Weakened EU - Welcome change for developing world
A.C. SHAHUL AHMEED COLOMBO—The Uk’s withdrawal from the European Union (EU) following the referendum of Brexit - abbreviation of British exit - has created ripples in global markets . The British pound fell to its lowest level since 1085. In the circumstances , investors flee risky assets and take refuge in the dollar and the yen.
Brexit is a blow to emerging market economies such as Sri Lanka which are already hit by the global financial turmoil and the economic setback in the aftermath of the US rate hike in last December .
Sri Lanka is exposed to Brexit as she has fairly significant trade, investment and financial links with the UK and the EU .Brexit came at a time when Sri Lanka is under severe balance of payments pressures with heavy heavy external debt payments amid credit rating downgrades.
Sri Lanka’s leading economist Professor Sirimevan Colombage said: The Brexit sent shock waves through capital markets .
Stocks tumbled sharply across global equity markets . US shares were down by 3.6 per cent.The Dow Jones industrial average declined by 611 points , its biggest drop since last August.
The Brexit is expected to result in economic setbacks in the UK as well as in the EU.Its impact would spill over to the emerging Asian economies through multiple channels including currency swings, trade exposure, bank lending developments , equity capital flows , inward remittances and tourism.. The scenario may change in the long run depending on the future relationship between the UK and the EU.
Since the EU and the UK are major trading trading partners of Sri Lanka, the rupee appreciation vis-a-vis their currencies has adverse effects on the export sector.This calls for s further depreciation of the rupee on top of the current rupee weakening “said Economist , academic and former Central Banker Professor Colombage said.
Sri Lanka’s exports to EU account for about 30 per cent of the country’s total exports. Hence developments in the EU have a significant bearing on the Sri Lankan economy.
The depreciation of the Euro coupled with the anticipated economic set back in the Euro region will diminish the demand for the Sri Lankan exports. West Bank city of Hebron, known to Muslims as the Ibrahimi Mosque and to Jews as the Cave of the Patriarchs.
It was the third violent incident in two days.
On Thursday morning, a Palestinian fatally stabbed a US-Israeli teenager in her home at a Jewish settlement adjoining Hebron.—Agencies