TAIPEI- Taiwan plans to spend T$60 billion (£1.5 billion) to help cushion the impact on the export-reliant economy from the new coronavirus, offering loans to small businesses and even vouchers to spend on food at night markets.
Taiwan, whose largest trading partner is China, lowered its 2020 economic growth estimate on Wednesday, as the coronavirus outbreak threatens to hit its economy, which is a key part of the global electronics supply chain.
The island has reported only 18 cases of the virus and no deaths, but has largely suspended travel and tourism links with China to help curb its spread. China has reported more than 1,300 deaths.
Taiwan’s cabinet on Thursday proposed in the special budget T$14.23 billion for the transportation and tourism industries, including subsidies for tour agencies whose businesses have been hit hard, and tax cuts for tour bus drivers.
The special budget also included loans to consumer-facing business owners.
Tourism accounts for only 2% of Taiwan’s GDP, Fitch Ratings said in report earlier this week, adding that Taiwanese banks are better positioned to navigate the economic headwinds from the coronavirus than those from the 2002-2003 SARS outbreak, which killed 37 people on the island.
“The spread of the virus in mainland China is set to have some impact on Taiwan industries,” National Development Council Deputy research director Wu Ming-huei told a news conference, adding that the impact would not be as serious as that from SARS.
Other industries likely to be impacted by the virus include the smartphone supply chain and petrochemicals, she said.
Assuming the outbreak lasts for three months from the end of January to April, it will knock 0.35%-0.5% off GDP this year, Wu added.
Taiwan’s Economy Ministry said it plans to give “coupons” to people to spend in places like department stores and the island’s famous night markets – normally a big draw for tourists – to encourage domestic consumption.
“Consumers will spend and the government will give you a discount,” Vice Minister of Economic Affairs Wang Mei-hua said.
The special budget will need to be passed by parliament, where President Tsai Ing-wen’s Democratic Progressive Party has a majority, meaning it should not encounter many legislative hurdles.
(Content and photos syndicated via Reuters)