Content area
Full Text
After three decades of whirlwind growth, many of East Asia's tiger economies are in the doldrums. Need this be the end of the Asian economic
miracle? No, says Pam Woodall; but governments must abandon their bad habits
THE gleaming high-rise buildings that fill the skylines of East Asia's capital cities used to be seen as symbols of the region's economic success. Malaysians boasted about having the world's tallest building; Bangkok bankers joked that the crane had become Thailand's national bird. But now these towering monuments look like a testimonial to financial excess. The cranes are idle, and snazzy offices and luxury apartment blocks stand empty. In Bangkok an urgently needed road and rail link between airport and city centre has been abandoned half-finished, its concrete pillars reminiscent of Roman ruins. Is East Asia's economic miracle now also a thing of the past?
If anybody had predicted a year ago that Indonesia, South Korea and Thailand would have to go cap in hand to the IMF, they would have been thought mad. This was, after all, the East Asia whose economic policies the international financial community was forever applauding: a world away from Latin America or Africa, where trouble was always on the cards. East Asia's three decades of growth averaging almost 8% a year (or 5.5% per head) had inspired pride at home and envy abroad (see chart 1, next page). Never before had any economy sustained such rapid growth for so long. The four original "tiger" economies (Hong Kong, Singapore, South Korea and Taiwan) had worked themselves up to developed-country status, and Indonesia, Malaysia and Thailand were catching up fast. There was much talk about an "Asian century" ahead, when the region's economies would leap ahead of America's and Europe's.
But plunging currencies and stockmarkets have put the economic miracle in the deep freeze, and minds are now concentrated simply on survival. At its low point, the Indonesian rupiah was more than 80% down against the dollar, and the currencies of Thailand, South Korea, Malaysia and the Philippines have all dived by 35-50% (see chart 2, next page). These countries' foreign-debt burdens have therefore swollen alarmingly in local-currency terms. The stockmarkets of all five countries have also seen losses of at least 60%...