Taiwan Lawmakers Double Stimulus Cap as Virus Batters Economy
Lawmakers in Taipei doubled the amount of stimulus available to cushion the economy from the pandemic, after Taiwan’s worst outbreak so far shuttered stores and forced curbs on social gatherings.
The cap on spending was lifted to NT$840 billion ($30.4 billion) from NT$420 billion, with most of the existing funds having already been spent or earmarked. Lawmakers also extended the duration the financial support measures are available by a year to the end of June 2022.
The action comes just weeks after the cabinet proposed a hike, and underscores growing concerns that the soft lockdown will crimp retail spending and potentially affect operations for exporters. Taiwan has gone from having fewer than 100 local cases at the end of April to almost 7,000 domestic infections, and there are fears a hard lockdown may await.
The new budget includes provisions allowing individuals such as tour guides, taxi drivers and tour bus drivers to apply for support of up to NT$30,000, according to the Central News Agency. Companies affected by the pandemic can apply for subsidies covering part of their employees’ salaries.
Taiwan was one of the world’s only major economies to grow last year, after it avoided going into lockdown and was strongly supported by booming demand for semiconductors, an area in which it’s a world leader. Previous stimulus efforts were focused on boosting retail spending and helping hotels cope as the government shut the door to foreign tourists.
By the end of 2020, more than 98% of Taiwan’s 23.5 million people had obtained stimulus vouchers from the government. The program was designed so that the vouchers had to be spent, not saved, and was accompanied by subsidies for hotel accommodation to boost domestic tourism.
Gross domestic product rose 8.16% in the first quarter, helped by factory output and surging export growth, with the government predicting a full-year expansion of 4.64%. But the National Development Council warned earlier this month that the current outbreak’s impact on the pace of growth could range from 0.16 to 0.53 percentage points, depending on how long restrictions last.
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