Regarding the United Kingdom's (U.K.) referendum vote in favor of "Brexit"—the U.K. withdrawing from the European Union (EU)—Premier Lin Chuan has directed various ministries and agencies to closely monitor the situation and make necessary preparations.
This morning the premier convened a meeting to assess Brexit developments' subsequent impact on Taiwan and the world with relevant agencies such as the National Development Council (NDC), Financial Supervisory Commission, Ministry of Finance, Central Bank of the ROC (Taiwan), Ministry of Economic Affairs (MOEA) and Ministry of Foreign Affairs.
Executive Yuan Spokesperson Tung Chen-yuan reported after the meeting that although the situation's effect on Taiwan has been limited so far, there is still uncertainty about future developments, including political changes.
At the meeting, the premier stated that while uncertainties do exist and Brexit could produce some negative effects, a crisis is also an opportunity for growth, and the administration must turn crises into development opportunities for Taiwan. For example, Brexit could result in both the U.K. and the EU seeking to expand economic and trade relations with Asia, and international interest in investing in the Taiwan market could increase. Lin thus instructed the MOEA to formulate related measures to attract investment to Taiwan.
As the financial situation is still volatile, the National Stabilization Fund and related response mechanisms must be prepared with various measures and communications to stabilize the stock markets, Lin stated.
Brexit would affect Taiwan in two ways, NDC Minister Chen Tain-jy said at the post-meeting press conference. First, in the short term stock markets would be impacted and exchange rates would fluctuate. Last Friday (June 24) the European and the U.S. stock markets reacted dramatically to the referendum result, though not to the degree of posing major dangers. This morning the response of Asian stock markets, including those of Japan, South Korea, Hong Kong and Taiwan, was rather stable.
Second, Brexit would affect trade and investment as well as economic growth in the medium to long term because the U.K. would have to renegotiate with the EU on trade and other relations. This could take a long time, Chen remarked. Moreover, political impacts and uncertainties resulting from Brexit would affect willingness to invest and consume, adversely influencing the global economy. International agencies have generally predicted that Brexit would have a negative effect on the global economy and could be detrimental to Taiwan; therefore, Taiwan must pay close attention to the situation.