The shock of Britain’s vote to exit the European Union (EU) will reverberate around the world for decades to come. In addition, Asia isn’t immune. The direct effect on stock markets and exchange rates around the region is a modest harbinger, but that’s only the beginning.
The global economic outlook may be grim but it would be grimmer still but for Asian economic growth. There’s no dynamic growth pole anywhere else in the world and global uncertainties have increased around the rise of Donald Trump in North America and Brexit in Europe.
Asia’s migrant domestic workers face exploitation and discrimination, but are largely left out of countries’ labour policies and legislation. Though estimates of the number of domestic workers vary between 52 and 67.1 million, there is consensus that a significant proportion of them, perhaps as many as 11.5 million, are migrants. About 40 percent of the world’s domestic workers are in the Asia Pacific and around 80 percent of migrant domestic workers are women.
A U.S. decision to block the reappointment of Seung Wha Chang, a South Korean member of the appellate body of the World Trade Organization, has put at risk the independence and credibility of the WTO’s dispute settlement mechanism — the crown jewels of the multilateral trading system. After the de facto collapse of the Doha round of talks on further trade liberalization the U.S. move is a serious blow for the WTO.
The UK has decided to seek a divorce from the EU after a 43-year rocky marriage. It was not an overwhelming decision. Brexit won by 52%-48% margin, seemingly too small for such a momentous decision. The UK has not decided exactly when it will formally begin the divorce proceedings, and it still wants to be friends.
There is no doubt that the United Kingdom’s (UK) exit from the European Union (EU) will have long-term economic consequences for the entire world. Friday’s response to the news that Britain voted to exit the EU (also known as “Brexit”), however, created an enormous market response.
In the wake of last week’s surprise vote for Britain to leave the European Union (EU), markets, analysts, and politicians are springing to respond.
The British pound lost over 7% of its value almost instantly against the U.S. dollar, bringing the currency to its lowest point since 1985. The decline has significantly hurt British purchasing power for imported goods and services, but has also made British companies more competitive internationally; the economic impact of the change in currency remains uncertain.
Sterling has been sold beyond the panic low seen when it became clear that UK voters were choosing to leave the EU though nearly every economists warned of at least serious short- to medium-term negative economic implications.
The UK choice to leave the EU on a 52%-48% vote is one of those moments that define before and after. It is true that there are examples of the EU not liking the outcome of a referendum and allowed a repeat, such as in the Maastricht Treaty or the European Constitution Lisbon Treaty.
Efforts for another referendum or a Scottish or Welsh veto do not seem to be the path forward. That will not fly now. Tsipras of Greece chose to ignore the results of his referendum last summer. We may not be the first to notice this, but the UK is not Greece.
The British decision to leave the EU has been a long time in the making, but it does not lessen the shock that many politicians in the UK and across the EU are feeling.
While London begins the long process of negotiating an exit from the European Union, some of our attention must now turn to the rest of the organisation and to the other member states.
