CORONAVIRUS/Benefits of Taiwan stimulus plan only temporary: economist

06/07/2020 06:11 PM
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Visitors flock to Tamsui old street. CNA file photo
Visitors flock to Tamsui old street. CNA file photo

Taipei, June 7 (CNA) The Taiwan government's stimulus measures are likely to spur domestic consumption in the short term, as the country relaxes its COVID-19 restrictions, but the country's economic future will depend on the recovery of Europe and the United States from the pandemic, an economist said Sunday.

The measures include the "Triple Stimulus Voucher" program to be launched July 15, which will allow Taiwan nationals and their foreign spouses to buy NT$3,000 (US$100) worth of shopping vouchers for NT$1,000, and a domestic travel subsidy that starts July 1 in an effort to revive the tourism sector.

While those packages and others are expected to help stimulate domestic consumption in summer as some COVID-19 restrictions are eased, the boost is likely to be only temporary, said Wu Dach-rahn (吳大任), director of the Research Center for Taiwan Economic Development at National Central University.

If the COVID-19 pandemic in Europe and the U.S. does not recede in the second half of the year, and global demand remains sluggish, Taiwan's export-reliant economy and its labor market will be hard hit, which will hurt consumption growth, Wu said.

As Taiwan moves to start easing its COVID-19 restrictions on Sunday, it remains to be seen how far the stimulus plans will reach, he said.

Wu said he was cautiously optimistic about the domestic economy growth in the second half of the year, which will depend heavily on the state of the economies in Europe and the U.S.

Since the start of the COVID-19 pandemic in January, the Taiwan government has lowered its forecast for the country's 2020 gross domestic product (GDP) growth by only 0.7 percentage points to 1.67 percent, while the global economic growth projections have been cut sharply.

Amid the pandemic and the resulting coronavirus control measures implemented this year, domestic demand has weakened, with real private consumption for 2020 expected to contract 1.82 percentage points to minus 0.24 percent, the lowest since 2009, according to the Directorate General of Budget, Accounting & Statistics.

(By Pan Tzu-yu and Evelyn Kao)

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