In the wake of BREXIT, which is the UK's intention to withdraw from the politico-economic union, that is the European Union (EU), there will be significant economic and political changes not only on the EU economy but also in the world. With the UK voting to no longer be a part of the EU, developing nations such as Bangladesh, which were till date, enjoying quota free access in trading with European nations may now face adverse effects.
In the lecture, Dr Raihan mentioned that Bangladesh might encounter a fall in exports of around US$330 million and a fall in its real GDP by 0.1% due to the loss in preferences in the UK market. There will also be negative effects on exports from the Pacific, CARICOM (Caribbean Community), other LDCs and Sub-Saharan African countries, not in different magnitudes. He described BREXIT as, “an unprecedented situation in the face of the effective partnership that is the EU, which, until now has been an ideal union of regional nations, one which other countries around the world strive to achieve.”
He further explained the possible post-BREXIT background situation by stating, “Until now, UK's trade deals with other nations around the globe have been under the regulations of the EU umbrella, but following BREXIT, the UK will have to make their own separate trade regulations with countries they trade with. This imposing of additional trade regulations by the UK may pose to have negative economic effects on some nations. Interested foreign investors may have to pay additional taxes to access the UK market, hence making things financially challenging for developing nations.”
Dr Razzaque elaborated on the historical contexts and the channels through which BREXIT might have negative effects on UK's partner countries and the potential implications of such channels. He explained: “With the value of the British Pound having gone down a significant amount in the wake of BREXIT, this will have an adverse effect on a magnitude of areas – from the income earned by locals and expats living in the UK. UK is also a major provider of foreign aid and the depreciation of the British Pound will invariably have a negative impact on the countries the aid goes to as they will be receiving less than they used to before.”
Dr Raihan brought the interactive lecture session to a close by ending it off on a positive note: “Since BREXIT, as a whole, is a setback, Bangladesh and other developing countries may see this either as an opportunity or a challenge, depending on how economic relationships pan out in the future. However, one silver lining for Bangladesh may be in making effective use of all the trading opportunities that will open up in the wake of trade cut-offs between UK and the EU.”
The lecture was organised as a part of SANEM Lecture Series, which is aimed to share and disseminate academic researches on current economic issue.
Started in 2007, SANEM is a non-profit research organisation and a network of economists and policy makers in South Asia with a special emphasis on economic modelling. SANEM aims to promote the production, exchange and dissemination of basic research knowledge in the areas of international trade, macro economy, poverty, labour market, environment, political economy and economic modelling. It seeks to produce objective, high quality, country and South Asian region specific policy and thematic research. SANEM contributes in governments’ policy-making by providing research support both at individual and organisational capacities. SANEM maintains research collaboration with global, regional and local think-tanks, research and development organisations, universities and individual researchers. SANEM promotes young researchers from Economics, Business and Social Sciences to undertake independent research works on contemporary issues and also arranges regular training programs on economic modelling and contemporary economic issues for both Bangladeshi and other South Asian participants.