‘Brexit and its Impact on the Sri Lankan Economy’ seminar by SLEA and OPA

The Sri Lanka Economic Association together with the Organisation of Professional Associations of Sri Lanka held a seminar of timely interest named ‘Brexit and its impact on Sri Lankan Economy’ on 11 July. Chairing the seminar OPA President Ruwan Gallage outlined key trade and international relations between EU and Great Britain and Sri Lanka’s relations with EU and Great Britain. 

University of Colombo Professor of Economics Prof. Sirimal Abeyratne, kick started the sessions by discussing the Brexit in and out of context. Prof. Abeyratne pointed out the immediate policy concerns for Sri Lanka and the medium-term economic implications of a possible Brexit from the EU. He implied that the expensive exports to EU and Great Britain from Sri Lanka due to depreciation of the Sterling Pound and the Euro call for aligning Sri Lanka’s exchange rate with the two currencies. 

Prof. Abeyratne also brought out the possible rise in the borrowing cost for Sri Lanka due to the pressure on interest rates, adverse impact on Sri Lanka of a likely fall in a high-spending tourist segment and anticipated a rise in cost of FDI flows as consequences of a possible Brexit. 

While emphasising how the geo-politics have been over-ruled by the EU Agreement, he stated that it is an opportunity to re-arrange long-term global economic affairs and sporadic events as pieces of a long-term process as Brexit is neither the beginning nor the end of global economic and political affairs.

University of Colombo Senior Lecturer Dr. Chandana Aluthge pointed out that the forecasts on Britain’s economy and its negative growth is due to a market over-reaction driven by uncertainty. He argued that the uncertainty is caused by the transition that can prolong for two years, with unknown exiting terms of conditions and the absence of similar historical examples to take guidance from. 

Thus the question Dr. Aluthge raised was, “How best to depart from the alliance?” that would eventually affect the global economic power balance. Sharing similar views as Prof. Abeyratne, Dr. Aluthge also uncovered the possible short and medium-term impact of the Brexit on Sri Lanka’s trade and investment.

Looking through an international relations lens Bandaranaike Centre for International Studies Additional Director Research Dr. Harindra Vidanage explained that the Brexit is a an overall result of a combination of factors: crisis of globalisation, distrust on institutions, establishments and political elites, and the belief in national solutions to local issues. Analysing the causes of the Britain’s impending departure from the EU, Dr. Vidanage highlighted the importance of having regulations and transparency in place, bringing examples from bottlenecks of Britain’s migration policy, to keep the house in order. 

Dr. Vidanage discussed that the major implication of a possible Brexit will be to identify new flows of finances, goods and people together with creating new economic super regions aligning with the global shift in production.