The COVID-19 pandemic might persist for nine months, from an earlier estimate of three months, and would wipe out almost all economic gains this year in the absence of the government’s relief and stimulus measures, top statistics and monetary officials said yesterday.
The pandemic could erase GDP growth by 1.8 to 2.3 percentage points this year through disruptions to trade channels abroad and consumer spending at home, Directorate-General of Budget, Accounting and Statistics Minister Chu Tzer-ming (朱澤民) told a meeting of the legislature’s Finance Committee in Taipei.
That would leave Taiwan with a parlous growth of between 0.4 percent and 0.9 percent, without government intervention, Chu said.
Photo: CNA
The statistics agency in February set its forecast for GDP growth this year at 2.37 percent, with the pandemic expected to affect China for three months, based on the global experience with SARS in 2003.
However, the novel coronavirus last month rapidly spread to Europe, the US and other parts of the world, forcing world leaders to shut non-essential businesses and international travel, and impose social distancing before the development of a vaccine.
While uncertainties remain high, Chu said the Taiwanese economy could still grow between 1.3 and 1.8 percent this year, bolstered by government relief and stimulus packages.
A special aid fund of NT$60 billion (US$2 billion) has cleared the legislature and the Cabinet is to propose an extra NT$150 billion later this week to help companies and households weather the virus shock, Chu said.
The package would shore up GDP by 0.9 percentage points, he said.
The goal now is to maintain an economic expansion of at least 1 percent, instead of 2 percent as earlier forecast, provided the world could return to normalcy in the third quarter, Chu said.
The IMF forecast last week that Taiwan’s economy would contract 4 percent is excessively pessimistic and inconsistent with its projected unemployment rate of 4.4 percent, he said.
An economic decline of 4 percent would put far more people out of work than an increase of 70,000 to 80,000 as the IMF suggested, he added.
A central bank official agreed, saying the international research body had underestimated Taiwan’s economic might for years.
The IMF does not have a designated unit to study Taiwan’s economy, accounting for its lack of accuracy, central bank Deputy Governor Yen Tzung-ta (嚴宗大) said.
The global economy is most likely to stage a U-shaped recovery, but much hinges on when the virus could be brought under control, Yen told legislators.
The central bank can make quick responses if necessary after cutting interest rates by 25 basis points last month, Yen said.
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