Final Crisis

7/29/2019 Final Crisis

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South East asian financial crisis and its lessons

for developing countries.

Sr. No. Topic Page no.

1 Inroduction 02

2 Chronology 03

3 Diagnosis of financial crises 06

4 Economic impact of the crises 08

5 Evolution of crises 13

6

Effect on countries

187 Consequences 24

8 Role of IMF 27

9 Conclusion 29

10 Lesson 31

11 Bibliography 32


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Introduction

The South East Asian financial crisis was a period of financial crisis that

gripped much of Asia beginning in July 1997, and raised fears of a worldwide

economic meltdown due to financial contagion. The crisis started in Thailand

with the financial collapse of the Thai Baht caused by the decision of the Thai

government to float the Baht, cutting its peg to the USD, after exhaustive efforts

to support it in the face of a severe financial overextension that was in part realestate driven. At the time, Thailand had acquired a burden of foreign debt that

made the country effectively bankrupt even before the collapse of its currency.

As the crisis spread, most of Southeast Asia and Japan saw slumping currencies,

devalued stock markets and other asset prices, and a precipitous rise in private

debt. Though there has been general agreement on the existence of a crisis and

its consequences, the exact reasons of this financial crisis are still

debatable.

Since the middle of 1997, East Asia has been gripped by an economic, and morelatterly a political crisis that shows few signs of abating. In the space of less

than a year the international standing and domestic situations of what were

formerly taken to be miracle economies has been dramatically transformed.

Major companies have defaulted on their foreign debt repayments, anxious

domestic and international investors have relocated or withdrawn vast amounts

of capital, inflation and unemployment have soared, and political instability has

risen to dangerous levels. Within this context, the expectations of many

observers that the East Asian miracle would continue indefinitely have beenreplaced by more sober predictions of recession and deflation. Even the most

optimistic observers suggested that economic recovery for the region would

take at least three years away. Pessimists suggested that the region could take

decades to recover and that the present crisis thus marks the end of the

East Asian miracle.

South East Asian economies had maintained high interest rate which promised

high return rate for foreign investors looking for investment. Regional


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economies Thailand, Malaysia, Indonesia, Singapore and South Korea

experienced 8-12% GDP growth in the late 1980s and early 1990s. US $184

billion entered in the developing countries during 1994-96 according to the

Bank of International Settlements. In the first half of 1997 $70 billion came in

but in 2nd half of 1997 (Onset of crisis) this inflow suddenly turned into

outflow of US $102 Billion, creating a wide spread panic among the investors

and governments alike.

A CHRONOLOGY OF THE CRISIS

1997

January

The Korean industrial conglomerate (chaebol), Hanbo Steel collapses under $6billion in debts, raising questions about the sustainability of a rapid growthstrategy dependent on large, potentially unsustainable external borrowings.

May

The Thai baht comes under speculative attack from foreign currency traders.Doubts emerge about the continuing competitiveness of the Thai economygiven the bahts loose pegging to the $US.

June - JulyThai insurance and finance companies begin to collapse. At the same time thecontagion effect begins, initially affecting the Philippines and Indonesia. InJuly, Thailand calls in the IMF for technical assistance. The IMF also offersthe Philippines financial assistance. Malaysia abandons the defense of theringgit as the contagion spreads.

August

The rupiah falls dramatically following the governments decision to abandonits managed float exchange rate policy. Mahathir blames Soros for initiatingthe crisis. The IMF increases assistance to Thailand to over US$17 billion.

October

As the crisis deepens, Indonesia calls in the IMF. Late in the month the IMFoffers the Indonesian government a $23 billion support package.

November

South Korean stock market prices collapse triggering debt and confidencecrises. By November 21, Korea is also forced to ask the IMF for assistance.


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December

The IMF puts together a multi-billion dollar rescue package for Korea. As thefinancial crisis continues to intensify, Japan tries to stimulate its domestic

economy, but its own banking sector is downgraded by ratings agencies.

1998

January

The Indonesian currency continues on a downward path, partly driven bySuhartos decisions to continue as President and appoint Habibie as Vice -

Presidentthe currency breaks Rp. 15,000 to US$1 barrier.

February

Stock markets in the region rebound during February, but remain characterizedby extreme volatility. A standoff over a currency board proposal continuesbetween Indonesia and the IMF.

March

The Indonesian economy is on the brink of hyper-inflation. Unemployment

escalates. Japanese proposals to stimulate its domestic economy are poorlyreceived. The IMF adopts a more flexible position towards Indonesias reform

program.

April

Japans Nikkei stock market index plunges at the start of the new fi nancial year.Moodys Investor Service lowers Japans sovereign debt rating. G7 leaders failto give support the Yen which continues its steady decline in value.

May


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Massive student protest and riots erupt in Indonesia for Suharto to resign. Vice-President B.J. Habibie takes over. The transition fails to bring stability to theIndonesian economy. The yen continues to fall against the dollar, undercuttingthe competitive position of other Asian nations and sparking fears of a fresh

round of currency collapses.

June

The crisis begins to affect Australia more directly steady decline in the valueof the Australia dollar despite Reserve Bank intervention sees interest rates

begin to move up. Pauline Hansons One Nation Party has electoral success inQueensland. The Japanese economy officially moved into recession followingsecond successive quarter of negative growth.

Diagnosing Financial Crises

Not all financial crises are alike, even though superficial appearances may

deceive. Only a close historical analysis, guided by theory, can disentangle thekey features of any particular financial crisis, including the Asian crisis. Weidentify five main types of financial crises, which may in fact be intertwined inany particular historical episode.

1. Macroeconomic Policy-Induced Crisis:Following the canonical Krugman (1 979) model, a balance-of-payments crisis

(currency depreciation, loss of foreign exchange reserves, collapse of a peggedexchange rate) arises when domestic credit expansion by the central bank isinconsistent with the pegged exchange rate. Often, as in the Krugman model,the credit expansion results from the monetization of budget deficits. Foreignexchange reserves fall gradually until the central bank is vulnerable to a suddenrun, which exhausts the remaining reserves and pushes the economy to afloating rate.

2. Financial Panic:Following the Diamond-Dybvig (1983) model of a bank run, a financial panic isa case of multiple equilibrium in the financial markets. A panic is an adverseequilibrium outcome in which short-term creditors suddenly withdraw their

loans from a solvent borrower. In general terms, a panic can occur when threeconditions hold: short-term debts exceed short-term assets, no single private


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market creditor is large enough to supply all of the credits necessary to pay offexisting short-term debts, and there is no lender of last resort. In this case, it

becomes rational for each creditor to withdraw its credits if the other creditorsare also fleeing from the borrower, even though each creditor would also be

prepared to lend if the other creditors were to do the same. The panic may resultin large economic losses (premature suspension of investment projects,liquidation of the borrower, creditor grab race, etc.).

3. Bubble Collapse:

Following Blanchard and Watson (1982) and others, a stochastic financialbubble occurs when speculators purchase a financial asset at a price above itsfundamental value in the expectation of a subsequent capital gain. In each

period, the bubble (measured as the deviation of the asset price from itsfundamental price) may continue to grow or may collapse with a positive

probability. The collapse, when it occurs, is unexpected but not completelyunforeseen since market participants areaware of the bubble and the probability distribution regarding its collapse. Aconsiderable amount of modeling has examined the conditions in which aspeculative bubble can be a rational equilibrium.

4. Moral Hazard Crisis:Following Akerlof and Romer (1994), a moral hazard crisis arises because

banks are able to borrow funds on the basis of implicit or explicit public

guarantees of bank liabilities. If banks are undercapitalized or underregulated,they may use these funds in overly risky or even criminal ventures. Akerlof andRomer argue that the economics of looting, in which banks use their state

backing to purloin deposits, is more common than is generally perceived andplayed a large role in the U.S. savings and loan crisis. Krugman (1998) similarlyargues that the Asian crisis is a reflection of excessive gambling and indeedstealing by banks that gained access to domestic and foreign deposits by virtueof state guarantees on these deposits.

5. Disorderly Workout:

Following Sachs (1995), a disorderly workout occurs when an illiquid orinsolvent borrower provokes a creditor grab race and a forced liquidation eventhough the borrower is worth more as an ongoing enterprise. A disorderlyworkout occurs especially when markets operate without the benefit of creditorcoordination via bankruptcy law. The problem is sometimes known as a debtoverhang. In essence, coordination problems among creditors prevent theefficient provision of working capital to the financially distressed borrower and

delay or prevent the eventual discharge of bad debts ( e g , via debt-equityconversions or debt reduction).


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THE ECONOMIC IMPACT OF THE CRISIS

We shall see the major impacts of the crisis and provide some empirical

evidence of their magnitude.

Currency Rates

By far the most dramatic and destabilising consequence of the East Asian crisis

has been a collapse in the value of the currencies within the region (See Table

1). Of these, the Indonesian rupiah, the South Korean won, the Thai baht, the

Philippine peso, and the Malaysian ringgit have been the worst affected. The

Hong Kong dollar has been the only currency not to record a fall over the past

12 months. Significantly, Hong Kong utilises a currency board system in

which the Hong Kong dollar is pegged to the US dollar. Unlike Indonesia,

however, which also considered adopting a currency board system until

International Monetary Fund (IMF) pressure and declining investor confidence

persuaded it not to, Hong Kong has foreign reserves of its own and the implicit

support of mainland China which also has substantial reserves. Chinas

currency has been similarly unaffected as it is not fully convertible.

Table 1. Currency Rates (equivalent of $US1)

Capital Flows

Although there are a number of interpretations about the ultimate causes of the

crisis, there is little doubt that flows of capital in and out of the region have

been a major influence on both the regions rapid development and its


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subsequent collapse. Huge inflows of private capital were instrumental in

causing both the appreciation of regional currencies and the value of domestic

assets, particularly in areas like real estate. Indeed, it is important to remember

that it was the bursting of Thailands speculative real estate bubble that was one

of the first clear indicators and triggers of the initial crisis. The other factor that

needs to be borne in mind with regard to capital flows is their sheer volume

compared to what are still comparatively small Southeast Asian economies. By

some estimates, US$ 2 trillion passes through the worlds financial markets

every day. This compares with Indonesias entire annual GNP of US$ 136

billion.

The subsequent loss of investor confidenceor outright paniccaused

significant withdrawals of capital from the region. According to the Institute ofInternational Finance, private capital flows to the five countries worst affected

by the crisisIndonesia, South Korea, the Philippines, Thailand, and

Malaysiafell from +$US93 billion in 1996 to -$12.1 billion in 1997 and are

forecast to be -$9.4 billion for 1998.

As Table 2 illustrates, most of this fall resulted from a decline in commercial

bank lending, although outflows of equity capital also had a significant impact.

Table 2. External Financing for Five Asian Economies ($US billions)


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Interest Rates

The crisis has also led to a dramatic rise in prime lending rates within the

region, especially in Indonesia and the Philippines (See Figure 1). As the value

of Asian currencies has fallen, banks have increased interest rates in order to

stem capital flight and maintain liquidity. At the same time, governments havebeen forced to raise interest rates in order to contain the inflationary pressures

caused by the currency collapse. Two points are worth noting in connection

with interest rates. First, comparatively high interest rates were actually used by

a number of governments to attract capital prior to the crisisa strategy that

was fraught with potential risk. Second, the current high interest rate levels in

the region make any rapid regeneration of domestic activity more problematic.


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Economic Growth

Another important element of the crisis has been a substantial drop in economic

growth rates within the region. In May of last year, the IMF was forecastingcontinued strong growth for the region for 1997 and 1998. By December,

however, it had dramatically revised its growth forecasts, predicting a

substantial drop in growth in all countries with the partial exception of South

Korea (See Table 3). This is an especially serious concern in a region in which

the legitimacy of government has often been directly bound up with its ability to

deliver rising living standards.

Consumer Demand

Compounding the impact of the crisis has been a substantial fall in consumer

confidence and spending. For instance, as Table 4 illustrates, automobile sales

within the region are expected to decline significantly during 1997-1998. The

contraction of domestic markets is potentially important for a number of

reasons. First, economic recovery will be more dependent on maintaining or

increasing exports to key markets in North America and Europe. GivenEuropes own modest economic performance and the possibility of further trade

tensions over the United States increasing deficits with the East Asian region,

this is clearly a strategy that faces a number of potential obstacles. Second, the

regions deteriorating economic performance may make inflows of foreign

direct investment (FDI) in productive activities less likely in the short term,

further constraining local economic activity. Third, the IMFs influential policy

prescriptions of fiscal restraint make any government-led economic recovery

less likely.


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Default on Foreign Debts and Corporate Collapses

The crisis has also increased many Asian countries foreign debt burdens. As

Table 5 shows, Asian companies have borrowed heavily from international

banks in recent years, especially short-term. As the value of Asian currencieshas fallen, these companies have found it difficult to meet their debt repayments

because their incomes are overwhelmingly in local currencies whilst their debts

are largely denominated in foreign ones. In some cases this has led to defaults

on debt repayments. Perhaps the best known example of this was the Indonesian

taxi company, PT Steady Safe, whose inability to repay its debts resulted in the

collapse of the Peregrine investment House in Hong Kong last year. Many other

companies, especially in Indonesia, Thailand and South Korea, are having

trouble repaying their foreign loans, something which makes any short-termresolution of the crisis all the more problematic.

Non-Performing Loans

In addition to being unable to repay their foreign debts, many Asian companies

have also had difficulty servicing their local debts since the crisis began. The

result of this, as Table 6 shows, has been a substantial increase in the level of

non-performing loans within the region. Not only does this make the position of

these companies more uncertain and the possibility of a domestic-led recovery

more remote, but it also acts as a continuing disincentive to further investment

in the region in the short-term.


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Inflation

Finally, as Table 7 illustrates, the crisis has also led to inflationary pressures

within the region. These pressures have been by far the greatest in Indonesiawhere panic buying occurred in mid-January and the central bank, Bank

Indonesia, increased the money supply in an attempt to maintain liquidity. The

most immediate impact of this inflationary trend has been to compound the

impact of the general economic downturn across the social spectrum, raising the

possibility, especially in Indonesia, of widespread social unrest.


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The Evolution of the Crisis

Triggering Events

The cracks began to appear at almost the same time in Korea and Thailand in

early 1997. In January, Hanbo Steel collapsed under $6 billion in debts. Hanbowas the first bankruptcy of a Korean chaebol in a decade. In the months thatfollowed, Sammi Steel and Kia Motors suffered a similar fate. These

bankruptcies, in turn, put several merchant banks under significant pressure,since much of the foreign borrowing of these companies had been, in effect,channeled through (and in some cases guaranteed by) the merchant banks. InThailand, Samprasong Land missed payments due on its foreign debt in earlyFebruary, signaling the fall in the property markets and the beginning of the endof the financial companies that had lent heavily to property companies. Duringthe ensuing six months, the Bank of Thailand lent over Bt 200 billion ($8

billion) to distressed financial institutions through its Financial InstitutionsDevelopment Fund (FIDF). As concerns began to mount, the Bank of Thailandalso committed almost all of its liquid foreign exchange reserves in forwardcontracts, much of it to speculators who correctly guessed that the combinationof slow export growth and financial distress would ultimately require adevaluation. By late June, net forward sales of reserves approximately equalledgross reserves. This does not mean that the central bank had run out of usablereserves (since the open forward positions could be closed at a partial, notcomplete, loss), but usable reserve levels had fallen sharply. In late June 1997,

the Thai government removed support from a major finance company, FinanceOne, announcing that creditors (including foreign creditors) would incur losses,contrary to previous announcements and market expectations. This shockaccelerated the withdrawal of foreign funds and prompted the currencydepreciation on 2 July 1997. In turn, the Thai baht devaluation triggered thecapital outflows from the rest of East Asia.

Panic amongst lenders and withdrawal of credit

The resulting panic among lenders led to a large withdrawal of credit from thecrisis countries, causing a credit crunch and further bankruptcies. In addition, asforeign investors attempted to withdraw their money, the exchange market wasflooded with the currencies of the crisis countries, putting depreciative pressureon their exchange rates. To prevent currency values collapsing, these countries'governments raised domestic interest rates to exceedingly high levels (to helpdiminish flight of capital by making lending more attractive to investors) and tointervene in the exchange market, buying up any excess domestic currency atthe fixed exchange rate with foreign reserves. Neither of these policy responses

could be sustained for long.


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Very high interest rates, which can be extremely damaging to an economy thatis healthy, wreaked further havoc on economies in an already fragile state, whilethe central banks were hemorrhaging foreign reserves, of which they had finiteamounts. When it became clear that the tide of capital fleeing these countries

was not to be stopped, the authorities ceased defending their fixed exchangerates and allowed their currencies to float. The resulting depreciated value ofthose currencies meant that foreign currency-denominated liabilities grewsubstantially in domestic currency terms, causing more bankruptcies and furtherdeepening the crisis.

Other economists, including Joseph Stiglitz and Jeffrey Sachs, havedownplayed the role of the real economy in the crisis compared to the financialmarkets. The rapidity with which the crisis happened has prompted Sachs andothers to compare it to a classic bank run prompted by a sudden risk shock.

Sachs pointed to strict monetary and contractory fiscal policies implemented bythe governments on the advice of the IMF in the wake of the crisis,while Frederic Mishkin points to the role of asymmetric information in thefinancial markets that led to a "herd mentality" among investors that magnifieda small risk in the real economy. The crisis has thus attracted interestfrom behavioral economists interested in market psychology.

Another possible cause of the sudden risk shock may also be attributable tothe handover of Hong Kong sovereignty on 1 July 1997. During the 1990s, hotmoney flew into the Southeast Asia region through financial hubs, especially

Hong Kong. The investors were often ignorant of the actual fundamentals orrisk profiles of the respective economies, and once the crisis gripped the region,coupled with the political uncertainty regarding the future of Hong Kong as anAsian financial centre led some investors to withdraw from Asia altogether.This shrink in investments only worsened the financial conditions inAsia (subsequently leading to the depreciation of the Thai baht on 2 July 1997).

Several case studies on the topicApplication of network analysis of afinancial system; explains the interconnectivity of financial markets, and thesignificance of the robustness of hubs or the main nodes. Any negative

externalities in the hubs creates a ripple effect through the financial system andthe economy (and, the connected economies) as a whole.

The foreign ministers of the 10 ASEAN countries believed that the well co-ordinated manipulation of their currencies was a deliberate attempt todestabilize the ASEAN economies. Former Malaysian Prime Minister MahathirMohamad accused George Soros of ruining Malaysia's economy with"massive currency speculation." (Soros claims to have been a buyer of theringgit during its fall, having sold it short in 1997.)

At the 30th ASEAN Ministerial Meeting held in Subang Jaya, Malaysia, theforeign ministers issued a joint declaration on 25 July 1997 expressing serious


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concern and called for further intensification of ASEAN's cooperation tosafeguard and promote ASEAN's interest in this regard. Coincidentally, on thatsame day, the central bankers of most of the affected countries were at theEMEAP (Executive Meeting of East Asia Pacific) meeting in Shanghai, and

they failed to make the 'New Arrangement to Borrow' operational. A yearearlier, the finance ministers of these same countries had attended the3rd APEC finance ministers meeting in Kyoto, Japan on 17 March 1996, andaccording to that joint declaration, they had been unable to double the amountsavailable under the 'General Agreement to Borrow' and the 'Emergency FinanceMechanism'.

As such, the crisis could be seen as the failure to adequately build capacity intime to prevent Currency Manipulation. This hypothesis enjoyed little supportamong economists, however, who argue that no single investor could have had

enough impact on the market to successfully manipulate the currencies' values.In addition, the level of organization necessary to coordinate a massive exodusof investors from Southeast Asian currencies in order to manipulate their valuesrendered this possibility remote.

The proximate causes of the withdrawal differed somewhat across the

region:

Bank failure:The failure of finance companies in Thailand and the bank closures in Indonesiahelped set off the exodus.

Corporate failure:

In Korea, the withdrawal of funds was based on concerns about the health of thecorporate sector.

Political Uncertainty:In Korea, Thailand, the Philippines, and Indonesia, political uncertaintyhastened the credit withdrawals, since each country faced a potential change ingovernment. (Korea and Thailand have both changed governments since theonset of the crisis. A new president will be elected in the Philippines in May1998. Elections are scheduled for mid-March 1998 in Indonesia, though with no

chance of a change through the ballot box. Suhartos weakening health, alongwith the absence of a clear successor, and growing discomfort with the


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economic role played by the presidents family-rather than the presidentselectoral vulnerability-are the notable features of Indonesian politicaluncertainty.)

Contagion:Many creditors appeared to treat the region as a whole and assumed that if

Thailand was in trouble, the other countries in the region probably had similardifficulties. Part of the contagion effect was the sudden loss of governmentcredibility throughout the region. After all, the Thai government had pledgedfor months that Finance One was in good shape, that plenty of foreign exchangereserves were available, and that the baht would not be devalued. Malaysia, thePhilippines, and Indonesia were all hit hard by contagion effects.

International interventions:

Although at times the IMF can help restore confidence in battered economies, itcan also send a signal to creditors of impending crisis, leading to an acceleratedoutflow of foreign funds.This depends especially on the specific measures thatthe IMF recommends. In the case of the Asian programs, the IMF recommended

immediate suspensions or closures of financial institutions, measures thatactually helped to incite panic.


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Effect on other countries

Thailand

From 1985 to 1996, Thailand's economy grew at an average of over 9% peryear, the highest economic growth rate of any country at the time. Inflation waskept reasonably low within a range of 3.45.7%. The baht was pegged at 25 tothe US dollar.

On 14 May and 15 May 1997, the Thai baht was hit by massive speculativeattacks. On 30 June 1997, Prime Minister Chavalit Yongchaiyudh said that hewould not devalue the baht. This was the spark that ignited the Asian financialcrisis as the Thai government failed to defend the baht, which was pegged to the

basket of currencies in which the U.S. dollar was the main component againstinternational speculators.

Thailand's booming economy came to a halt amid massive layoffs in finance,real estate, and construction that resulted in huge numbers of workers returningto their villages in the countryside and 600,000 foreign workers being sent backto their home countries. The baht devalued swiftly and lost more than half of itsvalue. The baht reached its lowest point of 56 units to the US dollar in January1998. The Thai stock market dropped 75%. Finance One, the largest Thaifinance company until then, collapsed.

Without foreign reserves to support the US-Baht currency peg, the Thaigovernment was eventually forced to float the Baht, on 2 July 1997, allowingthe value of the Baht to be set by the currency market. On 11 August 1997, theIMF unveiled a rescue package for Thailand with more than $17 billion, subjectto conditions such as passing laws relating to bankruptcy (reorganizing andrestructuring) procedures and establishing strong regulation frameworks for

banks and other financial institutions. The IMF approved on 20 August 1997,another bailout package of $3.9 billion.

By 2001, Thailand's economy had recovered. The increasing tax revenues

allowed the country to balance its budget and repay its debts to the IMF in 2003,four years ahead of schedule. The Thai baht continued to appreciate to 29 Bahtto the Dollar in October 2010.


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Indonesia

In June 1997, Indonesia seemed far from crisis. Unlike Thailand, Indonesia had

low inflation, a trade surplus of more than $900 million, huge foreign exchangereserves of more than $20 billion, and a good banking sector. But a largenumber of Indonesian corporations had been borrowing in U.S. dollars. Duringthe preceding years, as the rupiah had strengthened respective to the dollar, this

practice had worked well for these corporations; their effective levels of debtand financing costs had decreased as the local currency's value rose.

In July 1997, when Thailand floated the baht, Indonesia's monetary authoritieswidened the rupiah currency trading band from 8% to 12%. The rupiahsuddenly came under severe attack in August. On 14 August 1997, the managed

floating exchange regime was replaced by a free-floating exchange ratearrangement. The rupiah dropped further. The IMF came forward with a rescue

package of $23 billion, but the rupiah was sinking further amid fears overcorporate debts, massive selling of rupiah, and strong demand for dollars. Therupiah and the Jakarta Stock Exchange touched a historic low inSeptember. Moody's eventually downgraded Indonesia's long-term debt to 'junk

bond'.

Although the rupiah crisis began in July and August 1997, it intensified inNovember when the effects of that summer devaluation showed up on corporatebalance sheets. Companies that had borrowed in dollars had to face the highercosts imposed upon them by the rupiah's decline, and many reacted by buyingdollars through selling rupiah, undermining the value of the latter further. InFebruary 1998, President Suharto sacked Bank Indonesia Governor J.Soedradjad Djiwandono, but this proved insufficient. Suharto resigned under

public pressure in May 1998 and Vice President B. J. Habibie was elevated inhis place. Before the crisis, the exchange rate between the rupiah and the dollarwas roughly 2,600 rupiah to 1 USD.

The rate plunged to over 11,000 rupiah to 1 USD on 9 January 1998, with spotrates over 14,000 during 2326 January and trading again over 14,000 for aboutsix weeks during JuneJuly 1998. On 31 December 1998, the rate was almostexactly 8,000 to 1 USD. Indonesia lost 13.5% of its GDP that year.

After the crisis, on 2000, the Malaysia's SOE acquired Indonesia's SOE, theexample is the banking sector, Maybank (Malaysian Banking Berhad, Malaysiastate-owned bank) acquired BNI(Bank Negara Indonesia, Indonesia state-owned

bank) on December 29, 1999-January 1, 2000 with the agreement signatureby Abdurrahman Wahid (4th President of Indonesia) and Salahuddin of

Selangor (11th Yang di-Pertuan Agong of Malaysia). (See also : Bank NegaraIndonesia#BNI Maybank)


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South Korea

The banking sector was burdened with non-performing loans as its largecorporations were funding aggressive expansions. During that time, there was ahaste to build great conglomerates to compete on the world stage. Many

businesses ultimately failed to ensure returns and profitability. The chaebol,South Korean conglomerate, simply absorbed more and more capitalinvestment. Eventually, excess debt led to major failures and takeovers.

For example, in July 1997, South Korea's third-largest car maker, Kia Motors,asked for emergency loans. In the wake of the Asian market downturn, Moody'slowered the credit rating of South Korea from A1 to A3, on 28 November 1997,and downgraded again to B2 on 11 December. That contributed to a furtherdecline in South Korean shares since stock markets were already bearish in

November. The Seoul stock exchange fell by 4% on 7 November 1997. On 8November, it plunged by 7%, its biggest one-day drop to that date. And on 24November, stocks fell a further 7.2% on fears that the IMF would demand toughreforms. In 1998, Hyundai Motors took over Kia Motors. Samsung Motors' $5

billion venture was dissolved due to the crisis, and eventually DaewooMotorswas sold to the American company General Motors (GM).

The South Korean won, meanwhile, weakened to more than 1,700 per U.S.dollar from around 800. Despite an initial sharp economic slowdown andnumerous corporate bankruptcies, South Korea has managed to triple its per

capita GDP in dollar terms since 1997. Indeed, it resumed its role as the world'sfastest-growing economysince 1960, per capita GDP has grown from $80 innominal terms to more than $21,000 as of 2007. However, like the chaebol,South Korea's government did not escape unscathed. Its national debt-to-GDPratio more than doubled (approximately 13% to 30%) as a result of the crisis.

In South Korea, the crisis is also commonly referred to as theIMF crisis.


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Philippines

The Philippine central bank raised interest rates by 1.75 percentage points inMay 1997 and again by 2 points on 19 June. Thailand triggered the crisis on 2July and on 3 July, the Philippine Central Bank intervened to defend the peso,raising the overnight rate from 15% to 32% at the onset of the Asian crisis inmid-July 1997. The peso dropped from 26 pesos per dollar at the start of thecrisis to 38 pesos in mid-1999 to 54 pesos as in early August 2001.

The Philippine GDP contracted by 0.6% during the worst part of the crisis, butgrew by 3% by 2001, despite scandals of the administration of Joseph Estrada in2001, most notably the "jueteng" scandal, causing the PSE Composite Index,the main index of the Philippine Stock Exchange, to fall to 1000 points from ahigh of 3000 points in 1997. The peso's value declined to about 55 pesos to the

US dollar. Later that year, Estrada was on the verge of impeachment but hisallies in the senate voted against continuing the proceedings.

This led to popular protests culminating in the "EDSA II Revolution", whicheffected his resignation and elevated Gloria Macapagal-Arroyo to the

presidency. Arroyo lessened the crisis in the country. The Philippine peso roseto about 50 pesos by the year's end and traded at around 41 pesos to a dollar inlate 2007. The stock market also reached an all-time high in 2007 and theeconomy was growing by more than 7 percent, its highest in nearly twodecades.

Hong Kong

In October 1997, the Hong Kong dollar, which had been pegged at 7.8 to theU.S. dollar since 1983, came under speculative pressure because Hong Kong'sinflation rate had been significantly higher than the U.S.'s for years. Monetaryauthorities spent more than US$1 billion to defend the local currency. SinceHong Kong had more than US$80 billion in foreign reserves, which is

equivalent to 700% of its M1 money supply and 45% of its M3 moneysupply, the Hong Kong Monetary Authority (effectively the city's central bank)managed to maintain the peg.

Stock markets became more and more volatile; between 20 and 23 Octoberthe Hang Seng Index dropped 23%. The Hong Kong Monetary Authority then

promised to protect the currency. On 15 August 1998, it raised overnightinterest rates from 8% to 23%, and at one point to 500%. The HKMA hadrecognized that speculators were taking advantage of the city's unique currency-

board system, in which overnight rates automatically increase in proportion tolarge net sales of the local currency. The rate hike, however, increased


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downward pressure on the stock market, allowing speculators to profit by shortselling shares. The HKMA started buying component shares of the Hang SengIndex in mid-August.

The HKMA and Donald Tsang, then the Financial Secretary, declared war on

speculators. The Government ended up buying approximately HK$120 billion(US$15 billion) worth of shares in various companies, and became the largestshareholder of some of those companies (e.g., the government owned 10%of HSBC) at the end of August, when hostilities ended with the closing of theAugust Hang Seng Index futures contract. In 1999, the Government startedselling those shares by launching the Tracker Fund of Hong Kong, making a

profit of about HK$30 billion (US$4 billion).

Malaysia

Before the crisis, Malaysia had a large current account deficit of 5% of its GDP.At the time, Malaysia was a popular investment destination, and this wasreflected in KLSE activity which was regularly the most active stock exchangein the world (with turnover exceeding even markets with farhigher capitalization like the New York Stock Exchange). Expectations at the

time were that the growth rate would continue, propelling Malaysiato developed status by 2020, a government policy articulated in Wawasan 2020.At the start of 1997, the KLSE Composite index was above 1,200, the ringgitwas trading above 2.50 to the dollar, and the overnight rate was below 7%.

In July 1997, within days of the Thai baht devaluation, theMalaysian ringgit was "attacked" by speculators. The overnight rate jumpedfrom under 8% to over 40%. This led to rating downgrades and a general selloff on the stock and currency markets. By end of 1997, ratings had fallen manynotches from investment grade to junk, the KLSE had lost more than 50% from

above 1,200 to under 600, and the ringgit had lost 50% of its value, falling fromabove 2.50 to under 4.57 on (23 January 1998) to the dollar. The then

premier, Mahathir Mohammad imposed strict capital controls and introduced a3.80 peg against the US dollar.

Malaysian moves involved fixing the local currency to the US dollar, stoppingthe overseas trade in ringgit currency and other ringgit assets therefore makingoffshore use of the ringgit invalid, restricting the amount of currency andinvestments that residents can take abroad, and imposed for foreign portfoliofunds, a minimum one-year "stay period" which since has been converted to anexit tax. The decision to make ringgit held abroad invalid has also dried up


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sources of ringgit held abroad that speculators borrow from to manipulate theringgit, for example by "selling short." Those who do, have to purchase back thelimited ringgit at higher prices, making it unattractive to them. In addition, italso fully suspended the trading of CLOB (Central Limit Order Book) counters,

indefinitely freezing approximately US$4.47 billion worth of shares andaffecting 172,000 investors, most of them Singaporeans.

In 1998, the output of the real economy declined plunging the country into itsfirst recession for many years. The construction sector contracted 23.5%,manufacturing shrunk 9% and the agriculture sector 5.9%. Overall, the country'sgross domestic product plunged 6.2% in 1998. During that year, the ringgit

plunged below 4.7 and the KLSE fell below 270 points. In September that year,various defensive measures were announced to overcome the crisis.

The principal measure taken were to move the ringgit from a free float to a

fixed exchange rate regime. Bank Negara fixed the ringgit at 3.8 to the dollar.Capital controls were imposed while aid offered from the IMF was refused.Various task force agencies were formed. The Corporate Debt RestructuringCommittee dealt with corporate loans. Danaharta discounted and bought badloans from banks to facilitate orderly asset realization. Danamodal recapitalized

banks.

Growth then settled at a slower but more sustainable pace. The massive currentaccount deficit became a fairly substantial surplus. Banks were bettercapitalized and NPLs were realised in an orderly way. Small banks were boughtout by strong ones. A large number of PLCs were unable to regulate theirfinancial affairs and were delisted. Compared to the 1997 current account, by2005, Malaysia was estimated to have a US$14.06 billion surplus. Asset valueshowever, have not returned to their pre-crisis highs. In 2005 the last of the crisismeasures were removed as the ringgit was taken off the fixed exchange system.But unlike the pre-crisis days, it did not appear to be a free float, but a managedfloat, like the Singapore dollar.

Singapore

As the financial crisis spread the economy of Singapore dipped into a shortrecession. The short duration and milder effect on its economy was credited tothe active management by the government. For example, the MonetaryAuthority of Singapore allowed for a gradual 20% depreciation of the Singaporedollar to cushion and guide the economy to a soft landing. The timing ofgovernment programs such as the Interim Upgrading Program and other

construction related projects were brought forward.


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Instead of allowing the labor markets to work, the National Wage Council pre-emptively agreed to Central Provident Fund cuts to lower labor costs, withlimited impact on disposable income and local demand. Unlike in Hong Kong,no attempt was made to directly intervene in the capital markets and the Straits

Times Index was allowed to drop 60%. In less than a year, the Singaporeaneconomy fully recovered and continued on its growth trajectory.

China

The Chinese currency, the renminbi (RMB), had been pegged to the US

dollar at a ratio of 8.3 RMB to the dollar, in 1994. Having largely kept itselfabove the fray throughout 19971998 there was heavy speculation in theWestern press that China would soon be forced to devalue its currency to

protect the competitiveness of its exports vis-a-vis those of the ASEAN nations,whose exports became cheaper relative to China's. However, the RMB's non-convertibility protected its value from currency speculators, and the decisionwas made to maintain the peg of the currency, thereby improving the country'sstanding within Asia. The currency peg was partly scrapped in July 2005 rising2.3% against the dollar, reflecting pressure from the United States.

Unlike investments of many of the Southeast Asian nations, almost all ofChina's foreign investment took the form of factories on the ground rather thansecurities, which insulated the country from rapid capital flight. While Chinawas unaffected by the crisis compared to Southeast Asia and South Korea, GDPgrowth slowed sharply in 1998 and 1999, calling attention to structural

problems within its economy. In particular, the Asian financial crisis convincedthe Chinese government of the need to resolve the issues of its enormousfinancial weaknesses, such as having too manynon-performing loans within its

banking system, and relying heavily on trade with the United States.


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United States and Japan

The "Asian flu" had also put pressure on the United States and Japan. Theirmarkets did not collapse, but they were severely hit. On 27 October 1997,the Dow Jones industrial plunge 554 points or 7.2%, amid ongoing worriesabout the Asian economies. The New York Stock Exchange briefly suspendedtrading. The crisis led to a drop in consumer and spending confidence (see 27October 1997 mini-crash). Indirect effects included the dot-com bubble, andyears later the housing bubble and the Subprime mortgage crisis.

Japan was affected because its economy is prominent in the region. Asiancountries usually run a trade deficit with Japan because the latter's economy wasmore than twice the size of the rest of Asia together; about 40% of Japan'sexports go to Asia. The Japanese yen fell to 147 as mass selling began, but

Japan was the world's largest holder of currency reserves at the time, so it waseasily defended, and quickly bounced back. GDP real growth rate sloweddramatically in 1997, from 5% to 1.6% and even sank into recession in 1998,due to intense competition from cheapened rivals. The Asian financial crisisalso led to more bankruptcies in Japan. In addition, with South Korea's devaluedcurrency, and China's steady gains, many companies complained outright thatthey could not compete.

Consequences

Asia

The crisis had significant macroeconomic-level effects, including sharpreductions in values of currencies, stock markets, and other asset prices ofseveral Asian countries. The nominal U.S. dollar GDP of ASEAN fell byUS$9.2 billion in 1997 and $218.2 billion (31.7%) in 1998. In South Korea, the$170.9 billion fall in 1998 was equal to 33.1% of the 1997 GDP. Many

businesses collapsed, and as a consequence, millions of people fell below the

poverty line in 19971998. Indonesia, South Korea and Thailand were thecountries most affected by the crisis. The above tabulation shows that despitethe prompt raising of interest rates to 32% in the Philippines upon the onset ofcrisis in mid-July 1997, and to 65% in Indonesia upon the intensification ofcrisis in 1998, their local currencies depreciated just the same and did not

perform better than those of South Korea, Thailand, and Malaysia, whichcountries had their high interest rates set at generally lower than 20% during theAsian crisis. This created grave doubts on the credibility of IMF and the validityof its high-interest-rate prescription to economic crisis.


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The economic crisis also led to a political upheaval, most notably culminatingin the resignations of President Suharto in Indonesia and Prime MinisterGeneral Chavalit Yongchaiyudh in Thailand. There was a general rise in anti-Western sentiment, with George Soros and the IMF in particular singled out as

targets of criticisms. Heavy U.S. investment in Thailand ended, replaced bymostly European investment, though Japanese investment wassustained. Islamic and other separatist movements intensified in Southeast Asiaas central authorities weakened.

New regulations weakened the influence of the bamboo network, a networkof overseas Chinese family-owned businesses that dominate the private sectorof Southeast Asia. After the crisis, business relationships were more frequently

based on contracts, rather than the trust and family ties of the traditionalbamboo network.

More long-term consequences included reversal of the relative gains made inthe boom years just preceding the crisis. Nominal US dollar GDP per capital fell42.3% in Indonesia in 1997, 21.2% in Thailand, 19% in Malaysia, 18.5% inSouth Korea and 12.5% in the Philippines. The CIA World Factbook reportedthat the per capita income (measured by purchasing power parity) in Thailanddeclined from $8,800 to $8,300 between 1997 and 2005; in Indonesia itincreased from $2,628 to $3,185; in Malaysia it declined from $11,100 to$10,400. Over the same period, world per capita income rose from $6,500 to$9,300. Indeed, the Central Intelligence Agency's analysis asserted that the

economy of Indonesia was still smaller in 2005 than it had been in 1997,suggesting an impact on that country similar to that of the Great Depression.Within East Asia, the bulk of investment and a significant amount of economicweight shifted from Japan and ASEAN to China and India.

The crisis has been intensively analyzed by economists for its breadth, speed,and dynamism; it affected dozens of countries, had a direct impact on thelivelihood of millions, happened within the course of a mere few months, and ateach stage of the crisis leading economists, in particular the internationalinstitutions, seemed a step behind. Perhaps more interesting to economists was

the speed with which it ended, leaving most of the developed economiesunharmed. These curiosities have prompted an explosion of literatureabout financial economics and a litany of explanations why the crisis occurred.A number of critiques have been leveled against the conduct of the IMF in thecrisis, including one by former World Bank economist Joseph Stiglitz.Politically there were some benefits. In several countries, particularly SouthKorea and Indonesia, there was renewed push for improved corporategovernance. Rampaging inflation weakened the authority of the Suharto regimeand led to its toppling in 1998, as well as accelerating East Timr's

independence.


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Outside Asia

After the Asian crisis, international investors were reluctant to lend todeveloping countries, leading to economic slowdowns in developing countriesin many parts of the world. The powerful negative shock also sharply reduced

the price of oil, which reached a low of about $11 per barrel towards the end of1998, causing a financial pinch in OPEC nations and other oil exporters. Inresponse to a severe fall in oil prices, the supermajors that emerged in the late-1990s, undertook some major mergers and acquisitions between 1998 and 2002

often in an effort to improveeconomies of scale, hedge against oil pricevolatility, and reduce large cash reserves through reinvestment.

The reduction in oil revenue also contributed to the 1998 Russian financialcrisis, which in turn caused Long-Term Capital Management in the UnitedStates to collapse after losing $4.6 billion in 4 months. A wider collapse in the

financial markets was avoided when Alan Greenspan and the Federal ReserveBank of New York organized a $3.625 billion bailout. Major emergingeconomiesBrazil and Argentina also fell into crisis in the late 1990s(see Argentine debt crisis).

The crisis in general was part of a global backlash against the WashingtonConsensus and institutions such as the IMF and World Bank, whichsimultaneously became unpopular in developed countries following the rise ofthe anti-globalization movement in 1999. Four major rounds of world tradetalks since the crisis, in Seattle, Doha, Cancn, and Hong Kong, have failed to

produce a significant agreement as developing countries have become moreassertive, and nations are increasingly turning toward regional or bilateral freetrade agreements (FTAs) as an alternative to global institutions.

Many nations learned from this, and quickly built up foreign exchangereserves as a hedge against attacks, including Japan, China, South Korea. PanAsian currency swaps were introduced in the event of another crisis. However,interestingly enough, such nations as Brazil, Russia, and India as well as mostof East Asia began copying the Japanese model of weakening their currencies,restructuring their economies so as to create a current account surplus to buildlarge foreign currency reserves. This has led to an ever increasing funding forUS treasury bonds, allowing or aiding housing (in 20012005) and stock asset

bubbles (in 19962000) to develop in the United States.


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Role of IMF

The IMF Programs

One month after Thailand floated the baht, it announced on 5 August a policyreform package that had been formulated in cooperation with the IMF. Thethirty-four-month, $17.2 billion standby arrangement was approved by the Fund

board on 20 August. The IMF contributed $4 billion, the World Bank and AsianDevelopment Bank (ADB) $2.7 billion, and individual governments the balanceof $10.5 billion (including $3.5 billion from neighbouring Southeast Asiancountries). Japan contributed $4 billion; the United States did not contribute tothe package. Indonesia followed suit by signing a thirty-six-month, $40 billion

package on 31 October. The IMF contributed $10 billion, the World Bank andthe ADB $8 billion, and other governments the balance (including $5 billionand $3 billion in a second line of defense from Japan and the United States,respectively). Somehow, the official figure of $40 billion includes $5 billionof assistance from Indonesias own reserves! Korea signed its $57 billionthree-year standby on 4 December, with $21 billion from the IMF, $14 billionfrom the World Bank and the ADB, and $22 billion from a group of industrialcountries. With the Philippines continuing its previously signed standby

program, four of the five afflicted economies came under the tutelage of the

IMF.

The IMF programs have had nine main declared goals:

1. Prevent outright default on foreign obligations.2. Limit the extent of currency depreciation.3. Preserve a fiscal balance.4. Limit the rise in inflation.5. Rebuild foreign exchange reserves.6. Restructure and reform the banking sector.

7.

Remove monopolies and otherwise reform the domestic nonfinancial8. Preserve confidence and creditworthiness.9. Limit the decline of output.

To achieve these objectives, the programs have been based on six key policy

components:

Fiscalpolicy:


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The IMF placed fiscal contraction at the very heart of the programs. Forexample, the official press release on the Thai program states that fiscal policyis the key to the overall credibility of the program. The press release onIndonesia similarly put fiscal policy at the forefront: First, the authorities will

maintain tight fiscal and monetarypolicies. The objectives of fiscal contractionwere to (1) support the monetary contraction and defend the exchange rate and(2)provide funds necessary to inject into the financial system.

Bank closures:

In Thailand, 58 out of 91 finance companies were immediately suspended, and56 of these were eventually liquidated. In Indonesia, 16 commercial banks wereclosed. In Korea, 14 (of 30) merchant

banks were suspended. The goals of these actions were to limit the losses beingaccumulated by these institutions and to send a strong signal that governmentswere serious about implementing reforms in orderto restore confidence in the banking system.

Enforcement of capital-adequacy standards:

While banks were facing rapid decapitalization because of losses on foreignexchange exposure and anincrease in nonperforming loans, the initial Fund programs pushed for a rapidrecapitalization. The goal was to return the banking system to a solid footing asquickly as possible.

LESSONS LEARNED FROM THE ASIANFINANCIAL CRISIS

1. Lawsons Rule that it is okay to run a current account deficit without a budgetdeficit has proven

to be a fallacy;2. Foreign exchange reserves are important;3. Information and transparency are key;4. The composition of capital inflows does matter;5. Exchange rate regimes are extremely difficult to maintain;6. Financial markets are not perfectly efficient;7. Moral hazard is the central market failure;8. IMF programs should consist of both macroeconomic and structural reforms;9. Inevitably, countries will have to raise interest rates and lower exchange

rates; and10. Keynesianism is alive and well in Asia.


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Financial Market VulnerabilitiesMany government officials had forgotten the lesson that financial markets arenot always perfectly efficient.Hedge funds should not be blamed for this; rather, bandwagoning presents amajor challenge to emerging financial markets. Financial contagion is not new,

but the Asian crisis was the first time that unrelated countries in differentregions were hit by such a crisis. This implies the need for a greater role forgovernments in the domestic financial system, but governments are not perfecteither. Capital controls must be used sparingly, as in the case of Chile.

Moral Hazard and IMF ConditionalityThe lesson learned about the central role of moral hazard in the crisis is bothimportant and useful. U.S. congressmen now seem to have a grasp of the issue.To say that the IMF programs cause moral hazard iswrong; domestic practices are crucial. The next lesson is equally important:There must be conditionality when the IMF makes loans. Macroeconomic

policies had been fairly good in the crisis countries; the

financial and corporate sectors were the problems. Latin Americas experiencedemonstrates that reform may be easier during a crisis, and the downside risk ofsocial unrest may not be as great as feared. International financial institutionsmust also evolve, but there are three important reasons why conditionsshould be attached to loans. First, loan conditions must address the root causesof the crisis. Second, conditions imposed by international financial institutions(IFIs) provide great political cover for the required bitter reform medicine.Finally, IFI conditions reassure investors that positive changes are in fact beingmade.

The Role of GovernmentGovernments may have to devalue the local currency, raise interest rates, andexperience a recession in order to stabilize the economy. High interest ratesalone do not sufficiently reassure investors. The effect of a devaluation is muchgreater in the first year than originally predicted. It is also important to realizethat Keynesianism is alive and well. The initial budget cuts in Korea andThailand proved to be too severe. The governments can now play a key role inreflating the economy.


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ConclusionsThe analysis of the East Asian financial crises is a challengy but necessary task.

The Asian turmoils, which erupted in 1997, represent a new kind of crises,different in many aspects to those depicted in the first-generation and second-generation literature on currency crises in developing countries. This mightexplain why the Asian episodes were largely unpredicted. It also calls for athird-generation theoretical model of currency crises and for a new set ofindicators or predictors.The Asian crises highlight the importance of sound macroeconomic policiesand, especially, the need to avoid large current account balances in a context ofsubstantial real currency appreciation. But the preceding analysis has tried to

show that these were not the main culprits of the crises in East Asia, except, andonly partially, in Thailand and Malaysia. Instead, the paper has insisted onadverse non-conventional indicators such as overinvestment, imprudentdomestic financial liberalization and capital account opening, and accumulationof a large foreign debt (mainly private, short-term, denominated in foreignexchange, and largely unhedged). One of the main lessons of the Asian criseshas been that imprudent and unproperly sequenced financial liberalization inemerging economies increases their vulnerability to speculative attacks.Domestic financial deregulation should be attempted only after creating an

adequate supervisory and prudential regulatory framework. Moreover, financialopening should follow, and not precede, the strenghtening of the domesticfinancial sector. More precisely, regulating and taxingshort-term and potentially volatile international capital flows seem to benecessary steps in order to avoid disruptive processes in an otherwise soundmacroeconomic environment.Turning now to the international implications of the Asian crises, the role of theIMF as a manager of the turmoils has been widely criticized. It seems that theIMF is unable to deal with financial crises in the present era of financialglobalization. Therefore, a reassessment of its functions and programs indeveloping economies is surely needed. Moreover, several international


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measures to encourage more stable capital flows to emerging markets (such asregulating and supervising short-term bank loans and portfolio investments)should be explored in order to reduce internationalfinancial fragility (Singh, 1998). As the World Bank has recently

acknowledged, the initial response to the Asian crisis has clearly failed,especially because combining very high interest rates with strictfiscal restraints has intensified the recession in the region. Interest rates should

be allowed to fall and a concerted fiscal stimulus should be undertaken, in orderto spur growth and to alleviate the expected increase in poverty (World Bank,1998). But there are other reasons to reject traditional recipes of deflation andderegulation. These measures also jeopardize the foundations of the East Asiandevelopmental path, which, especially in economies such as South Korea andTaiwan, has been based upon a large state intervention (Lall, 1996) and upon astrategic (rather than close) integration with the world economy (Singh, 1995and 1998). If the East Asian model was successful, and thus so appealing toother developing economies, it was precisely because it departed substantiallyfrom the so-called Washington Consensus on development issues, a view whichthe World Bank has already rejected (Stiglitz, 1998a). The real danger of theAsian crises is that, if a change of approach is not undertaken on national andinternational levels, a very successful path towards industrialization andeconomic and social development might, not only be fully at risk, but simplydisappear.

Bibliography

www.wikipedia.com

www.google.com

www.imf.org

www.statisticsviews.com
http://www.wikipedia.com/http://www.wikipedia.com/http://www.google.com/http://www.google.com/http://www.imf.org/http://www.imf.org/http://www.statisticsviews.com/http://www.statisticsviews.com/http://www.statisticsviews.com/http://www.imf.org/http://www.google.com/http://www.wikipedia.com/

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