BREXIT and Bangladesh: An Exploratory Study on Likely Economic Implications

Abstract

UK’s EU-referendum held on 23 June 2016, and the verdict of the British electorate to leave the EU (popularly known as Brexit), have important implications not only for the UK, but also for its major trading and economic partners, both within and outside of the EU region. This paper aims to capture the possible short- and mediumterm implications of Brexit for the economy of Bangladesh. The paper makes an attempt to anticipate the terms of Brexit, and what these could mean for Bangladesh’s bilateral economic relationship with the UK in a diverse range of areas. With the help of a gravity model exercise, the paper tries to capture the likely fallouts of Brexit on exports of Bangladesh to the UK. The paper argues that Bangladesh’s exports, remittances, FDI and aid could be significantly affected by Brexit. The paper comes up with a number of recommendations to address the likely challenges facing the Bangladesh economy arising out of Brexit.