Global Risk Indexes (06-03-2025)

Global 97 (-1 ▼)
MENA 99 ( —)
APAC 97 (-1 ▼)
Europe 98 ( —)
Africa 95 (-1 ▼)
AMERs 96 (-1 ▼)
Markets 98 (-1 ▼)
Mei Ling, Asia Pacific region analyst at Worldwise Analytica

Mei Ling

Empowering minds, shaping decisions: Insights from the heart of geopolitics

Asia-Pacific Faces Economic and Security Challenges: U.S. Expands Trade Barriers, China Struggles with Deflation, and Regional Security Incidents Rise

The Asia-Pacific is experiencing intensifying economic uncertainties and shifting geopolitical alignments, as U.S. trade policies disrupt global supply chains, China’s economy faces persistent deflation, and security incidents raise regional stability concerns. These developments highlight the growing complexities in economic and political decision-making across the region.

Japan’s Aluminum Supply Shock: U.S. Tariffs on Canadian Imports Reshape Global Trade

The U.S. has expanded tariffs on Canadian aluminum, disrupting supply chains that directly affect Japan’s manufacturing sector. With Tokyo heavily reliant on aluminum imports, the sudden policy shift is forcing Japanese manufacturers to seek alternative suppliers or absorb higher costs, which could reduce profitability and impact Japan’s industrial competitiveness.

As trade policies become more unpredictable, Japan may have to strengthen trade ties with alternative aluminum producers in Australia, India, or the Middle East to stabilize supply chains.

China’s Economic Struggles: Deflation and Weak Consumption Persist

China continues to struggle with deflation and weak domestic consumption, raising doubts about Beijing’s economic policy effectiveness. Despite recent stimulus measures, household spending remains sluggish, and businesses are hesitant to expand investment.

If these trends persist, China may be forced to intensify state-led economic interventions, potentially exacerbating tensions with the private sector and foreign investors.

Trump Expands Travel Ban to Pakistan and Afghanistan

The U.S. has expanded its travel ban to include Pakistan and Afghanistan, a move that is already worsening diplomatic relations between Washington and Islamabad. The decision affects thousands of visa applicants, including students and business professionals, further straining U.S.-Pakistan relations.

Islamabad may respond by strengthening economic and security ties with China, Russia, or Gulf states as it seeks alternative alliances amid deteriorating relations with Washington.

South Korea’s Military Training Concerns: Bombing Mishap Injures Civilians

A military training accident in South Korea resulted in civilian injuries, raising concerns over the country’s military safety protocols. With heightened regional tensions, Seoul’s military preparedness remains under scrutiny, and any further incidents could trigger domestic opposition to expanded defense policies.

Pakistan-U.S. Counterterrorism Cooperation: ISIS-K Militant Arrest

Pakistan has played a key role in assisting U.S. intelligence efforts that led to the arrest of an ISIS-K militant linked to the deadly 2021 Kabul airport attack. This move underscores Islamabad’s efforts to maintain strategic security cooperation with Washington, despite broader diplomatic tensions.

However, Pakistan’s counterterrorism commitments could also provoke retaliatory attacks from militant groups within its borders, further complicating its internal security landscape.

Vietnam’s Trade Deficit Signals Economic Stress

Vietnam is facing a rising trade deficit, raising concerns over its export-driven economy. With increasing uncertainties in the U.S.-China trade war, Hanoi may be forced to diversify export markets to maintain economic stability.

Malaysia Investigates AI Chip Exports for Potential U.S. Trade Violations

Malaysian authorities are investigating potential violations of U.S. trade restrictions related to AI chip exports to Chinese firms. If violations are confirmed, Malaysia could face increased scrutiny from Washington and potential disruptions to its semiconductor sector.

India Increases U.S. Crude Imports Amid Russian Oil Uncertainty

India is increasing U.S. crude oil imports to reduce its dependence on Russian energy amid uncertainty over Moscow’s future oil exports. This shift underscores New Delhi’s strategy to balance energy security while maintaining diplomatic flexibility between Western and Russian suppliers.

Looking Ahead: Economic Realignments and Security Uncertainties

The Asia-Pacific remains highly fluid, with shifting economic dependencies, new trade policies, and ongoing security concerns shaping the regional outlook. The next few weeks will be critical in determining whether these disruptions stabilize or accelerate further geopolitical and economic realignments.

Geopolitical Risk Assessment for the Asia Pacific
(06-03-2025)

The Asia-Pacific region is facing mounting economic pressures, security incidents, and policy shifts that could reshape regional power dynamics. The expansion of U.S. tariffs on Canadian aluminum is disrupting global supply chains, directly impacting Japan’s manufacturing sector. China continues to struggle with deflation and weak domestic consumption, raising concerns about the effectiveness of Beijing’s economic policies. The Trump administration has expanded its travel ban to include Pakistan and Afghanistan, escalating diplomatic tensions and affecting thousands of visa applicants. Meanwhile, South Korea is dealing with the fallout from a military accident that injured civilians, raising concerns over training safety. Pakistan has taken a significant step in counterterrorism cooperation by assisting the U.S. in capturing an ISIS-K militant linked to the 2021 Kabul airport attack. In Southeast Asia, Vietnam's rising trade deficit signals economic stress, while Malaysia is investigating potential violations of U.S. trade restrictions on AI chip exports to China. India is diversifying its energy imports by increasing U.S. crude purchases amid uncertainty over Russian oil flows. Hong Kong has witnessed a rare legal victory for democracy activists, highlighting Beijing’s complex approach to balancing control and legal processes. Additionally, Cyclone Alfred is causing mass evacuations and economic disruptions in Australia, requiring a prolonged crisis response. With economic instability, shifting trade policies, and security challenges converging, the region remains highly vulnerable to economic fragmentation, political tensions, and strategic realignments.

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Developments to Follow for the Asia Pacific (See All Global)

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