Near-term forecast seen to gain from Singapore's vaccination rate

THE Singapore economy is expected to grow 4-6 per cent in 2021 with Q2 reporting a 14.3 per cent growth for the quarter year-on-year basis. This is due to the low base in 2020 when the circuit breaker was announced in the same quarter last year. However, on a quarter-on-quarter basis, there was a drop of 2 per cent in gross domestic product for Q2 2021 - which shows the impact of the Phase 2 heightened alert period.

As we start another Phase 2 heightened alert measures from July 22 to Aug 18, impact will be experienced across various industries in Singapore. However, the effects may be less damaging as more than half of the population have received both doses of vaccine as at July 19; and the nation is currently on track to have two-thirds of the population receive both doses of the vaccine by National Day on Aug 9. The pace of vaccination may allow the impact of any further potential outbreaks to be more easily controlled.

Business sentiments and investor expectations would usually price in the expected near-term forecast - which should benefit from the vaccination rate as well as the subsequent potential reopening of the local and regional economies. The chances that the Straits Times Index (STI) continues its uptrend would then be more likely than not.