Digital transformation is chiefly about disruption, by means of rapidly advancing technology, large scope of potential impact, massive economic impact, and economic impact that upends status quo. Some companies succeeded in disrupting existing markets: Uber, Facebook, Alibaba, Airbnb, Tencent; some failed to grasp innovation, such as Kodak. Some disruptive sectors are Social & Identity, IoT, Cryptocurrencies and Cryptotoken, Robotics and Artificial Intelligence.
Government approval ratings are reaching historical lows, as the government seems to lack of direction. Some Taiwanese consider that the Government is not dealing with their real problems (economic growth, income level); not everybody is interested in marriage equality. The lack of relationship with China, which lead to a decreasing number of Chinese tourists (-41.9% YoY in Q1 2017), is having a negative effect on the economy. The DPP is facing leadership infighting, which raises questions about their ability to win the next 2018 municipal elections. The New Southbound Policy doesn’t seem to work; except Vietnam, no one seems interested in building a partnership with Taiwan, as they are interested in being closer to China.
Global economic activity is picking up, due to stronger activity, expectations of more robust global demand, reduced deflationary pressures, and optimistic financial markets. Emmanuel Macron’s victory in the French presidential election is good news to open trade and globalization, and reduces the uncertainties of the Eurozone. IMF Global GDP Growth forecast shows a fairly good picture for this year. World’s GDP is expected to grow by 3.4% in 2017, US GDP by 2.3%, and Eurozone GDP by 1.6%.
According to IMA Asia growth rates, it is going to be a good year for Asia-Pacific region. Asia-Pacific GDP is expected to grow by 4.5% in 2017, and NICs GDP by 2.1%.
This works to Taiwan advantage. Its exports (+7% YoY in Q1 2017) and imports (+ 7.2% YoY in Q1 2017) are increasing. The 4Y National Development Plan (2017-2020) has been launched this year; we will have to see how it works. Taiwan’s PMI has been in positive territory over the last year; it spiked up to 65.2 in March, and fell to 61.0 in April; electronics, transportation and machinery in particular continue with a strong performance. Taiwan’s NMI has been in negative territory over the last year, even if it spiked up to 56.3 in April; it reflects the effect of the missing Chinese tourists, particularly on Accommodation and Food.