Thailand - The Currency Crisis and Beyond |
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The IndustryBy the 1970s, the active promotion of foreign investment had already created an industrial sector based on import substitution. In the 1980s, an export-oriented manufacturing sector, based on labor-intensive items such as textiles and garments, began to develop. After 1990, the fastest growth was in high-tech goods like computer accessories and motor vehicle parts...
Future OutlookIf the world economy picked up quickly, and Thailand's exports and tourist trade rose with it, the debt problem would marginally reduce the country's growth. But the government was worried that a gloomy global outlook, higher public spending and lingering debts might send Thailand into a prolonged deflationary spiral like that of Japan... Exhibits
Exhibit I: Thailand: The Economy at a Glance
1] In July 1997, Thailand devalued its currency, triggering the turmoil that roiled global capital markets for more than a year. Commodity prices plunged, hammering resource-based currencies like the Canadian, Australian and New Zealand dollars. Bond yields in emerging nations soared, while equity markets tanked. In August 1998 Russia defaulted on its debt, spurring a massive capital flight towards liquid, low-risk assets. Not until the Federal Reserve reduced interest rates in the fall of 1998 did the global turmoil subside.
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