Thailand May Lead Way to Economic Relapse
TK -- Signs are emerging in Southeast Asia that strongly suggest a relapse of the economic crisis that struck the region in 1997.
Three years ago, the Asian economic miracle came to a very public end. Under pressure, Thailand’s currency collapsed and culminated in a general financial panic. Since then, Asian economies have struggled to recover.
Some, like South Korea’s, have done better than others. But in general, most Asian nations have been unable to institute the radical restructuring required for recovery. Some, like Indonesia, have simply lacked the wherewithal for reform. Others, like Japan, lacked the political will to endure the wrenching social costs.
Now, indications are that Asia’s economies are once again running into trouble.
Thailand’s Currency on Downswing
Indeed, Thailand, the first domino to fall in 1997, seems to be leading the way again.
The Thai government was forced to intervene several times in the past three months to stabilize the baht. According to Thailand’s The Nation, the Bank of Thailand intervened in the London market on July 26 in an attempt to strengthen the baht, which had fallen to its lowest level since September 1999.
Thailand is not alone. The Philippine peso, which often closely follows the baht, came within 0.134 pesos of its weakest crisis point of 45.209 to the dollar on July 27. The Indonesian rupiah hit its weakest point since October 1998 and the Singapore dollar fell to its weakest point since September 1998.
But the baht has taken the most disturbing path of regional currencies. The currency experienced a general downtrend since 1998, with intermittent upswings.
This general pattern is seen throughout Southeast Asia. The peso declined more sharply than the baht, and the rupiah has declined steadily since presidential elections in October 1999. In the face of this pattern, stronger countries, like Singapore and South Korea, have been forced to weaken their currencies in order to remain competitive with regional rivals.
