Brexit: An Assessment, Implications, and Strategy for Pakistan

Abstract

Currently, Brexit is a reality. How much of an impact will Brexit have on the economy of Pakistan? We address this question by analyzing Pakistan’s most recent trade data. Since in the existing European Union, Britain, France, Germany, and Italy are among the major exporting destinations, the economy of Pakistan cannot remain entirely immune to the implications of Brexit. However, our analysis shows that after the Brexit-vote in Britain on 23 June 2016, economic indicators of Pakistan remained stable, and the Brexit pressure on Pakistan’s economy has remained relatively muted so far. To maintain the ongoing stable export trends, we suggest that Pakistan needs to modernize its political diplomacy by formulating separate policies for Britain and the post-Brexit EU. Additionally, we propose that, instead of signing a free trade agreement (FTA) with the United Kingdom, Pakistan should bargain for an agreement like the ‘Generalized Scheme of Preferences Plus to access the post-Brexit UK market.