It's the economy, Stupid!

* Taiwan's economy has performed poorly in 2023, suffering from negative GDP growth for two consecutive quarters. The numbers meant the economy entered into a recession in the first quarter of 2023. GDP was -3.02% year-on-year in the first quarter after a 0.41% YoY contraction in the fourth quarter of last year. This is not something that the administration welcomes in an election year. 

* Besides export declines, geopolitical uncertainties played a part in the poorer-than-expected economic performance. According to most news reports, China appears to be on the verge of launching an imminent invasion as relations across the Taiwan Strait continue to deteriorate. Though the sentiment on the ground may not be as gloomy, a sense of malaise nevertheless permeates throughout the Taiwan society that has slowed consumption and suspended investment decisions for local businesses and multinationals (MNCs) alike. If the trend holds up, economy and quality of life issues, e.g. inflation and employment, could overtake others and become a priority issue in the upcoming presidential campaign.

* The opposition Kuomintang (KMT) hopes to fashion the presidential race on the choice between war and peace, implying the risk of a cross-Strait military conflict would be significantly higher if the ruling Democratic Progressive Party (DPP) stays in power. Though nothing is written in stone, the fear of war is definitely a factor in polling decisions.

* It remains a formidable challenge for the DPP to convince the electorate that war is not inevitable, especially cross-Strait dialogue had broken down since 2016. Its presidential nominee, William Lai, can't seem to shake off the image that he once publicly stated he is a "pragmatic pro-independence advocate" in Taiwan's parliament, the Legislative Yuan (LY). Though he has moderated his position since, that declaration in the LY will continue to haunt him throughout the campaign.