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INTERNATIONAL FINANCIAL MANAGE
European Union
BREXIT
Short-term Visible Impacts on UK
Long-term Implications on UK
Effects on EU
Consequences of Brexit for the global
economy
Implications for Bangladesh Economy
Challenges
What is the European Union
The European Union (EU) is a political and economic
union of 28 member states that are located primarily in
Europe since 1957. It has an area of 4.32 Million km2,
and an estimated population of over 510 millions. The
EU has developed an internal single market through a
standardized system of laws that apply in all member
states. EU policies aim to ensure the free movement of
people, goods, services, and capital within the internal
market, enact legislation in justice and home affairs,
and maintain common policies on trade, agriculture,
fisheries, and regional development. Covering 7.3% of
the world population, the EU in 2016 generated a
nominal gross domestic product (GDP) of 16.477 trillion
US dollars, constituting approximately 22.2% of global
nominal GDP and 16.9% when measured in terms of
purchasing power parity. 6
What BREXIT Means
Trade
Foreign Direct Investment
Remittance
Foreign Aid
Migration
Implications for Bangladesh
Economy
Trade Conti..
Why is the EU the best market for Bangladesh?
Duty-free market access for all products under
Generalised Preference System (GSP).
More recent benefit: Duty-free, Quota-free market
Access for all- products-except-arms to the EU
market under the Everything-but- Arms Initiative
(EU-EBA).
One-stage Rules of Origin
Bangladesh runs the risk of losing these benefits in the
UK market.
Export growth potential of Bangladesh may get
undermined to a large
extent due to subdued demand in the concerned markets.
Weaker currencies in the UK and the EU zones imply
reduced buying power and thus lower prospects of
exports.
Exporters earnings will lose value in currency
Implications for Bangladesh
Economy
Conti..
Foreign Direct Investment
The uncertainty and volatility in UK market is
likely to have adverse impact on its investment
bound to Bangladesh economy.
Remittance
Devaluation of GBP will have immediate
impact on Bangladeshs
remittance.
Migrant workers and non-resident Bangladeshis
may postpone sending remittance to
Bangladesh until GBP revives.
Foreign Aid
The flow of grants from both the UK and the EU
is likely to be affected based on their respective
economic states.
Official Development Assistance (ODA)
Migration
Conclusion
Nobody exactly knows what will be the impact of Brexit on
the world economy including Bangladesh. However, the
impact will be lesser than anticipated- if the UK continues to
allow duty-free market access even after its exit from EU,
then Bangladesh would not have difficulties in export. In
that case, UK would continue to grow because of a large
number of NRB there. The government may have to make
necessary adjustments in the proposed budget and keep the
export sector vibrant by maintaining the tax at source on
RMG export. Bangladesh needs to proceed carefully by
inclusively analyzing post-Brexit global economic changes
by forming a national committee involving representatives
of all walks of relevant trade bodies and regulators so as to
react effective ways. The government ought to start
lobbying and need to renegotiate with UK to retain the