Briefs

The Ministry of Health targets to complete the distribution by November. It will start in the Jalan Besar and Tanjong Pagar districts where there is a higher concentration of elderly who may have more challenges using the TT app and are more vulnerable to Covid-19.

The TT token will be available free for all Singapore residents. According to the Minister-in-Charge of the Smart Nation Initiative Vivian Balakrishnan, the token can be used by people who do not have a smartphone or prefer not to use a smartphone app.

The token will work in the same way as the TT app on the smartphone. The government is encouraging as many people as possible to come on board this programme, whether it is by downloading TraceTogether on their smartphones or by using the TT token. “The more people that are actively on TraceTogether, exponentially, the protective effect increases,” said Balakrishnan. TraceTogether, along with the SafeEntry check-in data, has assisted in the quick tracing of Covid-19 cases and the informing of potential close contacts.

The TT app has been downloaded over two million times here but Balakrishnan said this was “not sufficient”, as not everyone has the app on all the time. The added tokens will thus make it more convenient and accessible for people to have a “fail-safe” to protect themselves. — Lim Hui Jie

Morgan Stanley says economic downturn ‘shorter than expected’
The V-shaped global economic recovery is happening earlier than expected, according to Morgan Stanley Research’s team of economists Chetan Ahya, Derrick Kam, Nora Wassermann, Julian Richers and Frank Zhao.

In a report dated Sept 7, the team estimates that the global and developed markets (DM) economies may return to pre-Covid-19 levels a quarter ahead of its original forecast, by as early as 4Q2020 and 3Q2021 respectively.

“The US will achieve pre-recession output levels in six quarters (for example, by 2Q2021) versus the 10 quarters it took during the global financial crisis (in our earlier forecasts the US economy reached pre-Covid-19 levels by 4Q2021),” it says.

The economists attribute the upside surprise to large economies lifting economic activity to “much higher levels” despite the ongoing spread, the progress in the fight against Covid-19 by the medical community, as well as the treatments and vaccines that are on track to being available “in the next couple of months”.

“The quick recovery since May means that the global economy will reflate faster than we initially expected. As the forces that drive inflation higher continue to align, we now see a stronger case for our call that inflation will re-emerge in DMs, particularly the US, in a different manner from the last three cycles,” the team adds.

In a separate report, Fitch Ratings in its latest Global Economic Outlook (GEO) says it expects global gross domestic product (GDP) to fall by 4.4% by 2020, compared to the 4.6% decline it predicted in the June GEO.

While the recovery in economic activity following the “severe recession” in March and April was quicker than anticipated, Fitch economists expect the pace of expansion to moderate soon.

“China has already regained its pre-virus level of GDP and retail sales in the US, France and the UK now exceed February levels, but we doubt this will become the much-lauded ‘V’-shaped recovery,” says Fitch Ratings’ chief economist Brian Coulton.

“Unemployment shocks lie ahead in Europe, firms are cutting capex, and social distancing continues to directly constrain private-sector spending”, Coulton adds.

Compared to its GEO in June, Fitch now expects the US economy to contract by 4.6%, compared to 5.6%. Its China growth forecast now stands at +2.7%, compared to the +1.2% in June.

For the rest of the world, Fitch has lowered its 2020 GDP forecasts for Europe, the UK, and for emerging markets (EM) excluding China to –9.0% (from –8.0%), –11.5% (from –9.0%), and –5.7% (from –4.7%) respectively.

In the emerging markets, the drop is mainly due to a cut in India’s forecast for FY2021 ending March to –10.5% from –5.0%.

Despite the Covid-19-related recession, Coulton does not foresee the positive growth to continue, amid fading optimism on the reopening of economies, labour market dislocations, and retrenchments.

“And with the virus outbreak not yet contained, social distancing behaviour and ongoing restrictions will drag on activity,” he says.

“We still see the recovery path being decidedly ‘swoosh’-shaped. Off the back of a two-month recession we think it will take 18 months from the low-point in April for the US to get back to 4Q2019 GDP and 30 months in the Eurozone”, Coulton adds.— Felicia Tan

Singapore’s economy tipped to shrink 6%
Market watchers are looking at a 7.6% y-o-y contraction in Singapore’s economic growth for 3Q2020 ending in September, according to findings from the Monetary Authority of Singapore’s survey of professional forecasters released on Sept 7.

For the full-year, the 26 economists and analysts polled expect GDP to decline by 6%, down from an estimate of –5.8% in the previous survey published in June. This level is in line with official estimates pointing to a 5% to 7% dip in the economy this year.

The market watchers’ move follows the 13.2% y-o-y contraction in Singapore’s economy in 2Q2020, which was worse than the 11.8% decline anticipated by respondents in the June poll.

“The rationale for these forecast revisions can be attributed to the strong risk-on sentiments since the re-opening of global and domestic economies since June, the dovish commitments by major central banks to keep monetary policy accommodative for longer, and the yield-seeking investor behaviour due to the very low interest rate environment,” says Selena Ling, who heads OCBC Bank’s treasury research and strategy department.

The tremors of the Covid-19 health-turned-economic crisis have topped the list of downside risks identified by the survey respondents. This is as any further waves of coronavirus infections or delays in the development of a vaccine will cause further disruptions to global supply chains, business operations and employment.

A further escalation of US-China trade tensions also continued to be a concern for respondents with 60% citing this as a risk, up from 55.6% in the previous survey.

As for potential upside risks for Singapore’s growth outlook, the containment of the Covid-19 outbreak have also emerged as another concern.

Respondents have also identified stronger-than-expected manufacturing sector performance, led by electronics and pharmaceuticals production, as a key upside risk. This was identified by 40% of respondents, compared with 55.6% in the previous survey.

Another phenomenon raised was the easing of tensions between the US-China, due to the benefits it will bring to global manufacturing activity and export flows.

For now, it is hard to say when Singapore’s economy will return to pre-Covid levels given the uncertainty in the global economy.

“Even assuming 5.5% growth in 2021, the value of Singapore GDP will not return to the 2019 pre-Covid levels,” notes OCBC’s Ling. She expects the city-state’s economy to grow 4% next year — depending on the speed and availability of a vaccine. — Amala Balakrishner