18 October 2019

Repeat of 1997 Asian crisis unlikely amid US tapering, ADB says

A repeat of the financial crisis that gripped much of Asia in 1997 is unlikely to be happen once the United States Federal Reserve starts tapering its quantitative easing program as many countries in the region now have adequate foreign exchange reserves, the Asian Development Bank (ADB) said on Wednesday. Even India and Indonesia, which are being affected by fears over the impact of US tapering amid their huge current account deficits, will be able to survive the Fed action as they have enough reserves, ADB chief economist Changyong Rhee said in a press briefing. However, Asian countries should beware of the increasing market volatility caused by capital flow and economic slowdown in the region, Rhee said. The bank also revised its projection of China’s gross domestic product growth for 2014 to 7.4 percent from 8 percent previously due to continuing structural reforms in the country. It also cut the inflation forecast for the country for 2014 to 2.7 percent from 3.5 percent.

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