ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Economic Turmoil in Asia

Most analyses of the recent south-east Asian crisis focus on non-performing fundamentals or on selffulfilling panics in the financial sector. This article traces the crisis to real sector deceleration, which was apparent a year before the crisis; and to the built-in instabilities in the deregulated financial system. As credit flows continued in spite of real sector slow-down, the system became vulnerable to sudden collapse in asset prices. Corrective measures by monetary authorities failed in deregulated financial markets.

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