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Fitch Ratings: Brexit Poses Minimal Impact on PH

by: Sarah Joson

Friday, July 1, 2016 |

Debt watcher Fitch Ratings recently said the credit ratings of banks and sovereigns in the Asia Pacific region, which includes the Philippines, will see no immediate and direct effects from the decision of the United Kingdom to part from the European Union (EU). In fact, Asian market reaction has been minimal compared to Europe.

The event has been given a nickname of Brexit, which is an abbreviation of “British exit”.

 However, the credit rating agency noted that for the short-term, Asian nations could see less interest from foreign investors due to the unstable political environment in the United Kingdom. If extended, it could result to tightened liquidity conditions which could bog down on emerging capital markets and the overall growth of the region.

Fitch also said growth in trade-integrated economies such as Singapore, Hong Kong, Taiwan, and Korea is more likely to be affected if uncertainty and instability are extended. But, the debt watcher pointed out that a sustained market reaction would likely happen. In addition to that, the direct impact from the UK trade on Asian nations, which includes the Philippines, will be minimal. Moreover, the agency explained that some of the negative effects and movements have already been partly revealed right after the Brexit vote has been concluded.

The United Kingdom is the fifth largest economy in the world. The exports of Asian countries to the UK account for less than one percent of gross domestic product (GDP), or less than 3.5 percent of total exports.


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