How Does Brexit affect Malaysians?


With the sterling falling and Malaysia’s direct investments in the UK rising, what does Britain’s vote to leave the EU potentially mean for us?

The UK defied expectations from opinion polls and bookmakers, and voted to leave the European Union (EU). Apart from the inevitable plunge of the British pound and the drop in appetite for risk assets, we highlight the economic implications of this event for Penang and Malaysia in four areas.

First, the UK economy is likely to head into a short-term recession due to the loss in confidence and the uncertainty surrounding the process of exiting. UK consumers are likely to increase precautionary savings, which will hurt high-end services and durable goods purchases. The GBP’s drop will help offset the damage, and the Bank of England is set to cut interest rates in July or August to provide support, but the UK’s economy as a whole is likely to suffer shock.

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