Asia recalls crisis that brought region to its knees

HONG KONG, July 1, 2007 (AFP) – When Thailand floated its currency on July 2, 1997, it meant to ease the immediate pressure on its faltering economy. Instead, it set off a chain reaction which destroyed many of the gains of Asia’s ‘economic miracle’ years as currencies, stocks, commodities and property prices went into free-fall and governments scrambled to limit the damage.

A decade on, most analysts believe the seismic shock changed the region’s economy for the good and that a repeat is unlikely — most markets are back up to 1997 levels, the underlying fundamentals are in better shape, and lessons have been learned in terms of better international cooperation.

But memories of the bad times linger.

“It was a very traumatic time. Our (economy contracted) by almost eight percent in 1998 after a very extended period of robust expansion,” said Lee Heng Guie, chief economist at CIMB Investment Bank in Kuala Lumpur.

“It resulted in a significant loss of wealth and capital flight … There were a lot of corporate problems … high (bad debts), rising unemployment, deflation and investments which collapsed,” Lee said.

For years, Tha