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Even as the erstwhile Asian tigers (read: economies) are still smarting under the wounds caused by the financial catastrophe of 1997, concerns are being raised as to whether they have learnt their lessons from the shock.
On July 3, this year, as Thai stocks rose to their record highs investors heaved a sigh of relief after having lived through the nightmarish catastrophe for almost a decade since the fateful day of July 2, 1997, when a financial crisis engulfed Thailand and other neighboring East-Asian nations. It all started with Thailand being at the pulse point of the crisis. Thai stock market had lost 75% by the end of 1997 as Thai baht, which was until then pegged to the US dollar, collapsed and fell to 56 to the dollar by January 1998 from its pegged value of 25 to the dollar. As speculators went on a panic selling spree, it left the country almost drained of the foreign currency reserves. Within days of baht's devaluation, another Asian currency, Malaysian ringgit came under attack from speculators who pushed the overnight rates from under 8% to over 40%, leading to a massive upheaval in the stock and currency markets and governments and corporates were suddenly saddled under reams of debts. By the end of 1997, the crisis had engulfed the four Asian Tigers—Hong Kong, Singapore, South Korea, and Taiwan—and spilled to Indonesia and the Philippines as well. Of all these Asian countries, Indonesia, South Korea and Thailand were however, the worst hit.
Ten years on, the countries affected by the crisis appear to have recuperated well. An Asian Development Bank (ADB) review of the five countries most affected—Thailand, Indonesia, Malaysia, South Korea and the Philippines— found that incomes per head had recovered to at least their pre-crisis levels. Foreign currency reserves, trade balance, corporate governance, depth of financial markets, and quality of government regulation, as well as various indicators of public health have also emerged stronger than before.
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