by Hiran H.Senewiratne
“UK has voted to exit from the the world’s largest trading bloc, the European Union, which accounts for 15 per cent of the world’s trade in goods and services. Therefore, it is the export market for more than 80 countries, including Sri Lanka, a top exporter said.
“So, the economic consequences of the disruption that could be caused by the UK pulling out of the EU would be felt even in our part of the world. The reason being, under the GSP plus trade agreement, UK imports from Sri Lanka are the largest when compared to other countries in the region, Executive Director, TOS Lanka Company, Merrick Gooneratne said.
“With the exit of UK from the EU region, it would mainly affect apparel and other items that are being exported from Sri Lanka to the EU region, due to the GSP plus trade arrangement, Gooneratne told The Island Financial Review.
“The UK could enter into a series of free trade agreements with the EU, the US, Asian and Commonwealth countries, and thereby cushion the impact of losing access to the European single market, he said.
“In Sri Lanka, we suffered the consequences of losing the GSP+, a preferential trade deal with the EU, in the late 2000s. Going by our experience, the adverse impact of a UK pull-out would be far greater, Gooneratne added.
Lead Economist Frontier Reserch Shiran Fernando told The island Financial Review that the immediate impact would lie in the volatility in the global financial market, which could create some problems of issuing our sovereign bonds to international markets.
He also said that there would be some pressure on the Sri Lankan rupee with the exiting of UK from the EU region in the future.
Prime Minister Ranil Wickremesinghe said Sri Lanka is ‘very concerned’ about the probable impact of ‘Brexit’ on the global economy, Sri Lanka and the UK.
He said the impact of Brexit on Sri Lanka would be greater than that stemming from Lanka losing the EU’s GSP+ tariff concession.