Spectre of 1997 financial crisis haunts Southeast Asia
Regional economies are stronger now than they were before the financial crisis, but some analysts are seeing ominous parallels
Southeast Asia has spent the best part of two decades shoring up defences against a repeat of the Asian financial crisis, including building up record foreign exchange reserves, yet is now feeling vulnerable to speculative attacks again.
Officials are growing increasingly concerned as souring sentiment has made currencies slide and investors reassess risk profiles in an environment where China is slowing and US interest rates will rise at some point.
And while economists have long dismissed comparisons with the 1997/98 currency crisis, pointing to freer exchange rates, current-account surpluses, lower external debt and stricter oversight by regulators, lately there has been a change.
Malaysia and Indonesia, which export oil and other commodities to fuel China's factories, are looking vulnerable as the world's second-largest economy heads for its slowest growth in 25 years and the prices of their commodity exports plunge.
"We are worried about the contagion effect," Indonesian Finance Minister Bambang Brodjonegoro said last week, using a word widely used in 1997.
In 1997, "the thing happened first in Thailand through the baht, not the rupiah. But the contagion effect became widespread", he added.