The shock wave of Britain’s exit from the European Union has been felt across the globe, as stock markets in various countries, including Pakistan and the United States, have tumbled, British pound has reached its lowest values in 31 years and fear of political uncertainty has rattled the financial capital of many countries around the world. According to experts, the UK was the important supporter in Brussels which had used its good offices to grant GSP plus status to Pakistan. As the aftermath of the development, Pakistan’s exports will further decline, leaving more pressure on the country’s economy, the stock market has shed over 1,400 points and textile and auto sectors are likely to be worst hit by the decision. However, another group of experts sees little impact of the British exit on the overall economy of the country as the total exports to the EU are only 7 percent of the country’s total gross domestic product.
The European Union is one of the leading trade partners of Pakistan and political uncertainty in 28-member block can adversely affect the dwindling exports. It will take time for Britain to stop depreciation of pound sterling against dollar and euro in the open market. However, it will take two years to clear the dust. The weak euro and pound sterling could slow down the European economies ultimately putting further pressure on the export sector of Pakistan. It will be better for the Pakistani exporters to adopt wait and see policy, but they cannot stop the compliance of the orders which are already under process. However, the import laws and custom duties can be changed in the UK after it leaves the EU. Pakistan was granted the Generalised System of Preferences Plus status in December 2013 for 10 years, but it could add only $1 billion exports earnings to its economy per year. After the Britain’s exits, the EU will also change its customs rules and import laws, which will multiply troubles for the Pakistani exporters.
Experts predict the textile exports will further down as Pakistan’s share in the UK market is $1.2 billion which is 10 percent of the total export to the other European countries. The next sector in line is leather which can be affected by uneven events in Europe. However, the Pakistani policymakers should prepare themselves to deal with the changing circumstances and should not sit idle at home. Pakistan has now good chances to approach both UK and EU to invest in the China Pakistan Economic Corridor which can also be helpful for their economies.
