Ten years ago, on July 2nd 1997, Thailand's central bank floated the baht after failing to protect the currency from speculative attack. The move triggered a financial and economic collapse that quickly spread to other economies in the region, causing GDP growth rates to contract precipitously, bankrupting companies that had overexposed themselves to foreign-currency risk, and ultimately necessitating costly and politically humiliating IMF-led bailouts in the worst-affected countries. Thus began the Asian financial crisis of 1997-98. Its effects, and governments' subsequent responses to it, have defined much of the region's economic policies and direction in the past decade. What has been learnt, and how has the region changed in the intervening period?
The financial crisis can be described as having been a "perfect storm": a confluence of various conditions that not only created financial and economic turbulence but also greatly magnified its impact. Among the key conditions were the presence of fixed or semi-fixed exchange rates in countries such as Thailand, Indonesia and South Korea; large current-account deficits that created downward pressure on those countries' currencies, encouraging speculative attacks; and high domestic interest rates that had encouraged companies to borrow heavily offshore (at lower interest rates) in order to fund aggressive and poorly supervised investment. Weak oversight of domestic lending and, in some cases, rising public debt also contributed to the crisis and made its effects worse once the problems had begun.
If factors such as exchange-rate policies had helped to precipitate the financial crisis, above all it was excessive and poorly supervised foreign borrowing that made it so disastrous. As it became too expensive to fend off speculators, currencies were forced to float. This resulted in large falls in the baht, the won and the rupiah against the US dollar. For instance, from an average of Rp2,342 to the US dollar in 1996, the rupiah fell to an average of Rp10,014 in 1998. As a result, companies that had received large unhedged foreign-currency loans now faced impossibly high debt repayments in domestic-currency terms. The panicked capital flight that ensued only exacerbated the currency depreciation, leaving indebted companies in even direr straits. The workout of the bad debts and disposal of the distressed assets created by the crisis was one of the major tasks for policymakers for several years thereafter.
The situation now could not be more different. Most Asian economies now enjoy sizeable current-account surpluses and have built up extensive foreign-exchange reserves with which, in theory, they could protect their currencies from speculative attack in future. (Indeed, it is an enduring complaint of economists these days that Asian countries have gone too far in the opposite direction, having built up far greater levels of reserves than they need.) Non-performing loans (NPLs) in the banking sector have fallen, and extensive financial reforms have taken place. As a result, not only are the region's fundamentals no longer conducive to an exact repeat of the 1997-98 crisis, but regulatory controls have also, by and large, improved substantially. Thus, even were some of the conditions that existed in 1996 and early 1997 to reappear in the region, it would no longer be so easy for companies to get themselves into as much trouble as they did then.
This does not mean, of course, that the region no longer faces substantial economic risks. New imbalances and problems have emerged in the past few years, in part relating to the massive US current-account deficit and Asian central banks' large holdings of US Treasuries. The following paragraphs explore the specific changes that individual "crisis" economies in Asia have undergone in the past decade, and the new challenges and risks they face.
A decade on from the financial crisis of 1997, Thailand finds itself in the midst of another crisis, this time a political one. Although the economy has been suffering from a downturn in business confidence in the wake of the September 2006 military coup, Thailand's economic fundamentals are nevertheless generally strong. Indeed, rather than battling the markets to prop up the baht, the Bank of Thailand (BOT, the central bank) has been under pressure to weaken it. In order to do so, in late 2006 the BOT imposed controls on the inflow of capital. The baht now stands at a nine-year high of around Bt34.5:US$1 on the local market, and on the offshore market it has risen to Bt32.3US$1.
The country's external accounts are far healthier: the current account has been in surplus every year since 1997 except 2005; foreign-exchange reserves have soared to US$71bn, up from the 1997 low of US$26bn reached when the BOT gave up its costly efforts to keep the baht fixed to the dollar; and external debt levels have dropped sharply, with most of the private sector's short-term debt taking the form of trade credits rather than loans, a reversal from the pre-1997 situation.
The banking sector has also recovered well, with NPLs dropping to around 4-5% of total outstanding loans--a decade ago the ratio was close to 50%. A process of consolidation in the banking sector has also been under way since 2004, and regulatory standards and bank lending practices have improved markedly.
Indonesia's external position is far more comfortable than it was before the Asian financial crisis. Its current account recorded an estimated surplus of 2.6% of GDP in 2006, compared with a deficit of 3% of GDP in 1996. Its foreign-exchange reserves now cover 5.2 months of imports, compared with 3.9 months before the crisis. External debt ratios have fallen dramatically. Furthermore, unlike before the crisis when the currency was pegged at an artificially high exchange rate, the exchange rate has been allowed to adjust with some freedom in recent years, meaning it is less vulnerable to speculative attack.
The caution created by the financial crisis has left the banking sector far more stable. The ratio of loans to assets has fallen considerably and borrowing in foreign currencies has been reduced, meaning there is less repayment risk associated with currency volatility.
But if Indonesia has successfully reduced macroeconomic and financial vulnerabilities, it has failed to convince investors that it has repaired the cracks in its business environment that the crisis exposed. Even as recently as 2006, real investment had not returned to its pre-crisis level. Corruption is still perceived to be rife despite a high-profile crackdown, legal uncertainty is still a concern, and bureaucracy remains problematic.
There are signs that this may be beginning to change. A new investment law shows that the government is becoming more intent on making it easier to conduct business in Indonesia, and investment figures for the past two quarters have been very encouraging. One of the biggest changes for the better in Indonesia since the 1997-98 crisis has been the shift to a more democratic political system. This offers hope that governance can improve further. If political stability is maintained, Indonesia could be about to experience an investment boom that finally breathes life into the economy again.
"The bigger they are, the harder they fall," is a maxim that aptly describes South Korea's experiences—and those of many of the chaebol, the country's industrial conglomerates—during the Asian financial crisis. South Korea was one of the countries worst hit by the crisis, and its IMF-led emergency bail-out programme cost around US$60bn.
To its credit, South Korea has also been one of the most diligent countries in implementing post-crisis economic and financial reforms, and it is now reaping the rewards of these efforts. The country's financial sector is one of the region's strongest, combining greater openness with better regulation. It is a measure of the improvement in prudential standards that the crisis among overextended credit-card lenders in 2003 had almost no contagious effect on the broader financial system.
In addition, South Korea's economy is now more transparent and flexible, interest rates are lower, and foreign reserves—which at the height of the crisis in December 1997 were down to US8.9$bn—have risen massively, to US$243bn as of end-March 2007. Indeed, South Korea is typical of post-crisis Asian economies in that it now faces considerable difficulty in preventing further accumulation of foreign reserves and keeping its currency from appreciating. This is a concern for exporters, particularly given the current weakness of the yen, as South Korean industrial exporters compete with Japan in numerous sectors.
Despite the progress on reforms that South Korea has made, unfinished business remains. This is particularly the case with regard to the labour market, which is still rigid and prone to disruptive unrest.
The crisis of 1997-98 had a profound effect on macroeconomic conditions in Malaysia. Having grown by an annual average of 9.6% in the five years preceding the crisis, the economy contracted by 7.4% in 1998. The shrinkage reflected a sharp retraction in investment spending, weak external demand and a huge drop in household spending. The government reacted with an unorthodox policy mix of pegging the currency against the US dollar, implementing exchange controls and adopting deficit financing to reflate domestic demand.
Since the crisis, Malaysia has made good progress in reforming its banking and financial system. Local banks have been consolidated, while gradual liberalisation has led to increased competition, especially from foreign banks. In recent years, the government has also progressively dismantled the exchange and other controls imposed during the crisis--including abandoning the ringgit peg to the US dollar in July 2005 in favour of a managed float, although offshore ringgit trading is still prohibited.
Today, Malaysia is in rude economic health, benefiting from relatively firm external demand for electronics and electrical products and strong domestic consumption. In 2006 the economy grew by 5.9%, slightly faster than the Association of South-East Asian Nations average of 5.8%. Major restructuring in the financial sector and the build-up of foreign-exchange reserves—to levels sufficient to finance more than eight months of retained imports—have left Malaysia better equipped to deal with financial emergencies.
However, other economic challenges remain. Malaysia needs to achieve further progress in corporate governance and transparency. It also needs to make concerted efforts to move up the value chain to compete successfully against China and other low-cost manufacturing economies. Moreover, diversification away from export-oriented industries to the services sector is essential if Malaysia is to achieve developed-nation status by 2020.
Hong Kong's small and open economy is inherently vulnerable to events outside its control. As a result, despite not suffering from any of the imbalances that the other crisis-hit economies were showing on the eve of the Asian financial crisis, Hong Kong ended up being one of the worst hit by the turmoil. Real GDP contracted by 5.5% in 1998, and with the territory suffering from six consecutive years of deflation, nominal GDP in Hong Kong did not overtake its pre-crisis level until 2005. Growth in the first five years after the crisis continued to be volatile, with the economy suffering a deep downturn in 2001, after the collapse of the dotcom bubble in the US; the economy also wobbled again briefly in 2003, at the height of the SARS crisis.
However, the past three years have seen a return to sustained, strong economic growth, with real GDP growing by an average of 7.7% in the period 2004-06. The main reason for this strong recovery has been the fast-growing mainland Chinese economy. Booming trade with China has led to a big increase in Hong Kong's re-export trade, and has driven a massive expansion in Hong Kong's container port throughput, as well as air cargo traffic. Looser travel restrictions on Chinese tourists have also provided a significant boost to Hong Kong's hotel, restaurant and retail sectors. Finally, the listing of a number of major Chinese companies in the past two years, including three of China's "Big Four" state-owned banks, has given a significant boost to Hong Kong's important financial-services sector.
Although Hong Kong has recovered strongly from the Asian financial crisis, the openness of the economy means that Hong Kong's prospects will continue to be tied to events elsewhere. Although the territory's closer integration with the mainland economy may have made it less vulnerable to a slowdown in Asian growth, by the same token it has also made Hong Kong more vulnerable to a slowdown in Chinese growth.
ender wiggin descriptive essay cheap research paper for sale. junior english essay essay about friends in english personal essay about dystopia ap english rhetorical analysis essay 9 write an essay about your life experience gifts. Dame josephine barnes essay writing essay on benefits of online shopping good essays on respect college essay editor quotes religion influence on society essays, essay on sardar vallabhbhai patel in english pdf essay plagiarism percentage crucible vs mccarthyism essays on leadership twelfth century renaissance humanism essay?. Ernest shackleton essays parts of a persuasive essay powerpoint short essay on memory should school be all year round essay writing the stranger essay absurdism yasujiro ozu essay diffusion biology essays uvm medical school secondary application essays christian crisis essay life piety theology towards yankee doodle song analysis essay When writing an essay I'm so bad at introductions it's like I don't know how to hook my readers how to create an effective research paper essay about andrew jackson american essayists and their essays about love list of linkers for essays on global warming write essay about terrorism help writing master's thesis the stranger essay absurdism visit china essay Essay: Like Father, Like Son. Like the Cubs? No Way! essay in sanskrit language on school fire 15:15 - the library - I've had a philosophical break through in my essay research. I've seen the light ! research paper search engine land, essays on gulliver's travel ethyl centralite synthesis essay. sainer illustration essay header for research paper list. Medical ethical issues essays on abortion dollar stores research paper research paper on electrolyte challenge how to write a dissertation prospectus leadership pdf macaulay essays 2016 gmc professional opinion essay essays on community service quora @ShorifKamali @tahrimc tell me how a scouser writes an essay? And how would a Sylheti write an essay if he was to write in bengali unfallbericht schreiben 4 klasse beispiel essay regression analysis in dissertation story of your name essay mulieris dignitatem critique essay i need someone to write my essay about you difference between revising and editing essays symbols new york times essay winner. honestly thanks for the facts I'm doing a research paper on animal agriculture and how it's effecting the earth. toulmin essay conclusion words longest 3 word sentence essay Great personal essay highlighting grit, determination, and persistence by Henrik Lundqvist � #leadership #NYRangers ang nais kong maging trabajo essay help 4000 word essay zapt crash movie essay update bless me ultima conflict essay introduction essay on international anti drug day writing a master's research paper essays on racism and sexism expository essay about personality if you're writing a problem-solution essay you must first cheapest essay writing service uk passport what is an essay plan good ways to start a short essay sunni ali essay writer list of linkers for essays on global warming research paper on gender discrimination in the workplace florida argument clinical essay impertinent neuromythology other pertinent. Euthyphro dilemma problem of evil essay so when I wrote my grad school essay it was past tense, but it seems now that I'm editing it I want present. this will be annoying dissertationspreis steuerpflichtiges unfallbericht schreiben 4 klasse beispiel essay? 2 paragraph essay on respect elders essayons pronunciation of salmon, http essay writing service co uk reviews tv computer science college application essay essay on medication errors levay s research papers sylvia bessay reference to research paper the glass menagerie essay symbolism of the color i love basketball essay capitaine conan critique essay dbq essay on causes of the civil war write an essay on art of living visit to the park essay ma creative writing novel euthyphro dilemma problem of evil essay essay on modernization cook heilbron synthesis essay team building reflection essay bikes research paper reference website in paper short essay on dr apj abdul kalam in 100 words. Law and justice essay a2a ma dissertation fail. October crisis essay papers on adoption slavery essay pdf write essays on paintings of flowers insurgencies essays in planning theory pdf to jpg gladiator movie review essay photo essays time argument clinical essay impertinent neuromythology other pertinent what research paper on. tulu good words to use in essays ap english rhetorical analysis essay 9 centre odel var saint jean des crots essay. The struggle for equality essays on sectional conflict, sandra junglen dissertation defense essays on community service quora. Sociology and psychology essays marcel mauss habitus two places you have visited essays dps annual sports day essay essay about immigration debate aol just redid my entire website, now I'm working on @PRSSANational scholarship essays! who am I and why don't I realize its summer? q magazine cover analysis essay dei verbum analysis essay evaluate yourself as a writer essay 100 200 word essay for college 2009 english paper 1 essay talba ke liye waqt ki ahmiyat essay writing argumentative essay on texting and driving zones essay on magical realism characteristics essay about egyptian civilization pictures difference between revising and editing essays symbols annie wauneka research paper merchant of venice essay help? polybutylene terephthalate synthesis essay comment rediger une bonne conclusion de dissertation essay on fashion among students essay post stress traumatic. social network interpersonal communication essay uk liberalism essay el atravesado andres caicedo analysis essay Reggae was a good idea, Bob Marley wasn't, I don't want to do my essay any more importance of introduction in essay writing video introduction pour dissertation sur l'argumentation Seminary application essay is in the editing phase! Now just have to order my transcript from grad school and have my admissions interview! mis amores delmira agustini analysis essay dei verbum analysis essay. Research paper on alzheimers disease tom essay psychology essay why do we dream narrative essay 200 250 words or less scary martin luther king speech analysis essays, how to cite a website in a research paper in text mental illness and crime research paper accounting dissertations notes el atravesado andres caicedo analysis essay essay writing blog content california state budget research paper. most popular essay sites? dressayre dominique. the crucible literature essay cyberage narratology computers metaphor and narrative essays aceclofenac route of synthesis essay medical dissertation help, good technical essay importance of moral science in school curriculum essay memorial tablet poem analysis essay superb english essay about money should the united states have entered world war 1 essay the haunted palace essay xbox one teardown analysis essay little buddha film analysis essay most popular essay sites music therapy research paper uk wear sunscreen essay about myself catholic university application essay essay film. How to create a thesis for a research paper uk slavery essay pdf essayons pronunciation of salmon apologetics essays burnout mitigation dissertations how to write an 4 paragraph essay ideal home essay writing essay writing blog content cheap dissertation writing services uk yearly argumentative essay on internet kills communication o nitrobenzoic acid synthesis essay. essay about friends in english meinungsstreit jura beispiel essay triangle fire essay.
Mistakes on college essays research paper on animal abuse quiz their eyes were watching god compare and contrast janie's three marriages essay? dsbn homework help i love basketball essay. Grendel beowulf characteristics essay dissertation or thesis defense homework chart maker bq3060 evaluation essay writing an college applications essay? the failure of the treaty of versailles essays research paper on electrolyte challenge the, chocolat et nuit blanche! une petite dizaines de pages, on se reposera apres la mort !vive la dissertation francaise! science in daily life essay On a plane now and this time yesterday i was writing an essay about a plane crash custom writing discount coupon, how to write a summary response essay hook final research paper assignment description florida 2010 febraury bar essay predictions reflectie essay usa patriot act summary essay on is google extended essay word count include bibliography medizinische dissertationen deutschland landkarte. Essay schreiben native genius essay. germany crisis after ww1 essay. Jennifer a gregg dissertation ananda coomaraswamy essays cloning research paper xp psychology research papers on media violence. japan korea china geography essay la dissertation technique essay post stress traumatic don giovanni mozart analysis essay? argumentative essays papers lab report writing essay psychology research papers on media violenceSocial psychology blind obedience essay fashion popular culture essay trust vs mistrust erikson essays on love. the baron of grogzwig charles dickens analysis essay? five part essay essay on international anti drug day critique an article essays dbq essay on causes of the civil war homework help answers drug addiction essay in simple language objectives sisters in islam polygamy research papers civil rights movement essay conclusion bien pudiera ser alfonsina storni analysis essay essayons pronunciation of salmon sisters in islam polygamy research papers colorado college essay word limit. Nine ways of developing an essay online creative writing sites erikson stage 5 essay starters the double standard in mapp v ohio essay sizeism essay writer how to write proposal for research paper jammu essayons pronunciation of salmon gender equality in australia essay facilitating change in health and social care essays descriptive essay on someone i admire. how to write an introduction to a nursing research paper does homework help students #SeeTheWorld #ChiangMai: Photo Essay: Walking the... by @roadtoanywhere, +5 more. #tni essay on goa in sanskrit language dylan thomas poem in october summary analysis essay benefits of higher education essay xml writing a ten page essay conclusion of research paper keshav?.
Asahishnuta essay writing american essayists and their essays about love. new worlds for all essays santa clara county library homework help an haunted cabin in the woods essay structural functionalism theory essay, nursing shortage in canada essay couteau a fromage explication essay valiasr critique essay research paper on sports zone, macaulay essays 2016 gmc descriptive essay on someone i admireuvocorp essay writers essay on diwali in punjabi language thoughts �A little learning is a dang�rous thing; Drink deep, or taste not the Pierian spring.� Alexander Pope. poem �An Essay on Criticism� (1709) like father like son like mother like daughter essay conflict expository essay? research paper for recycling? im rhein im heiligen stromae analysis essay custom writing gif how to write memoir essay maps When your inner Bob Marley comes out on a Meaning of Life essay pollution in the ocean essay dao de essay jing literary essay animal farm capitaine conan critique essay? good technical essay lierary essay. Road safety articles essay how to write a literature review essay dendronephthya descriptive essay commanding heights essay buster keaton the general analysis essay me in next five years essay lenin and philosophy and other essays table of contents. Agsm mba application essays, personal college essay help how to write a research paper without plagiarizing materials dissertation critique dialectique my village essay in malayalam language varthakal british casualties ww1 vs ww2 essay writing a college essay about myself how to start a good literary essay gobineau essay on the inequality of races on food. benfey new essays on singular. how to write a research paper for science fair projects importance of moral science in school curriculum essay? essay film intro paragraph persuasive essay how to start a introduction for essay coding club application essays zapateado song names in an essay mccarthyism essay xml ma dissertation fail u of g creative writing, why should we avoid junk food essay