Domestic institutional and regulatory frameworks were weak. Banking systems were poorly operated or supervised. Transparency and the rule of law were lacking. What the Indonesians termed KKN – corruption, collusion and nepotism – was accepted as the way business was done, rather than seen as a serious flaw to be put right. But the crisis cannot be blamed solely on its victims. It was also aggravated by weaknesses in the international financial structure. Unsound loans required imprudent lenders, or at least over-confident ones. The sustained Asian boom caused investors and lenders to over-reach themselves. When problems surfaced in Thailand, they stampeded for the exits across the board, creating a self-fulfilling panic. Non-Asian emerging markets, and even some developed world markets, also came under pressure. The problem was not just Asia. Recovery of the region Now, two years later, the Asian economies are stabilising. Macro-indicators show that the worst has past, much sooner than many expected, and the near term prospects are quite good. Throughout the region, exchange rates have stabilised. Inflation has subsided. Governments have eased monetary policy and lowered interest rates. Financial systems are flush with liquidity. Consumer sentiment has improved, and private consumption has recovered to pre-crisis levels. Exports are recovering, underpinned by the belated revival in Japan’s economy, and continued strong demand from the US. Electronics and semiconductor exports are doing particularly well, helped by an upturn in the global electronics cycle. Strong domestic consumption and export performance have stimulated industrial production. Inventories and over-capacity have fallen throughout the region.

Such emissions are chiefly responsible for the polluted air we breathe. Apart from its effect on pulmonary diseases and people’s quality of life, pollution correlates with a rise in the planet’s average temperature. That may severely affect the economy, tourism and agriculture, prompting potential humanitarian or migratory crises we can hardly evaluate at present. I believe we will all agree that climate change is the most global matter we can imagine, both in its consequences and its causes. Clearly, a potential rise in temperatures affects the entire planet. And evidently, too, atmospheric pollution does not stop when it reaches a border. Fortunately, most countries are adopting strategies to reduce greenhouse gas emissions as a way to mitigate the associated risks. Let us not forget that, despite this being a global problem, the rise in temperatures would have different effects from one country to another,3 hence the importance of international agreements being reached. 1  Among the key pieces of legislation setting ceilings on pollutants in Europe are the 2008 Directive on ambient air quality (2008/50/EC) and the 1996 Framework Directive on ambient air quality assessment and management (96/62/EC). See https://www.eea.europa.eu/ 2 http://www.realinstitutoelcano.org/wps/portal/rielcano_es/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_es/z onas_es/encuesta-espanoles-ante-cambio-climatico-sep-2019 3 Some studies indicate that global warming may be proving economically and socially beneficial for the rich countries, in particular the coldest ones such as Sweden and Norway, while adversely affecting poorer countries. See Noah S. Diffenbaugh and Marshall Burke, “Global warming has increased global economic inequality”.