The global economy will be faced with a number of potential risk factors in 2021, including a renewed coronavirus spike in Europe and the U.S., a breakdown in financial stimulation policy negotiations in the U.S., and continued further deterioration in U.S.-China relations. Nevertheless, the latest World Economic Outlook report from the International Monetary Fund (IMF), released on October 13 and entitled “A Long and Difficult Ascent,” estimates global economic growth in 2020 of -4.4%, a slight improvement from the -4.9% projected in June, and a growth rate of 5.2% next year.
When asked for his professional opinion regarding the IMF’s forecast regarding Taiwan’s economic growth, Leich Capital CEO Mark Lin refers to remarks two years ago by his good friend, Professor Viktor Mayer-Schönberger of Oxford University’s Internet Institute, who said: “The world is in the midst of a transformation from from 20th century financial capitalism to the data capitalism of the 21st century. Future markets will no longer be determined by money, but rather by data.”
This year’s COVID-19 outbreak spread infection throughout the world, causing a sharp decline in economic growth as countries turned their attention to fighting the pandemic. The resulting business model of encouraging social distancing contributed to ushering in the age of the commercial digital economy and data capitalism.
Taiwan is a key part of the global technology supply chain, occupying a crucial portion of the manufacturing link.
It has a worldwide reputation as a science and technology island, supported by mature high-tech industries, semiconductor industry supply chains, and a digital application ecosystem. As a result, since most members of the public were already extremely familiar with digital technology, the government was able to use digital technology to play a powerful role in controlling the epidemic, building on the experience Taiwan had gained in 2003 in combating the SARS epidemic.
First, the medical and health authorities utilized global positioning system (GPS) information on each person’s mobile phone to track the recent contacts of people confirmed to have contracted COVID-19, so that they could be immediately placed in quarantine. Next, digital technology was employed to establish a rationing system for face masks.
Whether because of the success in the prevention and control of the COVID-19 pandemic or the high degree of stability of the data technology applications that undergird the Taiwanese economy and its trade connections with the rest of the world, the IMF in October substantially readjusted its estimate for Taiwan’s 2020 economic growth from the -4.0% forecast in June to 0%. That is an outstanding performance in a year when countries around the world are generally showing negative economic growth rates!
As to which industries in Taiwan will have the best investment potential in 2021, Mark Lin believes that the COVID-19 phenomenon will continue to affect the world and Taiwan’s economy until the fourth quarter of next year. However, industries such as energy, transportation, hotels, logistics, food and beverage, medical equipment, biotechnology and pharmaceuticals, renewable energy, semiconductors, digital software, and communications have benefited from the expansion of demand from Taiwan’s domestic market and the growth of global supply chains, making them the most attractive potential industries for investment.