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1997 Thai Economic Crisis

The Asian financial crisis was a period of the financial crisis that gripped much of East Asia and Southeast Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. However, the recovery in 1998–1999 was rapid and worries of a meltdown subsided. Wikipedia

Start date: July 2, 1997

The Cause of the 1997 Economic Crisis

The economic crisis is caused by economic factors:

1. Export contraction and high current account deficit
2. Overinvesting which is the foundation of the bubble
3. Real estate business declined during the years 1987-1996
4. Implement macroeconomic policies that are inconsistent with the environment.
5. Baht value

Economic crises caused by non-economic factors

1. Behavior of commercial banks and finance companies

• Inefficient financing and credit management
• Behaviors of financial institution executives who are managing in a corrupt manner

2. Business fundraising behavior It happened because of a fundraising mistake.
is that there is a lot of borrowing from both inside and outside the country causing a high debt to equity ratio makes the business at high risk
3. The Bank of Thailand fails to supervise and audit financial institutions.
4. People lack faith in government

The impact of the economic crisis

1. Economic

It is for this reason that the chain affects the production and purchases that continue to decline automatically. Although this crisis affects the overall economy. But the damage that affects the country’s development the most is the impact on small and medium-sized businesses. This is the manufacturing sector that is the core and the heart of the movement that drives the economy to grow from within.

2. Social

Socially, it is well known that after the 1997 crisis, Thai people, especially the middle and lower classes, had a significant reduction in their quality of life. a state of famine The number of poor people has increased. Income distribution inequality is greater. as well as problems in education and public health problems, there are many

3. Agriculture

1. Little affected by the economic crisis but will be affected by natural conditions and more crop prices
2. It has an advantage because the baht has weakened. The prices of Thai agricultural products therefore seem cheaper. make more exports
3. Rural people who go to work outside the agricultural sector come back to do more farming.
4. But agricultural development still has budget problems. Fertilizer prices from abroad have risen. El Niño phenomenon and environmental degradation problems

4. Mine

1. Production of mineral fuels such as natural gas expands
2. The production of gypsum, limestone, and lignite used in construction was greatly reduced.

Government guidelines for solving economic problems, 1998

1. The state increases the budget deficit.
2. Accelerate demand by increasing credit
3. Open and incentivize foreigners to invest more, such as

• Give Thai nationality to investors
• Adjusting the law on holding foreign land
• Issuing the Foreign Business Act
• tax relief

4. Accelerate supply by increasing production especially in agriculture Small-medium industry and tourism
5. Create jobs in service and construction of public utilities
6. Add Export and reduce imports
7. Correction of liquidity of financial institutions
8. The National Asset Management Company was established. to solve NPL problems