For instance, stymied by a decline in First World demand, especially from recession-ridden Japan, Thai exports grew not at all in 1996. Now that the bubble has burst, the region endures a horrendous drying out process. Southeast Asian exports from autos to computer chips to steel to textiles now glut international markets, all made worse by intensifying competition from Chinese exports. Foreign financial capital has fled. Domestic spending is collapsing.
Banks fail at unprecedented rates.
Unemployment mounts, and as more and more people across the region fall into poverty, the Southeast Asian financial crisis has become a story of tremendous human suffering. In the language of economists, the crisis is also a story of market failure. Southeast Asian capital markets failed in three critical ways. First, too much capital rushed in. Lured by the prospect of continued double digit growth and searching for new places to invest its overflowing coffers, financial capital continued to flow into the real estate sectors of these economies even when financial instability was widespread and obvious to all.