The global economic downturn, which began as a sub-prime mortgage crisis in the U. The global outlook deteriorated dramatically in Septemberfollowing the default of a large investment bank and the government bail-out of the largest insurance company in the U. While resource rich countries have not experienced all the direct effects of the financial crisis, given their low exposure to international capital markets, adverse consequences have affected in the real sectors of many resource abundant economies.
The crisis was brought on by currency devaluations, bad banking practices, high foreign debt, loose government regulation, and corruption. The East Asian crisis has affected almost all of the Asian nations, but the three hardest hit countries are Thailand, Indonesia, and South Korea.
Thailand and Indonesia also suffer from being overbuilt during real estate booms that Reven2 were the result of huge influxes of cash by optimistic foreign investors. South Korea faltered under the weight of its huge foreign debt, decreasing exports, and weakening currency Lochhead Other major countries touched by the crisis are Japan, China, Malaysia, and the Philippines.
Malaysia and the Philippines are both faced with devalued currencies and lowered stock markets Lochhead 5. The implications of the Asian financial crisis are many.
A declining Asian economy will reduce demand for U. The devalued currencies of East Asia will make Asian imports seen cheap and will lead to increased American impor ts, thus increasing our trade deficit Lochhead 2.
A worldwide banking emergency could result if the embattled Asian economies failed to pay back their loans to the U. If the Asian economies fall further, in a desire to r aise cash, they might sell the hundreds of billion dollars of U. An article in the Economist reported that the Asian economic turmoil and the layoffs that may result, could instigate increased discontent and possibly give rise to violent strikes, riots, and greater political instability Reven 3 Since the financial tumult causes instability in the world market, several solutions have been proposed designed to restore the health of the Asian economy.
The aid will be used for converting short-term debt to long-term debt and to keep currencies from falling lower in the world market Passell 2. Lower currency values make repaying loans to other nations more difficult Sanger 1.
The aid packages are tied to measures that will ensure that the recipient countries reform their economies. Some of the measures the nations must follow are increasing taxes to decrease budget deficits, ending corruption, increasing banking regulation, improving accounting information so investors can make better decisions, closing insolvent banks, selling off inefficient state enterprises, and increasing interest rates to slow growth and encourage stability Lacayo 3.
Hopefully these market reforms will allow East Asia to improve its economic outlook. Since most of the Asian nations have balanced budgets, low inflation, cheap labor, pro-business governments, and high savings rates, the long-term outlook for these coun tries is very good Marshall 1.
The financial crisis, instead of destroying the Asian tigers, will merely serve as a much needed lesson in debt management, orderly growth, competent accounting practices, and efficient government. Global Issues Top Novelguides.In year to , the global economic downturn, it serious to affect the tourism industry in Malaysia, in year the international tourist arrivals only get million and receipt billion of revenue.
Jun 01, · The global financial and economic crisis has had an unexpectedly large impact on Asian economies. The GDP growth rate for the region is expected to be only a little over one third of the per cent growth rate Asia enjoyed in Economic growth has slowed to a two-decade low in the Caucasus and Central Asia (CCA) region, owing to the large and sustained decline in commodity prices, wide-ranging spillovers from Russia's recession, and the slowdown and rebalancing of China's economy.
A large economic downturn in East Asia threatens to end its nearly.
30 year run of high growth rates. The crisis has caused Asian currencies to fall %, stock markets to decline 40%, banks to close, and property values to drop. The further weakening of Japan’s economy has had a particularly large, negative impact on demand in the region and on international financial market sentiment in general.
However, many of the still existing risks can be mitigated as long as the affected economies continue to implement the stabilization and reform policies specified by IMF.
For Southeast Asia, the slowdown of China’s economy may have a bigger economic impact than the British vote to leave the European Union..
China’s government reported the country’s economy.