It is no secret that Singapore exists and prospers because of international trade. An incredibly diverse and vibrant country, the success of Singapore comes down to maintaining lines of trade with the rest of the world. So, how does the Brexit vote in the United Kingdom affect trade in Singapore. Our findings may surprise you.
Global Tensions Playing Out Locally
The UK has always had a troubled relationship with mainland Europe. Fighting to maintain some semblance of independence while simultaneously becoming a part of a larger trading union as part of the EU, the relationship has never quite sat right with UK citizens. With Brexit, the citizens of the UK have spoken and rejected closer relationships with Europe, throwing into the air trade partnerships and free access to one of the largest markets in the world. Whether through fear or a sound belief that a British exit from the EU would do the country better, the country is now locked into re-negotiating its deals with mainland Europe. What is turning into a major headache for the UK is only a minor issue for Singapore.
Down The List Of Trading Partners
Of all the countries that Singapore trades with, the UK is #22. What this means is marginal differences from Singapore in the short term. Before the vote to leave the EU, trade between Singapore and the UK was up from $4.69 billion to $4.94 billion over 5 months. The Brexit will potentially diminish the amount of investments to the UK from Singapore. However, at this early stage there is still a lot to be decided. The EU represents the world’s largest trading block, and how the UK and the EU determine their trading relationship will make a big difference in the future of trades with Singapore.
The Pros & Cons of a Fluctuating Pound
The Brexit vote has seen one of the most substantial drops in the British Pound in modern history. Fantastic for exports, companies that sell to the UK are making significantly more money. Companies like Hart Technologies are reporting better than expected profit forecasts. A volatile pound means significantly less stability for many Asian and Singaporean companies that have holding and investments in the currency. The best way for Singapore companies to take advantage of the situation is to increase import trade, advertise itself as a solid trading platform, and new outreach to bring in tourists from other parts of the world instead of primarily from the UK.
Where Does That Leave Us?
The only certainty to come out of the Brexit vote is the knowledge that uncertainty and instability are going to plague markets for years to come. With a major change in the global marketplace, it will take quite some time for the dust to settle and for Singapore to gauge where it is at in regards to trade. Luckily, Singapore has shown itself capable of quickly adapting to changing circumstances and is uniquely situated to pivot in response to whatever market trends may come its way. For now, we are left with minor short-term changes and a cloudy, uncertain future.
About the Author
Morris Edwards is a content writer at companyregistrationinsingapore.com.sg, he writes different topics like Why is Singapore an ideal place to set up business? , Major global technology companies are expanding their operations in Singapore, Doing Business in Singapore and all topics related to Company Registration.
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