The Asian Financial Crisis and Warning Indicators – Then and Now

This paper presents data on the financial crisis in East Asia that started in Thailand in July 1997 and then spread to other emerging Asian economies and the rest of the world, and the warning indicators that were used to predict that crisis. The causes of the current financial and economic crisis in Asia are then examined as well as the reason that the same indicators could not predict the current Asian crisis. Basically, Asian economies introduced significant structural changes after the 1997–1998 crisis, which prevented a crisis similar to the one that afflicted them in 1997–1998. The current financial crisis in Asia was imported from abroad and resulted from a contagion from the financial and economic crisis in the United States and other advanced nations when they sharply cut their imports and reduced their capital exports to Asian countries and other emerging market economies.