TAIPEI • Taiwan's government yesterday proposed an extra NT$210 billion (S$10 billion) in spending to help the economy deal with the Covid-19 pandemic, as it reported 13 new domestic cases amid a rare spike in infections that has spooked the stock market.

Early and effective prevention steps, including largely closing its borders, succeeded in shielding Taiwan from the worst of the pandemic. The island of 24 million people has reported just 1,256 infections so far, most of them imported.

But markets and the government have been on edge since renewed domestic outbreaks began late last month, with 16 new domestic cases announced on Wednesday to set a record daily high.

The government has now identified the source of the new domestic infections, linking them via DNA sequencing to an earlier outbreak at an airport hotel and pilots at Taiwan's largest carrier, China Airlines. However, they do not know how the people in the latest cluster got infected, and are stepping up contact tracing.

Cities across Taiwan are tightening restrictions to prevent the spread of infections.

New Taipei City, which surrounds the capital Taipei, has ordered libraries and Internet cafes closed, while Taipei has ordered a limit of 100 people at a time in gyms.

Taipei Mayor Ko Wen-je, writing on his Facebook page late on Wednesday, urged people not to worry. "Please don't panic... Taiwan has abundant medical capabilities, and the number of severely ill patients has not increased rapidly."

The central government has already suspended indoor gatherings of more than 100 and outdoor events involving more than 500 people until next month. It warned it may take further steps that could close non-essential businesses.

Taiwan has never gone into a complete lockdown.

REUTERS