Thailand's economy developed into an economic bubble fueled by hot money. More and more was required as the size of the bubble grew. The same type of situation happened in Malaysia and Indonesia, which had the added complication of what was called " crony capitalism ".
Japan's transition to an economic powerhouse was followed by the rapid ascent of the Asian tigers, and subsequently by China taking a prominent place on the world economic stage. As would be expected given the increasing size and sophistication of their economies, the nations of the region have also begun to exert a substantial influence on global economic developments and on international governance in the economic and financial spheres.
It is widely agreed that a key source of Asia's rapid advancement has been the openness of countries in the region to global trade and finance. Notwithstanding this consensus, the considerable progress of Globalization and the asian financial crisis countries in developing domestic institutions, policies, and industrial capacity--together with their strong growth in the initial phase of the ongoing global financial crisis--led some to speculate that the Asian economies had "decoupled" from the advanced economies of North America and Europe.
Of course, in hindsight, given the magnitude of the shocks that have struck these advanced economies over the past two years, as well as their strong economic and financial links to Asia, it should not have been surprising that Asia was ultimately hit quite hard by the global downturn, even though the origins of the turmoil were elsewhere.
As a prelude to the papers and discussions to follow, I will provide a brief overview of the Asian experience during the global financial crisis.
I will highlight the diversity of experiences, both within Asia and between Asia and other regions, and draw some inferences about the different channels through which the effects of the financial crisis were transmitted around the world. I will discuss Asia's policy response to the economic and financial consequences of the crisis.
Finally, I will focus on medium-term challenges. For both Asia and the United States, perhaps the greatest medium-term challenge is to achieve more balanced growth and, in the process, to further reduce global imbalances.
Asia's Experience in the Crisis During the years following the financial crisis of the late s, many emerging market economies, in Asia and elsewhere, took advantage of relatively good global economic conditions to strengthen their economic and financial fundamentals; they improved their fiscal and external debt positions, built foreign exchange reserves, and reformed their banking sectors.
Hence, at the onset of the financial turmoil in the summer ofthe Asian economies appeared well-positioned to avoid its worst effects. Moreover, economic activity in the region continued to expand. However, toward the end ofat about the same time that the United States entered a recession, the headwinds facing the Asian economies appeared to strengthen.
Asian equity markets began to fall again--they were to underperform global markets throughout much of and other signs of financial stress, such as widening credit spreads, appeared as well. By the second quarter ofmany of the region's economies were slowing, and growth in Hong Kong, Singapore, and Taiwan--small, open economies particularly sensitive to shifts in global conditions--had ground to a halt.
In September and Octoberas you know, the global financial crisis intensified dramatically. Concerted international action prevented a global financial meltdown, but the effects of the crisis on asset prices, credit availability, and consumer and business confidence resulted in sharp declines in demand and production worldwide.
Reflecting this worsening economic climate, Asian GDP growth slowed further in the second half of Among the major Asian economies, only those of China, India, and Indonesia did not contract during the crisis. Early this year, with many of the Asian economies in freefall, a quick recovery seemed difficult to imagine, but recent data from the region suggest that a strong rebound is, in fact, under way.
Although the regional economy continued to contract in the first months ofit expanded at an impressive 9 percent annual rate in the second quarter, with annualized growth rates well into double digits in China, Hong Kong, Korea, Malaysia, Singapore, and Taiwan.
Diversity of Experiences This brief review of Asia's experience during the crisis raises a number of important questions: Through what channels were the effects of the financial crisis transmitted across the globe? In particular, why was Asia, whose financial systems largely escaped the serious credit problems that erupted in the United States and Europe, hit so hard by the global recession?
|Keep Exploring Britannica||And since globalization is a challenge for all, we all have an obligation to ask ourselves what it implies for the terms of our partnership.|
|Asian financial crisis | Asian history [–] | rutadeltambor.com||And since globalization is a challenge for all, we all have an obligation to ask ourselves what it implies for the terms of our partnership. Certainly, there is very broad recognition of the benefits of global financial markets:|
|What is the 'Asian Financial Crisis'||See Article History Asian financial crisis, major global financial crisis that destabilized the Asian economy and then the world economy at the end of the s.|
What enabled the Asian economies to bounce back so sharply more recently? Some light can be shed on these questions by examining the diversity of experiences among both Asian and non-Asian economies during the downturn.
Trade and Finance The crisis that began in the West affected Asia through various transmission channels, whose relative importance depended in some degree on the particular characteristics of each economy.
However, for virtually all of the Asian economies, international trade appears to have been a critical channel. Exhibit 1 shows the course of global merchandise exports since the beginning of this decade. As the exhibit shows, after a period of strong growth, international trade plunged about 20 percent in real terms from its pre-crisis peak to its trough in early the dashed red lineand about 35 percent in U.However, the Asian crisis also illustrated the risks of globalization.
Many of these problems could have been avoided if the domestic financial sector had been reformed before the liberalization measures that led to massive capital flows. Accordingly, the global –nancial crisis provides an important testing ground for the –nancial globalisation model. While the market-panic phase of the global crisis was most intense during Autumn and Spring , subsequent crisis stages are still playing out, .
Asian financial crisis, major global financial crisis that destabilized the Asian economy and then the world economy at the end of the s. The –98 Asian financial crisis began in Thailand and then quickly spread to neighbouring economies.
Financial sector weaknesses are at the root of the Asian crisis and require particularly urgent attention. In many cases, weak but viable financial institutions must be restructured and recapitalized. Asian Financial Crisis July –December A financial crisis started in Thailand in July and spread across East Asia, wreaking havoc on economies in the region and leading to spillover effects in Latin America and Eastern Europe in East Asian economic miracle that are relevant to the discussions on globalization.
It will then show the degree of Asia's globalization in light of certain commonly used indicators so as to establish a partial account of the Asian financial crisis.
It will conclude with a .