The economic analysis of impact and policy response of COVID-19 on tourism industry in Taiwan

Abstract

ABSTRACT This study uses the Taiwan Tourism Satellite Account and input-output model (IO model) and analyzes the negative impact of COVID-19 as well as the positive impact of relief and stimulus measures rolled out by Taiwan’s government on the economy. According to the simulation results, following the initiation of border controls in Taiwan in March 2020, until the end of 2020, the value of Taiwan’s tourism industry witnessed a decline of NT$ 608.47 billion, equating to more than 50% of its 2019 production value. On the other hand, the implementation of relief and recovery measures reduced the negative impact on purchase orders of the tourism industry chain, GDP, and employment demand by 12.6%, 13.5%, and 13.9%, respectively. The government rolled out a total of NT$24.96 billion in relief and recovery measures related to the tourism industry, and had a direct, indirect, and induced effect on NT$192.718 billion in production value of tourism-related industries; the multiplier effect on output value reached a significant 7.72 times.