Britain’s exit from the European Union (EU) will hurt Bangladesh exports especially the RMG sector to its markets as it will cast shadow on the exchange rates, fear the economist and exporters.
In a referendum held on June 23, the UK people decided to leave EU as 52% people voted for exit while 48 cast vote to stay with the union.
“The short-term visible impact of the Brexit is devaluation of currency that has already witnessed an about 10% fall. Bangladesh will bear the brunt of the exit as it is the third largest single export destination for our products,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan told the Dhaka Tribune yesterday.
“As a result, the buyers will try to cut prices and to some extent even to cancel the orders.”
In July-May period of the current fiscal year, Bangladesh exports to the UK stood at US$3.44 billion, of which $3.18 billion came from the readymade garments sector.
“Exchange rates of Euro and Pound against US Dollars already fall. If the trends continues and take a permanent look, it will hurt Bangladesh export to UK markers,” said AB Mirza Azizul Islam, former advisor to the Caretaker Government while talking to the Dhaka Tribune.
Due to the turmoil in the UK, the demands for clothing products have come down, which will hurt Bangladesh export to large extend, said Hassan.
UK, the third largest single export destination for Bangladesh, is very important for us as the exporters enjoy duty-free market access for all products under Generalised System of Preferences (GSP). That is why, it has become a big question for the country as to whether it will be able to enjoy the trade facilities or not after the exit.
Talking on the issue Hassan said: “I hope that the duty-free facilities will remain same even after the Brexit”.
“Otherwise, the sector people as well as the government have to handle the issues diplomatically and politically.”
Since, the exit will be executed by next two years, Bangladesh has to negotiate with UK for continuing the trade facilities which may not be effective after two years, opined Islam.
“As an exporter, I used to get better price in UK market, but due to the exit plan, I will get less price, which will hurt the overall export earnings,” Exporters Association of Bangladesh (EAB) President Abdus Salam Murshedy told the Dhaka Tribune.
Salam said: “The exit of Britain from the EU will cast shadow on its employment as the EU members countries would pull out investment from the country. If there is crisis on employment, it would lower the consumption of clothing products.”
According to the forecast, Britain’s unemployment rate which is now at a 10-year low of 5% will be increased as soon as it leaves the EU although even after the previous financial crisis, Britain somehow managed to avoid job losses on the scale seen it other countries.
On the other hand, there is a big question over the Generalised System of Preferences (GSP) as to whether Bangladesh will get it or not after the exit, said Salam urging the government to start negotiation to deal the issue bilaterally.
Source: Dhaka Tribune