Breaking down Britain's exit vote: Local implications

The ballyhooed Brexit vote continues to stunned stakeholders, who remain uncertain of what to expect in the next months on the fate of Britain and the European Union. The intention of the British people to quit the EU brought made many nervous given the UK's position as a dominant power in the economic and political fronts.

Concerned nations with vast holdings with European Union-member countries have reasons to worry not because of its economic impact but due to long-term effects on stability. The loss of trust among member countries may lead to detachment economically and politically. How again can the world and the EU's members put faith in a bloc whose solidarity has been threatened?

While the Philippines and Europe have an existing free trade agreement that may be affected, the deal has barely started following its launch in December last year. It has yet to have an impact locally, particularly on our existing trade relations. Bilateral trade between the two parties, however, has started way before the deal amounting to €12.5 billion in 2014. The EU ranked as the Philippines's fourth largest trading partner, while the Philippines has remained the bloc's sixth biggest trading partner in Southeast Asia.

Trade between Europe and the Philippines has long been made outside political or economic considerations, but of mutual need.

These transactions have long been made outside political or economic considerations, but of mutual need. Europe needs the Philippines's products, and the same is true vice versa. The prospect then of sticking to the status quo is expected despite the turn of events in Britain. We are insulated from ill effects of the Brexit vote, with authorities forecasting that with the country's robust financial reserves, any economic catastrophe that may hit the world economy, the Philippines can weather conditions.

There are speculations, however, that investments connected with the EU should be seriously examined. The movements of the British pound the past six months have defined the direction of Britain and the rest of Europe. From a high of 69.79 in early February, it has decelerated to a record low of 62.17 on June 27. Investors may see these abrupt fluctuations as either positive or negative. Those who are more skillful will find ways to turn seemingly negative opportunities to advantageous ones. While the trend shows a continuous slowdown in the European economy, it can be read as the time to invest in the European equity market. For a more liquid investment, one can go for European currencies especially the pound, which remains to be one of the most stable and sturdy currencies the world has.

Skillful investors will find ways to turn seemingly negative opportunities to advantageous ones.

It will not be a surprise if the British economy gets back on its feet sooner than expected, being one of the powerhouse world economies. We may even see speculators of the British currency and equity raking money in the next few months.

While the European economy may take time to recover, its robustness and key role to global stability, along with the United States, will allow it to gain back trust.

Emmanuel J. Lopez, Ph.D. is an associate professor at the University of Santo Tomas and the chair of its Department of Economics. Views reflected in this article are his own. For comments email: [email protected]