The Asian financial crisis occurred since the beginning of summer 1997 in Thailand and was triggered due to the currency depreciation of Thai baht. Declines in the stock market and exchange rates and the assets prices affected the economies of East Asian countries on a large scale, most notably Thailand, South Korea and Indonesia. Although Hong Kong was suffered severely in the crisis, there was significant impact on its economy and livelihood. It took both countries three to four years to have their economies recovered. In general, the Asian Financial Crisis occurred due to the rapid-growing economy in Thailand and Hong Kong was affected. Therefore both countries faced a harsh time in economy and livelihood of people.
Thailand’s economy was growing fast in the early 90s, however the government and the banks were not aware of the bubble economy so the Asian Financial Crisis occurred and Thailand’s economy and livelihood was in a bad position. Before 1997, the economy of Thailand grew rapidly - 9% per year on average. Investors from all over the world inject capital in Thailand. However, a bubble economy was created. As the spending of each person in Thailand increased, the suppliers or the producers tend to produce more products to meet the demands of various products ranging from real estates to necessities. Assets prices were raised to a very high level. Unfortunately, there was an unbalance in the supply and demand. The prices dropped to a significant low level. Banks and other financial institutions also lend money to without serious consideration of risk. Individuals and firms had to prolong the length of repaying debts. Later, the government adopted a float exchange rate system. In January 1998, it resulted in the fact that the baht reached a point of 56 bahts to the U.S. dollar. (CRS Report - Table A1. Exchange rate). Moreover, there was a slump of 75% in 1997. Even Finance One, the
References: Ching, F. The Asian Economic Crisis: Policy Choices, Social Consequences and the Philippine Case: Social Impact of the Regional Financial Crisis. Retrieved Sept 22, 2007, from http://www.asiasociety.org/publications/update_crisis_ching.html International Monetary Fund. (1999). The IMF 's Response to the Asian Crisis. Retrieved Sept 23, 2007, from http://www.imf.org/external/np/exr/facts/asia.htm Nanto, D. K. (1998). CRS Report – The 1997-98 Asian Financial Crisis. Retrieved Sept 24, 2007 from http://www.fas.org/man/crs/crs-asia2.htm Wikipedia. 1997 Asian Financial Crisis. Retrieved Sept 22, 2007 from http://en.wikipedia.org/wiki/1997_Asian_Financial_Crisis Woodsome, K. (2007). Economists Say Asian Countries Benefit from Fluctuating Currencies. News VOA.com. Retrieved Sept 22, 2007 from http://www.voanews.com/english/archive/2007-10/2007-10-10-voa10.cfm?CFID=217884118&CFTOKEN=21524796