A weekly snapshot of Taiwan business news stories brought to you by CommonWealth and AmCham Taiwan’s TOPICS
Taiwan’s COVID-19 situation has quickly become more serious in recent days. Following a cluster infection in late April connected to China Airlines flight crew, local cases began increasing significantly for several days in succession, mostly in the north of the island. The sudden surge in case numbers – approximately 200-300 per day over the past few days – and the Central Epidemic Command Center’s (CECC) decision to raise the pandemic alert for Taipei and New Taipei to Level 3 caused a wave of panic buying at stores and supermarkets last Saturday, while MRT ridership and indoor dining at restaurants dipped substantially. Meanwhile, many corporate offices have switched to remote work arrangements and the central government has directed all schools to take all classes online from May 19 to 28.
The situation is rapidly evolving, and it raises concerns about what the impact to the economy will be in the second half of 2021. The following two weeks are critical; if Taiwan can control the outbreak by early June, the economic fallout should be minimal.
On May 12, the TAIEX fell more than 1,400 points – or 9% – in intraday trading – the most significant drop in decades – indicating investor anxiety and raising concerns among the public about whether to stock up on daily goods. The Ministry of Finance’s National Stabilization Fund is now considering holding a meeting on whether to take action and the Financial Supervisory Commission plans to closely monitor the impact of the epidemic on the overall economy and the performance of the Taiwan stock market.
Domestic consumption is likely to be the most affected by the spike in infections. Consumer-facing service industries and arts and culture-related businesses are expected to be hardest hit, as companies in these sectors have been forced to cancel many events and performances. The tourism industry could also take a hit. However, if the island can regain control of the pandemic shortly, consumption will not be affected in the long term.
The National Development Council (NDC) has said that since the outbreak came on quite suddenly, as long as industrial production and investment is maintained, the impact on exports should not be too severe, nor will it affect economic growth for the full year (Taiwan’s projected GDP growth for 2021 is around 5%), provided that the government is able to stop the spread of the virus soon.
The more significant issue is Taiwan’s slow acquisition of vaccines and corresponding low vaccination rates – currently around 1%. Taiwan’s exemplary handling of the pandemic and the government’s ability to maintain relative normalcy for its citizens has made it difficult to persuade the general public to get vaccinated. Plans to administer the first batch of AstraZeneca vaccines that arrived in March to healthcare workers and other vulnerable groups were eventually expanded to include those planning to travel abroad and then to anyone who wanted one to ensure that the doses were used up before the late May expiry date.
Even then, concerns about extremely rare incidents of fatal blood clotting and a growing preference for the mRNA vaccines produced by Moderna and Pfizer meant that uptake remained slow – until the current outbreak began intensifying last week.
The Ministry of Health and Welfare said last month that it had purchased more than five million doses of the Moderna vaccine and Taiwan’s two domestically produced vaccines are expected to be available in July. However, Taiwan’s ability to continue to secure vaccines is linked to regional politics and highlights the island’s international marginalization.
It’s not all bad news, though. After the Biden administration announced on Monday that it planned to send 20 million doses of vaccines overseas by the end of June, the TAIEX rose 5% to over 16,000 points, showing potential for a market rebound amid the outbreak.
This edition was translated from the original Chinese by Austin Babb.