Asian Financial Crisis in 1997 Asia before Financial Crisis Beginning of Asian Financial Crisis Affected countries from Asian financial Crisis End of Asian Financial Crisis IMF role during Asian financial crisis 3 Causes of Asian Financial Crisis Impact of Asian Financial Crisis to: Thailand Philippines Malaysia Japan How these countries overcame the Crisis Current developments to Avoid future financial crisis

2. GROUP MEMEBERS
• SHANIKA DILRUKSHI
• SACHIN ABEYKOON
• SACHINI UDUGE
• UGEEMA DE SILVA
• SHAKTHI DISSANAYAKE
• AVISHA SENEVIRATHNE
• PIYATH GUNAWARDENA
• SINTHUJA ESWARAN

3. FINANCIAL CRISIS
Situation of a country’s economy when they find themselves in an
unmanageable lifestyle
Debt of a country equalizes to the income of a nation.
It causes devaluation of currencies and stock

4. ASIAN FINANCIAL CRISIS
 Unsustainable lifestyle was maintained in Asian markets
 Aroused in July 1997
 Also called Asian contagion
 It began and spread throughout Asia resulting currency devaluations

5. ASIA BEFORE FINANCIAL CRISIS
Asian countries had an extraordinary records of economic performances in 1994-1997
Asian markets went through:
 Fast economic growth,
 Low inflations,
 Strong financial positions a stability
 Increases saving rates
 Open economies
 Blooming export divisions
flourishing Asian markets did not predict any financial crisis

6. BEGINNING OF ASIAN FINANCIAL CRISIS
 Began from Thailand (Tom Yum Goong crisis)
 IMF (International Monetary Fund)
 Thailand Authorities was notified about the upcoming crisis by IMF
 Convincing Thailand was a failure
 IMF assumed that the Thailand were tolerable to the crisis.
 Occurred due to the shortage of foreign currency to upkeep its stable
exchange rate.

7. AFFECTED COUNTRIES
 All countries underwent a loss of demand and self-confidence
 But in a different degree of impact
 Highly affected countries:- Indonesia, South Korea, and Thailand.
 Moderate impact to :- Hong Kong, Malaysia and Philippines.
 Least impact to :- Japan, China, Singapore and Vietnam.

8. AT THE END OF ASIAN FINANCIAL CRISIS
 This crisis spread throughout the Asian markets.
 It caused:
 Collapsing currencies
 Stock market crashes
 Devalued assets
 Reduced import revenues
 Increment in private debt

9. ROLE OF IMF AFTER THE CRISIS
 Adopt to protective strategies to safeguard the stability of their own currency.
 Affected authorities requested help from IMF
 IMF
 provided financial assistance
 provided the biggest loans in its history.
 and the World Bank then secured the financial stability

11. (1)
 Low interests were provided for funds in Asia
 Investors shifted extensive amounts of foreign funds
 Asian underwent economic boom
 But there was a poor corporate control and weak investment systems
 It left the foreign capital unproductive.

12. (2)
 Acquired dollar-denominated debt.
 Fixed exchange rates
 pictured them an incorrect sense of safe keeping

13. (3)
 Exports of Asian countries were weak
 Because of the:
 Indebtedness of US dollar in compared to Yen
 Weakening value of china’s Yuan in 1994
 NAFTA following market collapses
 extensive foreign funds and wilting exports
 enlarging account deficiencies

14. IMPACT OF ASIAN FINANCIAL CRISIS TO DIFFERENT
COUNTRIES

15. THAILAND
IMPACT TO THAILAND
 Huge downsizings in financial assets, constructions and stocks
 Population was left unemployed
 600,000 foreign employees left Thailand
 75% dropped in Thai Stock market
 Thai finance companies collapsed

16. IMF ROLE TO THAILAND
 Provided a helping hand to Thailand
 Provided a set of loans and investments.
THAILAND AFTER THE FINANCIAL CRISIS
 Stabilized its budget
 Paid off their debt to IMF

17. PHILIPPINES
 Philippines Pesos (PHP) is the currency of Philippines
 PHP was devalued from 26 ₱ to 55.75 ₱ against 1 US dollar
 Later after the PHP was appreciated to 53 ₱ in 2001
 And PHP was appreciated to 41 ₱ in 2007

18. MALAYSIA
IMPACT TO MALAYSIA
 Malaysian ringgit (MYR) is the currency of Malaysia
 Devaluation of Thai baht in July 1997 increased demand for MYR
 In 1997 MYR devalued from 2.50RM to 4.57RM against 1 US dollar
 GDP dropped by 6.2% in 1998
 Ultimately Malaysian economy dropped the country to collapse.

19. HOW MALAYSIA OVRCAME
 Various protective measures were taken into action
 Malaysian authorities imposed capital controls
 Pegged the ringgit at a value of 3.8RM to 1 US dollar.
 They refused the aids of IMF
 Established different task force agencies.

20. JAPAN
 Japan markets were also hit but the markets did not collapse
 40% of the Japan’s exports were sent to Asian markets
 Japan had to run on a trade deficit
 This decreased the Japanese GDP growth rate from 5% to 1.6%
 Led to an increment in bankruptcies in Japan.

21. 1950 SEOUL 2015

22.  Shutting down all the merchant banks.
 Economy collapsed quarterly at an average rate of -6.65%.
 The finance sector was loaded with non-performing loans for aggressive
expansions.
 Excess debt of Chaebols’ directed them to failures and takeovers.
 The Seoul stock exchange fell by 11.2%
 $5 billion venture of Hyundai Motors, Kia Motors. Samsung Motors was dissolved due to the crisis.
The South Korean won decreased to more than 1,700 per U.S. dollar from around 800.

23. • Nation’s financial problems were handled with the arrangements by the South Korean
government and debt exchanges.
• Much of South Korea's recovery from the Crisis was credited to labor modifications and
alternate funding sources.
• GDP growth had risen to 5.4% by the first quarter of 1999, and strong growth in currency lead
to an annual growth of 10.5%.

24. In order to provide a helping hand to South Korea IMF
offered USD $21 billion loan as a part of USD $58.4
billion bailout plan by December 1997.
This lead Koreas situation even worse.

25.  After the Financial Crisis, many are aware on preventing such in Future.
 Prof. Gray B. Gorton’s new type of test for financial institutions and banks.
 Central Banks potential to end future crisis with their experiences on 1997.
 The design of '' Dodd Frank Act'' to prevent future financial crisis.

26. CONCLUSION
 1997 Asian markets were living an unmanageable lifestyle
 began with Thailand and was spread through the Asian markets
 Major reasons
 extensive amounts of foreign funds
fixed exchange rate
poor corporate control, weak investment systems
less exports

27. ASIAN CRISIS CAUSED:
 a devaluation of currencies
 led to stock market crashes
 reduced the trade revenues
increased their private debt.
LATER ASIAN MARKETS:
 increased tax revenues
stabilized their financial markets
paid off the debts to IMF.
IMF provided loans and investments.