The Asian currency crisis: looking back and lessons forward

Abstract

The East Asian financial crisis has truly been an exceptional event. All of a sudden the most swiftly expanding victorious economies of the world were plunged into intense crisis. Beginning in 1997 of July, the Asian Financial Crisis was a stretch of financial crisis which took over most of East and Southeast Asia. From being a regional financial crisis it has expanded to a global one within a very short span of a year. After having more than three subsequent decenniums of economic boom, the Asian Crisis came into existence. Throughout the previous decade to the setback, development of the GDP caught up to an average of 8% each year for countries such as Indonesia, Singapore, Thailand, and the Philippines. Thus, in a span of thirty years, the income per habitant was amplified by ten times in Korea, four times in Malaysia and five times in Thailand. Since, the 1960s no other group of countries in the world has induced to such expeditious economic expansion or such a legit cutback in poverty. This paper presents a run-through of economic fundamentals in Asia on the eve of the crisis, what led to the crisis, factors inclusive of external sector weaknesses, delicacy in domestic financial market and loss of confidence with an emphasis on current account imbalances, quality and quantity of financial over-lending, banking problems and composition, maturity and size of capital inflows, with a reconstruction of the Asian contagion from the previous to the recent developments and a survey which presents a discussion on schemes to recover from this contagion.