Global reactions to Brexit as reported from our posts around the world:

14 October 2016

From Paris:

Slower UK growth and a weaker pound as a result of Brexit will hit French exports, shaving a cumulative 0.4 to 0.6 per cent off France’s GDP growth in the period to 2019, according to an analysis by Crédit Agricole. France’s INSEE reported that domestic consumption stagnated in the second quarter of 2016, and the International Monetary Fund has revised down its 2017 growth forecast for France, from 1.5 per cent to 1.25 per cent. The UK is France’s fifth largest trading partner and the destination for seven per cent of its goods exports and 11 per cent of services exports. Longer-term, Brexit could potentially bring some benefits to Paris, in the event financial players look to relocate from London to other EU finance centres – a possibility which the French government is fuelling with new policies to attract them across the channel.

From Jakarta:

The direct impact of Brexit on the Indonesian economy is expected to be limited. The UK is Indonesia’s 23rd largest trading partner and the EU (ex-UK) the destination for 11.4 per cent of Indonesian exports. However, increased risk aversion in the global economy could pose some risks to capital inflow, currency stability and the cost of funding Indonesia’s budget deficit.

From Tokyo:

The UK accounts for some 45 per cent of total Japanese investment into the EU. Japan's corporate leaders have expressed concern about economic and political stability in relation to UK and EU investments, as well as the general impact on business as the economy responds to unfolding events. SMEs, which employ the largest number of workers in Japan, are particularly vulnerable to the yen appreciation which followed the Brexit vote, as well as flow-on effects from the impact on larger corporations.  For companies deeply invested in the UK, the potential for increased trade barriers into the EU will be of concern.  Japan's major investors are expected to adopt a wait-and-see approach and avoid expanding their UK investments until the outcome of the Brexit negotiations is clearer.

From Washington:

While the direct impact of Brexit on US growth is expected to be negligible, US companies are heavily invested in the UK: the US Chamber of Commerce estimates there is USD588 billion worth of US investment in Britain, in large part in order to access other EU markets.  The US Federal Reserve has cited Brexit as a key risk factor being considered in the context of its interest rate decisions, with markets now anticipating US interest rates will remain lower for longer.  The US Government has signalled it remains focussed on concluding the US-EU Transatlantic Trade and Investment Partnership, currently under negotiation, and that it was premature to enter formal bilateral trade negotiations with the UK.

From Moscow:

While Brexit will result in market volatility and uncertainty, its direct impact on the Russian economy will be limited, according to Finance Minister Siluanov. Some local analysts are speculating that Brexit could result in Russian companies delisting their stocks from the London Stock Exchange. The desire to lift EU and US economic sanctions remains the headline economic issue in Russia, rather than the effect of Brexit. Bilateral trade between Russia and the UK fell by about 40 per cent in 2015.

From New Delhi:

India’s government has publicly reassured markets of India's ability to weather uncertainty in the wake of the Brexit vote. Finance Minister Jaitley said India was well-prepared to deal with any short- and medium-term consequences of the leave vote, and that the government’s aim would be to smooth market volatility and minimise its impact on the economy in the short-term. An estimated 800 Indian companies have investments in the UK, many using them as a gateway into the European market. Indian investors in the UK will be monitoring events closely to determine whether a strategic shift in location is required in the longer term.

From Berlin:

The UK is Germany’s third largest trading partner. While the German Government remains positive about Germany’s economic fundamentals and resilience, industry is bracing for the Brexit fallout. A recent survey of 5,600 companies suggests German exports to the UK could fall by up to five per cent in 2017. The survey also foreshadows a possible reduction in investment into the UK by German companies with British subsidiaries. Conversely, some British companies with German subsidiaries indicate they may increase their German investments and staffing levels, possibly foreshadowing the future relocation of business operations from the UK.

From The Hague:

Of all the EU members, the Netherlands is among the most connected to the UK economy. Its exports to the UK in 2015 totalled EUD20.5 billion, or three per cent of GDP. A pre-referendum forecast by the Netherlands Bureau for Economic Analysis estimated the net cost of Brexit to the Netherlands could reach 1.3 per cent of GDP, or EUD10 billion, by 2030. A possible silver lining is the Netherlands’ attractiveness as a destination for corporate migration, should multinationals look to relocate their UK-based offices to the continent. With its English-language fluency, pro-business policies and excellent logistical links to major European markets, the Netherlands has certain advantages as a springboard, including for Australian companies seeking to do business or establish a regional base in the EU.

From Manila:

Government officials and private analysts alike expect Brexit will have minimal impact on the Philippine economy. The Philippines is seen as relatively insulated from Brexit shocks, due to its strong macroeconomic fundamentals and limited economic ties with Britain.  Bilateral trade between the Philippines and the UK reached about USD1.8 billion in 2015, focussed on the manufacturing and agricultural sectors.  The UK is also home to around 200,000 Filipinos and Filipino-British citizens, who in 2015 remitted some USD1.539 billion in earnings to the Philippines.

From Rome:

Italy's peak industry body, Confindustria, the Italian Banking Association and the Bank of Italy have all downplayed the possible negative impact of Brexit on the local economy, noting Italy’s exports to the UK are relatively small and Italy's banking system one of the least exposed to the UK in Europe. Despite this, financial market uncertainty following Brexit has hit Italian banks particularly hard, bringing to the fore the issue of their non-performing loans.  In 2015, these represented around 16 per cent of all loans and amounted to EUD360 billion – a figure more than one fifth of Italy’s GDP.

From Beijing:

Chinese officials have been measured in their comments about Brexit's impact on the Chinese economy, emphasising it is one factor among many bearing on a weak global economy. Feedback from local industry has been mixed. Some Chinese companies view Brexit as a significant negative, while others believe it could create opportunities, noting the UK has traditionally been viewed as one of the more forward-leaning EU members on trade.

From Kuala Lumpur:

Prime Minister Najib has reassured Malaysians that Brexit will not have a major impact on the local economy, pointing to the country's sound and diversified economic fundamentals, ample financial market liquidity and limited trade exposure to the UK. Commentators seem less certain about the longer-term effects of Brexit on Malaysia, particularly in the event it triggers further instability among other EU member states. The EU represents over 10 per cent of Malaysia's exports, which could suffer from a post-Brexit slowdown in economic activity. Analysts also note the potential for any further EU disintegration to lead to lower demand for oil, dampening the oil price and putting pressure on the Malaysian economy.

From Wellington:

The UK is New Zealand's fifth largest trading partner and accounts for almost half of its services exports to the EU, mostly tourism. There is considerable concern that currency volatility and lower consumer confidence in the UK could impact the approximately 192,000 annual tourist arrivals from the UK. New Zealand's exporters - particularly in sheep meat, wine and horticulture products - will be focussed on currency movements following the Brexit vote and their effect on export prices.  Primary exporters will also watch with interest the effect on agricultural subsidies of any UK withdrawal of funding for the Common Agricultural Policy, to which the UK is a net contributor.

Last Updated: 18 October 2016