecting meat processing, packaging, brewing, healthcare, and cold chains. The episode highlights acute supply vulnerabilities across essential business operations.

China EV Competition Intensifies

Chinese manufacturers are gaining share in Germany’s fast-electrifying car market as battery electric vehicles recently outsold combustion cars in Germany for a month. This raises competitive pressure on domestic OEMs while increasing strategic dependence on Chinese batteries, software, and components.

Persistent Inflation and Higher Rates

The RBA raised the cash rate to 4.35% on 5 May after March inflation hit 4.6%, with fuel costs driving broader price pressures. Higher borrowing costs are weakening consumer demand, raising financing costs and tightening conditions for investment and expansion.

LNG and Nuclear Buildout

Vietnam is accelerating major LNG and nuclear-linked cooperation to secure baseload power, including US$2.23 billion Quynh Lap and US$2.2 billion Ca Na projects plus South Korean nuclear discussions. These projects improve long-term energy resilience but create execution, financing, and import-dependence risks.

Energy System Needs Winterisation

Energy security remains a major operating risk for manufacturers, logistics operators, and investors. Kyiv says it needs at least €5.4 billion to prepare for winter, restore 6.5 GW of capacity, and close an €829 million gap on already approved critical energy projects.

State-backed battery supply chain

France is accelerating EV industrial policy through lithium mining, cathode materials, and component investments. Imerys targets 34,000 tonnes of lithium hydroxide annually from 2030, while tax credits and fast-tracked permits support battery manufacturing localization and supply security.

Structural Competitiveness Erosion

Business groups and foreign investors increasingly describe Germany’s weakness as structural rather than cyclical, citing high taxes, labor costs, bureaucracy and weak digitalization. Industrial production has declined annually since 2022, raising deindustrialization risks and encouraging production or investment shifts abroad.

Growth Slowdown, Demand Cooling

Officials and private analysts indicate economic activity is slowing, with weaker capacity utilization, softer PMI signals and reduced credit momentum. Growth forecasts were cut toward 3.0-3.4%, implying a more challenging operating environment for exporters, retailers, industrial suppliers and new market entrants.