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Moody’s Investors Service said The UK departure from the European Union will not have a “significant credit impact” on Singapore and other countries in the Asia Pacific region. However international financial centers in the region like Singapore and Hongkong could take a hit if the flow of money from the UK and European banks decreased.

The Pound sterling hit record low following the nation-wide referendum calling for the UK’s exit from the EU.

On June 27, Standard & Poor’s also dropped the UK’s credit rating by two grades from “AAA” to “AA” and warned more downgrades could follow.

Moody’s speculations are published on its most recent report; Sovereigns — Brexit and Asia Pacific: Limited Direct Credit Impact; Some Sovereigns Exposed to Market Volatility. It also projected the UK’s GDP growth to drop to 1.2 per cent in 2017 from 1.6 per cent this year.

Although the lower GDP growth in the UK could lower demand for products from the rest of the world, the impact on trade or GDP growth in the Asia Pacific region is not expected to be significant because of the region has limited reliance on exports to the UK, said Moody’s.

Singapore’s exports to the UK accounted only for 1.1 per cent of its GDP last year. Australia, Indonesia and the Philippines are even lower at 0.2 per cent.

The report, however, warns that announcements related to Brexit could trigger financial market volatility. It also cautioned that the impact on money flows into Asia from the UK and other European banks is uncertain. “Although not our baseline assumption, with a more challenging environment in their home markets, UK and European banks could reduce their activities abroad,” it said.

“As international financial centres, Hong Kong and to a lesser extent Singapore would be exposed if financing flows from the UK and European banks ebbed. However, there is a possibility that these centres could benefit if UK and European banks aimed to diversify their asset bases.”

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