Trading with the EU bloc more important than with the UK
The European Union (EU) is far more important to Sri Lanka than Britain as the total trade with EU is 28 per cent whereas trade with the UK is around 10 per cent.
“Where tourism is concerned 22 per cent of the tourists come from EU and 10 per cent from the UK. However Germany is the country where we have underemphasised our linkages with only 7 per cent of the trade, being the most important economy in Europe and probably the third or the fourth largest economy in the world. 6 per cent of our tourists comes from Germany,” said Dr. Ganeshan Wignaraja, Executive Director of the Lakshman Kadirgamar Institute of International Relations and Strategic Studies, at a seminar held at the Ceylon Chamber of Commerce, Colombo recently on the impact of Brexit on Sri Lanka.
He said Sri Lanka’s scenario is a scary one with its economy in a vulnerable state with elections coming up at the end of the year. “We have to be vigilant on the macro-economic front than ever before. As Brexit shocks can have an effect outside the country creating a significant change within the economy. It can happen due to oil prices going up, natural disasters and due to disruptive trading practices. Brexit is unusual because it has multiple dimensions owing to the ongoing trade war between the United States and China. We would be lucky to have 3 per cent growth this year although various institutes forecast different numbers. However recovery is possible when countries like Turkey, Egypt and others were affected by terrorism,” he said.
But is there a silver lining for Sri Lanka to find business opportunities in the Brexit story? What can the government do to support businesses to formulate strategy?
Business chambers in the country should provide a clear view point to the government of its strategic direction. Referring to the EU, he said it was held as the most comprehensive model of regional economic integration that provided benefit to its members which is a huge market, bigger than the US. “It has 33 per cent of the world trade and 68 per cent of that trade occurs within the EU. The question remains why Britain is leaving the EU. Immigration was a major part of it when Britain opened up its borders with the EU for skilled workers from the EU to come into Britain when Britain was undergoing austerity,” he said adding that perception was also growing among the British that EU workers grabbed their jobs and enjoyed the welfare benefits provided to its natives. The other issue was that the British people wanted to take control of their sovereignty and the Custom Union with Ireland. He said that the British also underestimated the huge trade benefits they derive by trading with the EU block than other unimportant issues.