Singapore’s Lee says Brexit a turning point; Korea to study economic fallout

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Lee SingaporeThe UK vote in the Brexit referendum seeking to leave the European Union is “a turning point,” all the consequences of which nobody can foresee at this early stage, said Singapore Prime Minister Lee Hsien Loong.

The “leave EU” win “reflects the anxiety of the British population over immigration, their resentment at having to negotiate with and accommodate European partners, and their desire to assert British identity and sovereignty,” Lee posted on his Facebook on June 24.

“Other developed countries also face similar challenges as Britain. We all live in a globalised, interdependent world. The desire to disengage, to be less constrained by one’s partners, to be free to do things entirely as one chooses, is entirely understandable. And yet in reality for many countries disengaging and turning inwards will likely lead to less security, less prosperity, and a dimmer future.”

He added that the next few years will be uncertain ones for Britain and Europe. “Leaving the EU is as complicated as joining it. What new arrangements will be made? Will Brexit hurt investor confidence more broadly, and the global economy? How will Britain’s leaving affect the rest of the EU? How will this affect us, living in Asia but part of the same globalised world?”

“It is too early to tell, but we need to watch developments carefully. Nobody can foresee all the consequences of the Brexit,” said the official.

He stated that Singapore will continue to cultivate its ties with Britain, which it considers “a long standing friend and partner.” He added: “We hope in time the uncertainty will diminish, and we will make the best of the new reality.”

Korea preparing for new trade deals with EU, UK

Meanwhile, striving to cope with the Brexit aftermath, the South Korean government said it will prepare for new trade talks with the European Union and Britain, a report from Yonhap News said.

Seoul signed a bilateral free trade agreement (FTA) with the EU in 2009. The accord took effect two years later.

“The effect of the South Korea-EU FTA on Britain will automatically become void at the time of its official withdrawal from the EU. But a revision to the FTA is deemed necessary to reflect it,” the Ministry of Trade, Industry and Energy said in a statement.

It’s not a matter of weeks or months, though, as it is expected to take at least two years for Britain to complete negotiations with the EU to follow through on last week’s referendum, the ministry added.

“Until that time, the current South Korea-EU FTA will continue to hold true,” it said.

It said South Korea will consider a separate FTA with Britain to resolve “legal uncertainties” in bilateral trade.

The top priority is to minimize the negative impact to South Korean firms and maximize national interest, according to the ministry.

The unexpected move has added to global market uncertainties and is fueling financial sector turbulence that is adversely impacting Asia’s fourth largest economy.

Even before the Brexit shock, many expected South Korea’s economy to face harsher challenges in the second half of the year.

Exports face squeeze

South Korea’s exports are expected to feel the pinch from the Brexit move that could hurt the real economy of Britain and the eurozone for the time being.

The Korea Customs Service said the nation’s exports plunged 12.8% year-on-year to US$25.6 billion in the first 20 days of June. South Korea has suffered continued declines in its exports since January last year in the longest ever losing streak since related data were first compiled in 1970.

The government also plans to update its 2016 growth forecast for the South Korean economy, currently standing at 2.8%. Chances are slim that it will revise up the figure, said the report.