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MAJOR EVENTS
2
a year in review
21
After two consecutive years of crisis and contraction, 1999 was the year of recovery for
the countries of Asia that were caught in the currency collapse of 1997. Economy after
economy began recovering, led by South Korea that recorded a dramatic turnaround from
a contraction of 5.5% in its GDP in 1998 to growth of just under 10% last year. Thailand,
the Philippines, Malaysia and Hong Kong SAR all resumed their expansion after losing
ground the year before, while Indonesia, the hardest hit of all, saw the contraction of its
economy almost come to an end as it struggled to bring equilibrium to its political as well
as its economic system. Overall, it seems the Asian growth engine is powering up again.
However, beneath the surface remain financial and structural problems that the rapid
recovery is tending to cover up. The restructuring of debt-ridden corporations has really
only just begun, while financial bail-outs have forced governments to take on unfamiliar
debt burdens that will be a drain on national budgets. China and Japan were not contagion
victims, but continue to wrestle with their own serious domestic problems of anemic
consumer demand that raise as many questions about public morale as they do about their
economies. The one unqualified bright spot was India, which missed out on the Asian
crisis altogether. It turned in yet another year of strong growth, making it the best performer
in Asia in the second half of the 1990s — if you take China’s GDP figures with a grain of salt.
It was also a year in which the democratic process, if not achieving full political openness,
recorded significant advances in the region. Overshadowing all else was Indonesia. It
managed a surprisingly smooth transfer of power from the transitional presidency of B.J.
Habibie (a long-time Suharto protégé) to popular Muslim cleric Abdurrahman Wahid.
Despite having no tradition or recent experience of democracy, the complex congressional
elections, then the controversial selection of a president, were carried out fairly, if somewhat
boisterously. In hindsight, the process appears to have reflected the will of the people.
Most aspects of it were open. Even the unsuccessful attempt by the outgoing Golkar
government to siphon funds out of Bank Bali to buy the election became a matter of
public record. India, a country with an established democracy, proved again, with the
re-election of a coalition government led by A.B. Vajpayee, that a competitive electoral
system can function in a multi-ethnic nation of more than one billion people. And
Malaysia demonstrated again that, despite the autocratic tendencies of outspoken Prime
Minister Dr. Mahathir Mohamad, the country is a functioning democracy, even if the