ISAS Insights

Until the mid-1990s, emerging Asian economies were among the most dynamic in the world. In addition to the sustained growth of the newly industrialising economies (NIEs) - Hong Kong, Korea, Singapore and Taiwan - and the near-NIEs in Southeast Asia (notably the economies of Malaysia, Indonesia and Thailand), the Asian giants of China and (later) India were rapidly integrating into the global economy. The Asian crisis of 1997-98 brought the growth in the NIEs and Southeast Asia to a screeching halt. The region experienced a period of painful but much needed deleveraging and corporate and financial restructuring (including consolidation, loan loss recognition and restructuring of bad loans) as well as some institutional and governance reforms. The region faced setbacks with a series of negative shocks in 2000-03, including the collapse of the NASDAQ bubble, the spread of SARS, the Avian flu and some natural disasters, all of which helped delay a full-fledged recovery in both growth and asset prices. Although some doubts were expressed about whether the region could regain its lustre at all, Asia re-emerged quite strongly, with growth returning to pre-crisis levels and asset prices, in most cases, even surpassing their pre-crisis levels.