The Report's analysis of the social consequences of the crisis in East Asia finds that the burden is being unfairly carried by the poorest and most vulnerable sections of the community. The effects of unemployment are compounded by rising food prices and falling social expenditures. The impact could even spill over to the next adult generation if primary school enrolments decline and child malnutrition increases. Even on conservative estimates, the proportion of the Indonesian population living on incomes below the poverty line in 1998 is expected to be at least 50 per cent greater than in 1996. Poverty in Thailand can be expected to increase by at least one third.
Safety nets can help the victims of financial instability.
To date, the gravity and the novelty of this situation have not been recognized and pronouncements on the alleged structural weaknesses of the economies in crisis and on the need for further accelerated liberalization have actually made things worse. Current approaches to crisis management have turned a liquidity crisis into a solvency crisis, the Report argues. A fresh approach to managing international financial crises in general is thus called for. Financial flows to emerging markets outside East Asia do not appear to be slowing. But the price has been high.