POST-CRISIS

EXPERIENCE
4.3.1
The World Economy

 Weakness in Korea and Japan surfaced toward the end of 1997.

 World output growth in 1998 did fall.
 Rapid growth of Asia including India and China
 It did not precipitate into a world recession
 US Economy
 United States and other industrial countries recovered

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4.3.2
Economic Growth
The overall economic growth in the Asian economies did not immediately
reflect events in the financial sector and in foreign exchange markets.
 1998 was a bad year for most countries in the Asian region.
 Strong recovery in 1999 which strengthened in 2000.
 The slowdown in growth in the United States and other industrial countries.
 Economic growth in the Asian region between 2002 and 2007.

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Exchange Rates
 Exchange rates have strengthened from their lows in the first part of 1998.
 Depreciation vis-à-vis pre-crisis level.
 2003 to 2007: Appreciation in some of Asian currencies.

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Equity Prices
 Stock prices rebounded.
 In Korea, they had risen above pre-crisis levels by the middle of 1999
 Funds form the rest of the world started to return.
 From 2002-2007, stock markets in Asia generally increased.
 Beginning of 2008.

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Restructuring
Many weaker firms throughout the region went out of business during the
Asian financial crisis.
As the Asian economies recovered, they put in more efforts to avoid the
potential bubble that had resulted in the previous crisis.

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4.3.3
Economic Recovery
 Downturn in most economies was not caused by a dramatic fall in exports.
 Recovery came through a revival of domestic demand.
 Slowdown in the growth of the industrialized countries in 2001.
 Sustained growth in these industrialized countries.
 Export performance also recovered significantly.
 The primary reason for the quick turnaround in the external balance.
 The recession in Asia was primarily a failure of domestic demand.

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4.3.4
Emerging Development
Divide in Asia
 Real GDP growth in U.S. dollars at 1996.
 Stock market and export performance, and the ability to attract investment.
When China was included, the East Asia-4 grew more rapidly. When China was
excluded, the ASEAN-5 grew faster.

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4.3.5
Social Impact of the
Economic Crisis
 Credit crunch, currency depreciation, inflation accelerated, purchasing power
fell, and government revenues came under strain.
 The price of providing services also increased.
 There was an increased in reverse migration.
 The formal rate of unemployment increased dramatically.

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4.3.5
Social Impact of the
Economic Crisis
Budget cuts and reduced incomes had an adverse effect on expenditures on
health and education.
 Higher incidence of mental health problems.
 Rate of school dropouts rose.
There was greater discrimination against girls and limited resources were used
to educate the boys in the family.
 Sharp decline in real per-capita income between 1997 and 1998.

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4.3.5
Social Impact of the
Economic Crisis
Households used a umber of coping mechanisms to deal with the crisis.
Certain disadvantaged groups that were particularly hard hit by the crisis were
the poor, women, children and the elderly.
As the Asian economies recovered from the crisis, the unemployment rate fell
and growth accelerated.
 It reduced the poverty.

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