Vaccine roll outs + Singapore economic growth (audio)

In today’s audio podcast I discuss my thoughts on:

  1. The coronavirus vaccine rollout and whether it will help markets
  2. The fact that Singapore is forecast to have high GDP growth next year
  3. Proposed new taxes in the UK.

For your convenience, and to give credit to the original writers, I have included links to the articles I referred to and copied them below.

  1. US, Germany and UK could start Covid vaccinations as early as December – The Guardian (UK version).

As G20 leaders pledged to ensure the equitable distribution of Covid-19 vaccines, drugs and tests so that poorer countries are not left out, the US, UK and Germany each announced plans to begin vaccinations in their countries in December, while Spain said it would start administering the vaccine to its citizens in January.

Britain could give regulatory approval to Pfizer-BioNTech’s Covid-19 vaccine as early as this week, even before the US authorises it, the UK’s Telegraph newspaper reported on Sunday. Pfizer and BioNTech could secure emergency US and European authorisation for their Covid-19 vaccine next month after final trial results showed a 95% success rate and no serious side effects.

Moderna last week released preliminary data for its vaccine showing 94.5% effectiveness.

The better-than-expected results from the two vaccines, both developed with new messenger RNA (mRNA) technology, have raised hopes of an easing of a pandemic that has killed more than 1.3 million people.Why the race to find Covid-19 vaccines is far from overRead more

In the US, the head of the US vaccine program, Moncef Slaoui, said the first Americans to receive a vaccine could get it as soon as 11 December, CNN reported on Sunday.

“Our plan is to be able to ship vaccines to the immunisation sites within 24 hours from the approval, so I expect maybe on day two after approval on the 11th or the 12th of December,” he said in an interview to CNN.

Citing government sources, the Telegraph also said the UK’s National Health Service had been told to be ready to administer it by 1 December. 

Britain formally asked its medical regulator, the MHRA, last week to assess the suitability of the Pfizer-BioNTech vaccine. The UK Department of Health had no comment on Sunday on when the first vaccinations would be administered. 

Britain has ordered 40m doses and expects to have 10m doses, enough to protect 5 million people, available by the end of the year if regulators approve it.

Germany could also start administering shots of Covid-19 vaccines as soon as next month, health minister Jens Spahn was quoted as saying on Sunday. He said Spain and Germany were the first European Union countries to have a complete vaccination plan in place.

“There is reason to be optimistic that there will be approval for a vaccine in Europe this year,” Spahn said in an interview with publishing group RedaktionsNetzwerk Deutschland. “And then we can start right away.”

Spahn said he had asked Germany’s federal states to have their vaccination centres ready by mid-December and that this was going well. “I would rather have a vaccination centre ready a few days early than an approved vaccine that isn’t being used immediately.”

Germany has secured more than 300m vaccine doses via the European Commission, bilateral contracts and options, Spahn said, adding that this was more than enough and even left room to share doses with other countries.

Spain will begin a comprehensive vaccination programme in January and expects to have covered a substantial part of the population within three months, the prime minister, Pedro Sanchez, said on Sunday.

“The campaign will start in January and have 13,000 vaccination points,” Sanchez told a news conference after a two-day online summit of G20 leaders. “A very substantial part of the population will be able to be vaccinated, with all guarantees, in the first quarter of the year.”

Meanwhile, nearly 2bn doses of Covid-19 vaccines will be shipped and flown to developing countries next year in a “mammoth operation”, the UN children’s agency Unicef said on Monday, as world leaders vowed to ensure the fair distribution of vaccines.

Unicef said it was working with more than 350 airlines and freight companies to deliver vaccines and a billion syringes to poor countries such as Burundi, Afghanistan and Yemen as part of Covax, a global Covid-19 vaccine allocation plan with the World Health Organization (WHO).

“This invaluable collaboration will go a long way to ensure that enough transport capacity is in place for this historic and mammoth operation,” said Etleva Kadilli, director of Unicef’s supply division, in a statement.

Covax – co-led by Gavi vaccine group, the WHO and the Coalition for Epidemic Preparedness Innovations – aims to discourage governments from hoarding Covid-19 vaccines and to focus on first vaccinating the most at risk in every country.

Unicef’s role with Covax stems from its status as the largest single vaccine buyer in the world. It said it procures more than 2bn doses of vaccines annually for routine immunisation and outbreak response on behalf of nearly 100 countries.

2. S’pore economy to return to growth next year, forecast at 4% to 6% – Straits Times.

SINGAPORE –  Singapore’s economic growth will rebound in 2021 by the most in a decade, helped by a low base, but gross domestic product (GDP) will probably not return to pre-Covid levels until the end of next year. 

The economy will also contract by 6.5 to 6.0 per cent in 2020, compared to the previous estimate of -7 to -5 per cent, the Ministry of Trade and Industry said on Monday (Nov 23) while presenting the Economic Survey of Singapore.

The forecast for 2020 has been narrowed due to Singapore’s better than expected economic performance in the first three quarters, said Mr Gabriel Lim, Permanent Secretary for Trade & Industry, in his opening remarks at a virtual press briefing on Monday.

The economy is expected to grow by 4.0 to 6.0 per cent in 2021 – – the highest since at least 2011 when the economy expanded by 6.3 per cent – helped by continued expansion of trade and manufacturing and a gradual recovery in construction and aviation- and tourism-related sectors, he said.

“While growth is expected to rebound from the low base this year, our economic recovery is expected to be gradual, with GDP not likely to return to pre-Covid levels until the end of 2021,” Mr Lim noted.

“Furthermore, there remains uncertainty over how the Covid-19 situation will evolve globally in the year ahead, which will depend in part on the progress in vaccine development, production and distribution,” he added.

In the third quarter this year, the economy expanded by 9.2 per cent on a quarter-on-quarter seasonally-adjusted basis, a turnaround from the 13.2 per cent decline in the second quarter, latest data in the Economic Survey showed.

On a year-on-year basis, the economy shrank by 5.8 per cent, a smaller contraction than the 13.3 per cent slump in the second quarter. That was also better than the previous estimate of a 7 per cent contraction, though slightly worse than the 5.5 per cent drop tipped by economists in a Bloomberg poll.

The improved performance came on the heels of the phased resumption of activities in the third quarter following the circuit breaker that was implemented from April 7 to June 1, as well as the rebound in activity in major economies during the quarter as they emerged from their lockdowns.

The economy has contracted by 6.5 per cent on a year-on-year basis in the first three quarters of the year.

For 2021, the economy is projected to return to growth amid improved growth outlook for key external economies, as well as a further easing of global travel restrictions.

Trade-related services sectors such as wholesale trade are expected to benefit from the pickup in external demand.

At the same time, the manufacturing sector may to continue to expand, with growth in the electronics and precision engineering clusters boosted by robust semiconductor demand from the 5G market.

Likewise, growth in the information & communications and finance & insurance sectors is expected to remain healthy.

Aviation- and tourism-related sectors such as air transport and accommodation are projected to see a gradual recovery in air passenger volumes and visitor arrivals.

Improved visitor arrivals and consumer sentiment will in turn benefit consumer-facing sectors like retail and food services. However, economic activity in these sectors is not likely to return to pre-Covid levels even by end-2021.

The construction sector is likely to recover from a low base this year, although construction activity will continue to be dampened by the implementation of safe management measures.

Mr Edward Robinson, the Monetary Authority of Singapore’s deputy managing director, hinted at no change in the central bank’s policy stance of a zero per cent appreciation of the trade-weighted Singapore dollar.

He said at Monday’s briefing that the MAS stance already takes into account possible alternative scenarios and outcomes for the projections going forward and the next policy meeting and decision will be in April as scheduled.

Mr Kenny Tan, a director at the Ministry of Manpower, said employers are likely to take a cautious view towards fresh hiring and as such unemployment will likely remain at elevated levels even as the economy rebounds next year.

Minister of Trade and Industry Chan Chun Sing said while Singapore is turning the corner in its economic recovery, it still has a long way to go as it adapts to the new realities of the Covid-19 world.

While growth will improve from a quantitative perspective next year, the overall economy will change permanently qualitatively, he said at the briefing.

The Government will continue to support businesses and workers in their transformation in this new economy, said Mr Chan. He highlighted programmes such as Scale-Up and Enterprise Leadership for Transformation as part of this move aimed at improving the job-matching between employers and employees, and helping companies seek new revenue streams.

“If we are able to help our businesses and workers make the necessary adjustments and pivot quickly, I have every reason to believe that we will emerge in a stronger position than before,” he said.

Ms Selena Ling, OCBC Bank’s chief economist and head of treasury research and strategy, said that Singapore’s labour market may continue to see some downward pressure in spite of the recovery next year.

“But the risk of a sharper spike in layoffs and the unemployment rate may be somewhat limited by the extension of the Jobs Support Scheme (JSS), the various loan moratoriums and other assistance schemes into 2021,” she said.

The JSS, which was launched at the start of the pandemic to help companies retain staff by covering their salaries, was extended in August to March 2021.

Ms Ling said the Government has also hinted that the 2021 Budget due in February will still be expansionary and as such protecting local jobs and preserving livelihoods will likely remain a key focus, in addition to helping the economy and businesses transform to compete in a post-Covid environment.

3. (UK) Drivers could be charged a per mile car tax – Your Money

Drivers could be charged ‘road tax’ based on the number of miles they cover under measures considered by the government to plug reduced fuel duty amid the electric car revolution.

The chancellor, Rishi Sunak, is reportedly looking at a ‘pay-by-the-mile’ tax scheme for motorists to plug the gap in fuel duty as the electric car initiatives would put a stop to £40bn of annual tax revenue.

According to The Times, Sunak is “very interested” in a road pricing scheme and it comes after reports this weekend suggested the government is looking to bring forward the new petrol and diesel car ban to 2030.

A ‘pay as you drive’ scheme was last explored by the Labour government in 2007 but was scrapped due to opposition from motorists.

Dan Hutson, head of motor insurance at, said: “A per-mile road tax will be a daunting prospect for many motorists in the UK. Cars are critical for so many people who rely on them to get to work, and post-lockdown to see their family and friends. The cost of running a car is already a significant burden for some and simply becoming unaffordable for others, particularly given the financial constraints people face as a result of the pandemic.

“It is essential the government think carefully about how this rumoured road pricing scheme is implemented to protect these under-pressure groups as they struggle to cover the existing costs, let alone a further tax.”

RAC head of roads policy, Nicholas Lyes, said: “As more electric vehicles come on to our roads, revenue from fuel duty will decline so it’s inevitable a new system will have to be developed. While not paying car tax is clearly an incentive to go fully electric at the moment, we will very soon need a system that can levy tax on both conventionally fuelled and battery electric vehicles fairly. If this isn’t addressed, we risk finding ourselves in a situation where petrol and diesel drivers continue to pay all the tax for using the roads which is unsustainable.

“But drivers are firm in their views that any new system must not be used as a way to increase the tax burden on them. Despite this, RAC research shows around four-in-10 drivers believe that some form of ‘pay-per mile’ system would be fairer than the current system of fuel duty, while half agree that the more someone drives the more they should pay in tax. Drivers are also clear that tax revenues from any replacement for fuel duty should be solely reinvested back into the road network.”

Further Reading

When lightening strikes twice.

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