Asian Financial Crisis (redirected from 1997 Asian Financial Crisis)

Asian Financial Crisis

A situation in which a number of East Asian currencies collapsed in value, forcing the IMF to launch a $40 billion loan program to stabilize their economies. The crisis started in 1997, when the Thai baht began to float for the first time; this resulted in rapid devaluation of the currency and large price increases. Similar things began happening in Hong Kong, Laos, Malaysia, the Philippines, and especially Indonesia and South Korea. This occurred despite the fact that most of these governments had no national debt and were thought to have been pursuing rational monetary policies. The Asian financial crisis ended what was previously called the East Asian economic miracle.

Analysts disagree about what caused the crisis. Some economists have argued that there was too much foreign capital investment in East Asia without a concomitant increase in domestic productivity. Others have cited supposed crony capitalism in many of these countries, while still others blame the IMF for exacerbating what they say was a minor situation.