TAIPEI (Reuters) - Taiwan plans to spend T$60 billion ($2 billion) to help cushion the impact of the new coronavirus on its export-reliant economy, offering loans to small businesses and even vouchers to spend on food at night markets.
Taiwan, whose largest trading partner is China, cut its estimated for 2020 economic growth on Wednesday, as the outbreak threatens to hit its economy, which is a key part of the global electronics supply chain.
It has reported just 18 cases of the virus and no deaths, but has largely suspended travel and tourism links with China to curb its spread. China has reported more than 1,300 deaths.
In a special budget on Thursday, the cabinet proposed T$14.23 billion for the transport and tourism industries, including subsidies for hard-hit tour agencies, and tax cuts for tour bus drivers.
It also included loans to owners of consumer-facing businesses.
Taiwan Premier Su Tseng-chang told a cabinet meeting the crisis was a reminder why the island “should not put all its eggs in one basket”, a reference to economic reliance on China that Taiwan has been trying to reduce.
Tourism accounts for only 2% of Taiwan’s GDP, Fitch Ratings said in a report this week, adding that the island’s banks are better positioned for economic headwinds from the virus than at the time of the 2002-2003 SARS outbreak that killed 37.
“The spread of the virus in mainland China is set to have some impact on Taiwan industries,” Wu Ming-huei, deputy research director of the National Development Council told a news conference, while adding the impact would be less serious than that of SARS.
Other industries likely to be hit include the smartphone supply chain and petrochemicals, she said.
The outbreak will knock 0.35% to 0.5% off GDP this year if it lasts for three months from the end of January until April, Wu added.
Taiwan’s economy ministry said it planned to give people “coupons” to spend in places such as department stores and the island’s night markets, normally a big draw for tourists, to encourage domestic consumption.
“Consumers will spend and the government will give you a discount,” said Wang Mei-hua, the vice minister of economic affairs.
The special budget should not encounter many legislative hurdles as President Tsai Ing-wen’s Democratic Progressive Party has a majority in parliament.
As a precaution, Taiwan’s National Palace Museum, home to one of the world’s finest collections of traditional Chinese art, said it would suspend all guided tours from Friday until the end of March.
Reporting by Yimou Lee; Writing by Ben Blanchard; Editing by Sam Holmes and Clarence Fernandez