Brexit shock will be felt globally, locally

SHOULD Britain decide at its referendum on Thursday June 23, 2016 to leave the European Union it would have a negative impact on both local and global economies with financial markets, trade, investment and the real economy all being affected, Dr Anusorn Tamajai, Rangsit University’s vice president for research and academic service said yesterday.

However it would also open an opportunity for the Thai Government to map out a suitable strategy and becomes one of the first nations to start trade and investment dialogue with Britain.

This well-known economist added that a Brexit would plunge financial markets into turmoil especially over the next three months.

“Euro and the pound should weaken substantially while US dollar and Asian currencies such as Japanese yen and Thai baht would strengthen against them.

“The impact on Britain will become clear in the fourth quarter of this year and this country could also face an economic crisis early next year with this having a strong impact on stock markets
across the world especially the UK stock market which could plunge by over 10%, while EU bourses could go down by 5-10%.

Brexit-shock

“Most investors would turn to bonds, US dollar, Japanese yen, Swiss franc and gold leading to gold price rising by 20-30%.

“US dollar would only appreciate up to a point because the Federal Reserve could delay interest rate hikes.”

Dr Anusorn added that if Britain votes to stay on in EU then the financial markets would immediately bounce back with euro and the pound strengthening but gold price dipping.

In case of a Brexit, Thailand should start a dialogue on a new trade pact with UK even though only 2% of Thai exports go to Britain while EU takes about 10-11%.

By Nina Suebsukcharoen

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