Academic journal article Southeast Asian Affairs

The Economic Crisis

Academic journal article Southeast Asian Affairs

The Economic Crisis

Article excerpt

In the midst of this heightened activity by both rural and urban representatives of civil society, Thailand was struck down by a severe economic crisis. On 2 July 1997 the government floated the baht, abandoning a thirteen-year peg to a basket of currencies dominated by the U.S. dollar. Attacks on the baht had been building up for months, fuelled by troubles in the financial and property sectors, and declining export performance. The floating of the baht led immediately to a massive withdrawal of foreign funds, and sent the currency and stock market into a free fall. Both plummeted by over 40 per cent by the end of the year. The impact was felt also on the real economy, and on people's welfare as the government cut expenditure to pay for mistakes by the private sector. An IMF-led US$17.2 billion bail-out showed few early results. Inflation increased to double digits. Hundreds of thousands lost their employment. And the National Economic and Social Development Board reported that the number of people under the officially designated poverty line increased from 11.3 per cent in 1996 to 13 per cent in 1998.

As the economic crisis bit deeper, the Thai Government approached the World Bank, the Asian Development Bank (ADB), and Japan's Overseas Economic Co-operation Fund (OECF) for special funds to alleviate the social impact. …

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