Morris Goldstein - The Asian Financial Crisis, Ebooks (various), Geopolitics + Sociology
[ Pobierz całość w formacie PDF ]
1
Introduction
The turmoil that has rocked Asian foreign-exchange and equity markets
since June 1997 and that has spread far afield is the third major currency
crisis of the 1990s. Its two predecessors were the crisis in the European
Monetary System (EMS) of 1992–93 and the Mexican peso crisis of
1994–95.
At the meeting of heads of state of the Asia Pacific Economic Coopera-
tion (APEC) forum in Vancouver in November 1997, US President Bill
Clinton first characterized the Asian crisis as ‘‘a few small glitches in the
road’’—a description that has given way to less rosy scenarios as evidence
of the depth and breadth of the crisis has accumulated. As shown in
tables 1 and 2, currency and equity markets in emerging Asia recorded
huge falls—on the order of 30 to 50 percent—in the second half of 1997
(as measured from the end of June, just before the floating of the Thai
baht). Developments during the first four months of 1998 have been
mixed: on the positive side, there have been some rebounds in exchange
rates in Thailand and South Korea and in equity prices in the Philippines;
in the negative column, the downward slide in the Indonesian rupiah
has accelerated, and even where currency and equity prices have
rebounded, the cumulative decline over the crisis period as a whole
remains very large.
Moreover, forecasts of 1998 economic growth in the region—which
stood in the 6 to 8 percent neighborhood prior to the crisis—have been
sharply marked down since then (see table 3).
1
Thailand, Indonesia, and
1. Goldstein and Hawkins (1998) show that these downward revisions of 1998 growth
forecasts for the Asian emerging economies represent some of the largest downward revi-
sions (over a 6-month period) of the 1990s.
1
Institute for International Economics |
e
r
l
s
|
m
2
N
S
South Korea are now expected to suffer recessions this year, and growth
in Malaysia and the Philippines is likely to be only about a third of what
was anticipated prior to the crisis. Excluding China, growth in emerging
Asia is now expected to be only marginally positive (1 to 2 percent)
this year.
Moving outside the region, it becomes more hazardous to link changes
in 1998 growth forecasts solely to the effects of the Asian crisis, because
other factors have also changed. Nevertheless, it is relevant to note that
INTRODUCTION
3
Institute for International Economics |
in April 1998 the International Monetary Fund (IMF) (1998b) revised its
1998 global growth projection to 3.1 percent—down from 4.3 percent in
October 1997, and (roughly) two-thirds of that downward revision might
be attributed to slower growth in developing Asia. Turning to growth in
the largest industrial countries, there is a consensus that Japan has been
hardest hit by the Asian crisis, with its impact exacerbating Japan’s serious
homegrown problems.
2
In the United States, the contractionary impact of
the Asian crisis has so far been more subdued, and the IMF’s latest (1998b)
forecast for 1998 growth is in fact now higher than it was before the crisis.
3
My aim in this book is threefold: first, to explain how the Asian financial
crisis arose and spread; second, to outline the kinds of corrective policy
measures and reforms that would help to end the crisis; and third, to
suggest a package of improvements in the international framework for
crisis prevention and crisis management.
Chapter 2 discusses the three main interrelated origins of the crisis,
namely:
financial-sector weaknesses
in Asian emerging economies cum easy
global liquidity conditions; mounting concerns about
external-sector prob-
lems
in these economies; and
contagion
from Thailand—first to three larger
economies of the Association of Southeast Asian Nations (ASEAN-4)
(Indonesia, Malaysia, and the Philippines), then to North Asia (South
Korea, Taiwan, Hong Kong, and Japan), and finally to other countries
(ranging from Brazil to Russia and, more briefly, to equity markets in
some major industrial countries).
Chapter 3 turns to proposals for fixing the crisis. Here, I take up restruc-
turing and reform of financial sectors and prudential supervision in the
ASEAN-4 economies and South Korea, exchange rate policies in Asia,
fiscal and financial-sector policies in Japan, competitive depreciation pres-
sures facing China, and the design and effectiveness of IMF-led official
rescue packages.
2. IMF forecasts for 1998 growth in Japan have fallen from 2.9 percent in the May 1997
World Economic Outlook
to zero in the April 1998 edition. The IMF (1998b) argues that while
the Asian crisis added to the toll, the faltering of Japan’s recovery in 1997 primarily reflected
problems of its own making, including the large withdrawal of fiscal stimulus when the
recovery was not yet firmly established, the bad loan problem cum more generalized finan-
cial-sector weaknesses, and delays in the implementation of structural reforms. Posen (forth-
coming 1998) comes to a similar conclusion. Liu et al. (1998) also find that Japan’s real GDP
is more adversely affected by the Asian crisis than either the United States or Europe but
emphasize that the outcome is heavily influenced by how one treats the depreciation of the
yen vis-` -vis the US dollar and European currencies over the period and by how one
accounts for the real absorbtion effects of exchange rate changes. As argued in chapters 2
and 3, Japan’s problems have also been an important element in the origins of the crisis
and have made recovery from the regional crisis more difficult.
3. In May 1997, the IMF was projecting 1998 growth in the United States to be 2.2 percent;
the April 1998
World Economic Outlook
envisages US growth of 2.9 percent in 1998.
4
ASIAN FINANCIAL CRISIS
Institute for International Economics |
[ Pobierz całość w formacie PDF ]