Full Report - Subregional Office for East and North-East Asia - escap

ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2013
Box C. Asian financial crisis despite macroeconomic stability
Macroeconomic stability in the conventional sense of single-digit inflation and low or no budget deficit did not protect countries in
East and South-East Asia from external shocks, which resulted in a major financial crisis in 1997-1998. For instance, both the Republic
of Korea and Thailand experienced the shock despite more stable inflation and lower debt burdens relative to GDP. Having a balanced
or surplus budget also proved inadequate (see figure B).
Figure B. “Sound” macroeconomic indicators before the crisis
Republic of Korea
Thailand
20
Republic of Korea
20
Thailand
15
15
10
10
5
5
0
0
-5
-5
-10
1988
1989
1990
1991
1992
1993
Malaysia
1994
1995
1996
-10
Malaysia
1988
1989
1990
1991
1992
Indonesia
1993
1994
1995
1996
100
80
60
40
20
0
-20
1988
1989
1990
Malaysia 100
80
60
40
20
0
-20
1991
1992
1993 1988
1994 1989
1995 1990
1996 1991
1992
Indonesia
40
30
20
10
0
-10
1993
1988
1994
1989
1995
1990
1996
1991
1992
1993
1994
1995
1996
Deficit/GDP (%) Debt/GDP Deficit/GDP (%) (%) Debt/GDP (%)
Inflation (% change) Current Inflation account/GDP (% change) (%) Current account/GDP (%)
Sources: International Monetary Fund, International Financial Statistics. Available from elibrary-data.imf.org/FindDataReports.
aspx?d=33061&e=169393; and International Monetary Fund, Government Financial Statistics. Available from http://elibrary-data.imf.org/
FindDataReports.aspx?d=33061&e=170809.
growth and high public debt as the Government
implemented procyclical macroeconomic policies
to contain debt and keep inflation low. In sum,
rethinking of macroeconomics in the region is needed
in order to simultaneously tackle the short-term
effective demand problem and long-term structural
impediments to resilient and inclusive sustainable
development.
The final chapter of the Survey 2013 contains
estimates of required public investment for a set
of policies to enhance the region’s resilience and
inclusiveness. These policies include the provision of
an employment guarantee for a limited number of
days in a year, basic social services in education
and health, income security to older persons and
persons with disabilities and ensuring efficient energy
for all by 2030. The choice of these elements was
determined partly by the structural impediments
identified in chapters 2 and 3. They were also derived
from the commitments made by the countries at
various United Nations conferences and summits,
leading to global campaigns, such as “health for all”,
“education for all”, “education first”, “social protection
floor” and “sustainable energy for all”.
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