Southeast Asian financial crisis in 1997
The financial crisis in Southeast Asia began with the currency crisis in Thailand and was brewing as early as 1996. At that time, Thailand's current account deficit reached 8.2% of GDP. In order to make up for the large current account deficit and meet the needs of domestic over-investment, foreign short-term capital flows into the real estate and stock markets, the bubble economy expands, and bank bad debts increase. Thailand's economy has shown signs of crisis. Since 1997, due to the sluggish real estate market, outstanding debts have risen sharply, and financial institutions in Thailand have encountered difficulties in cash flow, and bank runs have occurred from time to time. In mid-May, international investors headed by george soros's Quantum Fund, a great American speculator, launched a fierce attack on the Thai baht, which further aggravated the instability of Thailand's financial market. On July 2, the currency crisis in Thailand finally broke out in an all-round way, which opened the prelude to the Asian financial crisis that has not yet subsided.
(1) On July 2, Thailand's currency crisis broke out in an all-round way and quickly spread to the entire Southeast Asian financial market.
On July 2, Thailand announced that it would abandon the fixed exchange rate system implemented from 1984 and adopt a managed floating exchange rate system. On that day, the Thai baht depreciated by 20%, marking the full-scale outbreak of the Thai currency crisis. Because the neighboring countries such as the Philippines, Indonesia and Malaysia are also facing some problems similar to Thailand, coupled with the so-called "contact infection" effect and the constant attacks of international speculators, the collapse of the Thai baht has formed a "domino effect" in Southeast Asian countries, and the currency trend has spread rapidly to the entire Southeast Asian market.
On July 1 1, the Philippines took the lead in following Thailand's footsteps and announced that its currency would float freely. The Philippine peso depreciated 1 1.5% on the same day, and overnight rate soared to 25%; Indonesia announced that the exchange rate volatility of the Indonesian rupiah has expanded from 8% to12%; The Singapore dollar, which has always been stable, also fell to the lowest point in 30 months on July 8, 1.4683 Singapore dollars 1. On August 14, Indonesia announced that the exchange rate would float freely, and the Indonesian rupiah depreciated by 5% again that day. On August 16, the Malaysian ringgit plunged 6% to the lowest point in 24 years. The shock of the foreign exchange market in Southeast Asia has hit investors' confidence, a large number of foreign capitals have withdrawn, and the stock market in Southeast Asia is also depressed, thus the Thai currency crisis has gradually developed into a wider financial crisis in Southeast Asia. In this financial crisis, the linked exchange rate system of the Hong Kong dollar has also been seriously challenged. The Hong Kong SAR Government has taken decisive measures to successfully defend the linked exchange rate system of the Hong Kong dollar. However, due to the soaring interest rates, the Hong Kong stock market has been greatly affected.
In order to help Southeast Asian countries get rid of the crisis at an early date, the international community extended a helping hand. In July, the meeting of central bank governors in East Asia and the Pacific was held in Shanghai, and in August, the meeting on providing economic assistance to Thailand sponsored by the International Monetary Fund was held in Tokyo. In order to help Thailand out of its predicament, international organizations such as the International Monetary Fund and some countries and regions in the Asia-Pacific region, including China, China and Hongkong, have promised to provide Thailand with 654.38+072 billion US dollars in economic assistance. Faced with the bad debts of Thai banks as high as 1 trillion baht and foreign debts of 90 billion dollars, it is obvious that the loan assistance of 172 billion dollars from the international community cannot fundamentally save Thailand's economic and financial crisis, but at least it has enhanced the confidence of the Thai people and the international community in overcoming the financial crisis.
(2) On June 65438+1October 65438+July, the monetary authorities in Taiwan Province Province took the initiative to devalue, and the Hong Kong stock market plummeted, which led to the global stock market crash and the financial market in Southeast Asia was once again turbulent.
10 On June 7th, Taiwan Province monetary authorities suddenly gave up their intervention in the foreign exchange market on their own initiative when the economy was in good condition, economic projects were in surplus, and foreign exchange reserves were sufficient to maintain the stability of the new Taiwan dollar. On that day, the exchange rate of the new Taiwan dollar against the US dollar fell to 29.5, the lowest level in 10 years. The active devaluation of the new Taiwan dollar is competitive in economy and political premeditated with ulterior motives in politics. Not only did it further shake investors' confidence in Southeast Asia, but it also aggravated the chaos in the financial market in Southeast Asia, and further isolated Hong Kong psychologically, making speculators turn their attention to Hong Kong again. In order to maintain the linked exchange rate system of the Hong Kong dollar and the stability of Hong Kong and even Southeast Asia as a whole, the Hong Kong Government and the HKMA actively intervene in the foreign exchange market by using foreign exchange reserves, and on the other hand, they have to raise short-term interest rates in the interbank market. 1October 23rd 10, the overnight interbank lending rate once rose from 7% to 300%, and the exchange rate of the Hong Kong dollar against the US dollar once rose to 14, the highest level since the implementation of the linked exchange rate system (7.6 150). However, under the influence of high exchange rate and short-term interest rate of banks, the Hong Kong stock market fell sharply due to the impact of speculative selling forces.
10 years 10 Since October 20th, the Hong Kong stock market has fallen sharply for four consecutive trading days, and the Hang Seng Index has fallen by 3,000 points. 1October 23rd 10, Hong Kong stocks fell below the 10000 mark twice, and the Hang Seng Index dropped as much as 10.4%. The Asia-Pacific stock market and the European and American stock markets all fell to varying degrees. By1October 26th 10, the stock markets of Southeast Asian countries and regions had fallen by more than 30%. Due to the close economic and trade cooperation between Southeast Asia and Japan, the United States and the European Union, the financial turmoil in Southeast Asia has had a certain impact on the foreign trade, investment and economic situation of Japan, the United States and Europe. The deep decline in the Hong Kong stock market has once again dampened the confidence of global investors. In addition, the market is worried about the Fed's interest rate hike. On the 27th, global stock markets fell sharply at the same time, with the daily decline of major stock indexes ranging from 2% to 15%. Among them, new york Dow Jones index plunged 554.26 points, the biggest one-day drop in history. Affected by this, on the 28th, the Hang Seng Index of Hong Kong fell again, falling below 1.000 for the first time since 1.996, with a minimum of 8775.88 points, a decrease of 13.7%. So far, compared with the peak in August, the Hong Kong stock market has fallen by almost half.
After the sharp adjustment of global stock markets, because people are still optimistic about the world economic situation, many stock markets rebounded after the plunge, and the Asian market once showed a positive trend. However, the outbreak of the financial crisis in South Korea once again plunged Southeast Asia into the third round of financial turmoil.
(3)165438+1On October 20th, the financial turmoil in South Korea resumed, and it swept across South Korea and Japan.
Since 1997, many large consortia in South Korea have fallen into the desperate situation of bankruptcy, and the economy has been greatly impacted. Coupled with the impact of the Southeast Asian financial turmoil, South Korea's negative economic growth has fallen to its lowest point for many years. 1 1 month, South Korea's financial situation continued to deteriorate sharply, the stock market continued to slump, and the Korean won exchange rate hit a new low. 165438+1October 17 Due to the failure of the government's financial reform bill, the exchange rate of the Korean won against the US dollar broke through the mark of 1000: 1, and the stock composite index fell below 500 points.
165438+1On October 20th, the Central Bank of Korea decided to expand the floating range of the won exchange rate from 2.25% to 10%, and South Korea began to become a new hot spot in the Asian financial turmoil.
After entering 65438+February, when people thought that the most dangerous moment of the financial crisis in Southeast Asia had passed and the financial storm gradually subsided, the financial crisis in South Korea was getting worse. As of 65438+February 1 1, four commercial banks and merchant banks in Korea have been closed by the government. 12 15, South Korea announced that the won would float freely. On February 22nd, 65438, Standard & Poor's, an American credit rating agency, downgraded Korea's foreign exchange debt credit rating by four notches. 12 On February 23rd, the South Korean government announced that, according to the statistical standards of the International Monetary Fund, by the end of September, the total foreign debt of South Korea had reached 119.7 billion US dollars, of which about 80 billion US dollars were short-term loans due within1year, and the foreign exchange reserves were insufficient and exceeded expectations, which led to the Korean won exchange rate plummeting again that day. On the same day, the composite share price index of the Korean stock market also fell by 7.5%, the biggest drop in history.
The financial turmoil in Southeast Asia and South Korea has undoubtedly made Japan's economy and finance worse. After Japan's "bubble" economy burst in the early 1990s, Japan's economy was in a state of stagnation, the stock market was depressed, the real estate market shrank sharply, and bank bad debts increased sharply. Since 1997, illegal trading events of securities companies have occurred frequently, and the scandals of bribing triad societies have all emerged in the four major securities companies in Japan. 1 1 month, hokkaido takushoku bank, the largest bank in Japan, and Yi Shan Securities Company, the fourth largest securities company in Japan, went bankrupt again. The continuous closure of large financial institutions has seriously affected people's confidence in the Japanese economy, and the exchange rate of the yen against the US dollar has therefore fallen below the 128 yen mark. Because Japan has a good economic foundation and abundant foreign exchange reserves, it will not have a serious economic and financial crisis like Thailand and South Korea. However, the problems existing in Japan's financial system have once again attracted the attention of the world.
(D) 1998, the Asian foreign exchange market and stock market went down one after another, the global financial market was still ups and downs, and the Asian financial crisis continued.
At the beginning of the new year, affected by the crisis of market confidence, Asian foreign exchange markets and stock markets continued to fall: 1 October 5th, 65438. Thailand's exchange rate fell below the 50 baht mark for the first time, reaching a record low of1USD, which was also the day when Thailand announced the implementation of a floating exchange rate system in July. 1997. The won fell from 1997 in the last trading day to 1 and then to 1 again. The exchange rate of the Indonesian rupiah against the US dollar also fell by 1 1.6%. 65438+1 On October 6th, the exchange rate of the Philippine peso against the US dollar fell below 45 pesos1for the first time, with a daily decline of 6%. 654381October 7, the exchange rate of the Japanese yen against the US dollar fell to 134.8 yen, the lowest point in the past six years. The Nikkei index also fell below the 15000 mark. 654381October 9, new york Dow Jones index plunged 222.2 points, or 2.85%, and major European stock markets fell in succession. On June 5438+1October 12, Asian stock markets fell again, with Singapore and Hong Kong falling the most, by 104.5 1 point and 773.58 points, respectively, by 8.88% and 8.70%. Thailand's stock market and foreign exchange market also hit record lows.
(5) the serious consequences of the crisis
(1) The foreign exchange market and stock market in Southeast Asian countries and regions are in violent turmoil. Compare the exchange rates of 1998 at the end of March and 1997 at the beginning of July. Stock markets in all countries have shrunk by more than a third. The exchange rates of currencies of various countries against the US dollar fell by more than 10%~70%, among which Thai baht, Korean won, Indonesian rupiah and Singapore dollar were the hardest hit areas, depreciating by 39%, 36%, 72% and 6 1% respectively.
(2) The crisis led to the bankruptcy and closure of a large number of enterprises and financial institutions. For example, Thailand and Indonesia closed 56 financial institutions and 17 financial institutions respectively. Four of the top 20 enterprise groups in South Korea have gone bankrupt, and many national financial institutions, including Xinyi Securities, have also suffered large losses and gone bankrupt, and their credit ratings have generally declined. One year after the crisis in Thailand, 1 10,000 companies and enterprises went bankrupt, 2.7 million people lost their jobs, and 20 million people lost their jobs in Indonesia.
(3) Capital flight. It is estimated that the net inflow of private capital in Indonesia, Malaysia, South Korea, Thailand and the Philippines has changed from $93.8 billion in196 to $24.6 billion in198, and the reversal of private capital alone has exceeded $ 1000 billion.
(4) Affected by the Southeast Asian crisis, the yen fluctuated violently at 1998. In June and August, the yen fell to 146.64 yen against the US dollar, the lowest point in recent years, which triggered turmoil in the western foreign exchange market.
(5) The financial crisis in Southeast Asia turned into economic recession and spread to all regions of the world. Under the impact of the financial crisis, the economic growth rate of Thailand, Indonesia, Malaysia and the Philippines dropped from about 8% in the years before the crisis to 3.9% in 1997. The economies of these four countries, as well as Hong Kong, South Korea and even Japan, all began to experience negative growth from 1998. The East Asian financial crisis and economic recession triggered the financial crisis in Russia and spread to other countries. A large number of Brazilian capital fled, and the Colombian currency depreciated sharply, which led to violent shocks in the global financial market, large fluctuations in the American stock market in Western Europe, and a slowdown in economic growth.
An analysis of the causes of the financial crisis in Southeast Asia in 1997
The financial crisis in Southeast Asia is very similar to the financial crisis in Mexico 1994 to 1995 in the spring. First, the import growth is too fast, the export growth is slow, and the current account deficit is expanding; Second, exchange rate depreciation, capital outflow and sharp drop in foreign exchange reserves; Third, financial institutions have difficulties in operating and a large number of enterprises have gone bankrupt; Fourth, interest rates are rising, prices are rising, workers are unemployed, and the economy is declining. However, the impact of the Southeast Asian financial crisis on the world economy, especially on the economic development of developing countries, is far less than that of the Mexican financial crisis. In less than three years, two financial crises that shocked the world occurred in some developing countries, namely "Dragon" countries and "Tiger" countries. This is a thought-provoking question. For many years, scholars at home and abroad have been exploring the causes of these two financial crises. On the surface, there are two reasons for the financial turmoil in these countries:
(A) large-scale entry of international capital, international speculative capital wantonly destroyed.
After World War II, with the revolution of science and technology and information, economic globalization has developed in breadth and depth. Since 1990s, economic globalization has been mainly manifested in the development of international financial markets. Its outstanding performance:
First of all, the scale of international capital flows is growing. Transnational capital increased from $440 billion in 1990 to $ 1999. 1996, the cumulative amount of transnational stocks and bonds in major western countries accounted for more than 100% of GDP, and the United States reached as high as 10 trillion US dollars.
Second, the speed of international capital flows has accelerated. The most typical is the sharp increase in cross-border foreign exchange transactions. From 1986 to 1995, excluding double counting, the daily trading volume of international foreign exchange soared from 188 billion to120 billion, accounting for 37% to 84% of the total foreign exchange reserves in the world.
Third, the financial market is more unstable. Focus on interest rate fluctuations and large exchange rate changes. From 1993 to 1996, the interest rate in the international financial market changed by as much as 3%. 1991-1999 in March, the exchange rate of the Japanese yen changed by as much as 70%, and the exchange rates of the US dollar, the German mark and the Canadian dollar also changed by 20% to 30%. Under the general trend of economic globalization, developing countries are accelerating their integration into the international financial market. One of the manifestations is that since the 1990s, the international private capital flowing into developing countries has soared, mainly concentrated in East Asia and Latin America countries with rapid economic growth and high degree of openness. 1991-1996, the annual net foreign investment of developing countries increased from 100 billion to 300 billion, of which private capital increased from 44 billion to 240 billion, and East Asia increased from 190 billion to/kloc-. Before the crisis broke out in Mexico and Thailand, the scale of foreign capital inflow was very large.
1At the end of 1994, Mexico's foreign debt balance was $85.4 billion, accounting for more than 50% of GDP, and international direct investment was nearly $20 billion. Thailand's foreign debt balance in September 1996 was $77 1 billion, accounting for 45% of GDP, and international direct investment was $20 billion. The large-scale inflow of foreign capital into developing countries in East Asia and Latin America not only solved the contradiction of insufficient construction funds in these countries, but also brought technology and markets and promoted the rapid economic growth of these countries. However, the degree of financial internationalization in developed and developing countries is different. Developed countries have a high degree of financial integration, and the real interest rate difference in major developed countries has gradually narrowed. The participation of developing countries in the international financial market is relatively low, and the interest rate difference with developed countries is quite large. In order to earn spreads and exchange differences, international short-term capital frequently flows out and in some developing countries. This gives international financial speculators the opportunity to make profits by using the interest rate difference and exchange rate difference. In fact, there are also many specialized international financial speculators in international capital flows. According to overseas public opinion reports, after Thailand's exchange rate began to depreciate in May, 1997, American financial speculator Soros invested $6 billion in Thailand's foreign exchange market for foreign exchange speculation, which pushed the Thai baht to a desperate situation. 1992 when the European exchange rate system was unstable, this person took advantage of the change in the exchange rate of the pound to trade in the foreign exchange market, earning $65,438 billion, forcing the pound to withdraw from the European exchange rate system. But when we discuss the reasons, there are two questions that need to be clarified.
The first question is, is it right for developing countries to relax the control of foreign capital flows and introduce a large amount of foreign capital?
The second question is: Where do the opportunities used by international financial speculators come from?
The answer to the first question is yes. With the globalization of economy and the integration of international financial markets, international capital flow has become an engine to promote the development of the world economy and a lever to realize the effective allocation of resources on a global scale. At present, both developed and developing countries regard the introduction of foreign capital as an effective way to accelerate their own economic development. The reason why East Asian and Latin American countries can rank among the newly industrialized countries in a short time is that these countries can adapt to the changes in the international economic environment, treat foreign investment with a positive attitude and make effective use of the benefits brought by international capital.
The answer to the second question is also clear. The opportunities used by international financial speculators are not created by themselves, but discovered by them. Obviously, if a country's interest rate and exchange rate are relatively stable, they have no chance to speculate. In other words, by seeing the possibility of a financial crisis in a country, they make a fortune by taking advantage of the turmoil in the financial market. For example, before the Mexican financial crisis, it was the local residents who first felt the threat of the crisis and transferred capital. At that time, Mexican residents learned that the export growth declined, the balance of payments deficit increased, and the foreign exchange reserves decreased, so their currency would depreciate, thus buying a large number of dollars, accelerating the reduction of foreign exchange reserves and causing exchange rate fluctuations. Then, foreign capital began to flee. It can be seen that the financial crisis is a problem in a country's economic operation system, and internal factors play a decisive role, while international financial speculators only play an external role.
(2) Financial liberalization and internationalization reform are too fast.
It should be affirmed that since 1980s, especially in recent years, newly industrialized countries in East Asia and Latin America have taken a series of measures to promote financial system reform, such as relaxing bank restrictions, abolishing foreign exchange controls, opening up the securities market, and encouraging domestic financial institutions to expand abroad, which has accelerated the pace of financial liberalization and internationalization. However, it is inaccurate to attribute the financial crisis in some of these countries to the opening of financial markets. Of course, if these countries continue to implement financial repression policies, financial markets are not open, international capital cannot flow out or in freely, and speculators are powerless, the crisis will naturally not happen. However, international capital does not flow at will, and its purpose is to earn greater profits and spread risks. The basic factors that determine the capital flow in the hands of international capital investors depend on the financial openness and economic prospects of the receiving countries. If a country's economy grows at a high speed and the return on capital is high after the financial opening, it is natural for foreign capital inflows to increase. However, the large inflow and outflow of foreign capital and the success of financial speculators cannot be attributed to the opening of economy and finance, but to the internal factors of receiving countries. The liberalization and internationalization of financial markets in Mexico and Thailand are inevitable for the economic development of these countries, but they do not constitute the inevitability of financial crisis in these countries. The reason for the financial crisis is that their economic policies, economic systems and structures are out of touch with the changes in the international economic environment, especially with the following requirements of international financial market integration.
Economic policy does not adapt to the changes in the international financial market. With the increase of international financial market volatility, Mexico and Southeast Asian countries still restrict the change of exchange rate and interest rate, which lags behind the fluctuation of international financial market.
For example, Mexico implemented a fixed exchange rate of peso against the US dollar in the early 1990s, while the accumulated inflation rate reached 53% in the first four years of the 1990s, with a foreign trade deficit of US$ 87 billion. Under the condition that the exchange rate does not reflect this situation, the devaluation of the peso is inevitable. However, the Mexican government at that time did not take timely depreciation measures in the face of the overvaluation of the peso, which hindered exports and the foreign trade deficit expanded year by year, laying the foundation for the financial crisis. At the same time, the Mexican government at that time implemented a high interest rate policy in order to control inflation, increase the domestic savings rate and attract foreign capital to support the foreign exchange demand of imported goods. 1990- 1992 The real interest rate in Mexico was as high as 20%-25%. 1993 decreased slightly, but it still reached about 14%, which was much higher than the international market interest rate, while the real interest rate of domestic enterprise loans was higher than this. This high interest rate policy not only makes Mexican enterprises unable to bear interest costs and repay bank loans, but also causes serious bad debts of banks, which makes Mexico pay high interest to the outside world, which leads to the deterioration of the balance of payments and increases the pressure of currency depreciation.
Another example is Thailand, which has long implemented the linked exchange rate system between the Thai baht and the US dollar. Since 14, it has been maintained at the level of about 25 baht 1 US dollar. When the dollar depreciates, its exchange rate with major western currencies also depreciates, thus enhancing its export competitiveness. With the appreciation of the US dollar, the Thai baht also appreciated, and the export competitiveness decreased. After 1996, the US dollar continued to appreciate against the Japanese yen, followed by the appreciation of the Thai baht, and China's competitiveness declined. After 1996, the US dollar continued to appreciate against the Japanese yen, and the Thai baht also continued to appreciate against the Japanese yen, which became an important reason for the rapid growth of imports, the slowdown of export growth and the deterioration of the balance of payments.
The economic system is not suitable for opening up. After a country's economic opening up, the inflow of foreign capital increased, and the financial system should have been strengthened. However, Southeast Asian countries and Mexico are not well prepared for the opening of financial markets, their domestic financial systems are not perfect, their financial market infrastructure is insufficient, their regulatory measures and institutions are not complete, and they are blindly open to foreign investment. For example, in the case of excessive risks in the domestic banking system, Thailand took the initiative to provide low-interest US dollar loans to foreign investors, adding fuel to the fire for real estate investment. The free flow of international capital will inevitably lead to the same-day trading of local currency and foreign currency. The central bank's method of controlling the exchange rate is contradictory to the huge foreign exchange transactions. When the capital outflow increases, the demand for foreign exchange increases and the depreciation of the local currency is under pressure. In order to defend the linked exchange rate, Thailand spent $4 billion in foreign exchange reserves in a month, which is still useless, giving international financial speculators the opportunity to speculate on foreign exchange. 1994 12.20, the central bank of Mexico once sold billions of dollars in one day, trying to stabilize the exchange rate of peso against the US dollar within the range set by the government. As a result, the peso fell uncontrollably, and the foreign exchange reserves dropped sharply to $6 billion, which made it impossible to maintain the normal operation of the economy. The next day, the central bank had to announce that it would no longer intervene in the foreign exchange market. These facts show that it is difficult for the government to succeed against the market. Only by adapting to market rules, floating exchange rate is the way out.
1. The financial system does not adapt to the development of the financial market, and the development of the long-term capital market lags behind. Overheating of the economy leads to "bubble economy" and forms false prosperity divorced from the real economy, which is only the superficial cause of financial turmoil. The deep-seated reason is the unreasonable financial market structure caused by the long-term lag of capital market construction. Specifically, it includes: First, the capital structure is unreasonable, and investors rarely use medium-and long-term bonds for financing, but mainly rely on bank loans, often short-term funds, which are not suitable for long-term investment projects. Second, the structure of credit investment is unreasonable. Banks tend to provide loans for unproductive purposes. For example, in Thailand, 1/4' s bank loans are consumer loans and 1/4' s real estate loans. This kind of loan is difficult to generate income, and the bad debts of banks increase. According to the data of the World Bank, among the15.5 billion dollars, the non-performing loans of Thai lenders accounted for 10% of their loan scale, and the non-performing loans of banks in197 were equivalent to 9% of Thailand's GDP. Third, the foreign capital structure is unreasonable. Because the medium and long-term capital market is underdeveloped, foreign capital mostly flows in the form of short-term capital. From 65438 to 0994, of the more than $70 billion of foreign capital that entered Mexico, three quarters were short-term securities capital, and short-term investments such as American mutual funds accounted for a large proportion, of which more than $33 billion entered the stock market. 1995 of the 646.6 billion baht of foreign capital flowing into Thailand, direct investment only accounts for 5.5%, commercial bank loans account for 5 1. 1%, and most of them are short-term loans, and non-resident Thai baht deposits and securities investments with the greatest speculative and liquidity account for 30.7%. Due to the irrational structure of the financial market, it is not surprising that when the macro economy is unstable, foreign capital runs away, which leads to the decline of stock prices, the paralysis of financial institutions and the depreciation of the local currency.
2. The adjustment of industrial structure does not meet the needs of economic development. First, the adjustment of industrial structure in Southeast Asian countries and Mexico caters to foreign investment unilaterally, converging with each other and later industrialized countries, and excessively concentrating on general processing industries with low technology content. Second, these countries have low infrastructure and basic industrial capacity, low domestic scientific and technological level and excessive dependence on imported technology and equipment. Third, the rapid increase in labor costs is not conducive to the export of labor-intensive manufactured goods, the international competitiveness is weakened, and the export growth rate is reduced, resulting in a huge balance of payments deficit and macroeconomic instability. For example, in the face of competition from low-cost similar products from post-industrialized countries, the export industries of Mexico and Thailand failed to upgrade, resulting in weakened competitiveness, slow export growth and widening balance of payments deficit. Before the crisis, the foreign trade deficits of the two countries accounted for 8% and more than 8% respectively, which was much higher than the internationally recognized safety line of 5%, and became the direct driving factor of the financial crisis.
3. Delay in timing and untimely adjustment. After the financial turmoil, the government failed to adjust its economic policies, economic system and structure in time for various reasons, which delayed the opportunity and intensified contradictions. This is the case in Mexico and Thailand. From 1968 to 1988, four Mexican presidents stepped down because of the economic crisis. During the period of 1994, the western economy recovered and interest rates rose. In addition, at that time, the political situation in Mexico was unstable, some foreign investors began to withdraw their funds, and signs of currency crisis appeared. At this time, we should take decisive adjustment measures. However, in order to win re-election at the end of the year, President Salinas did not adjust the monetary policy and reform the exchange rate system in time. Instead, he used tens of billions of dollars of international reserves to make up the deficit and tried his best to create the illusion of prosperity. As a result, by the time Japanese President Cedillo took office in February of that year, there were not many international reserves left in the national treasury. 19 decided to devalue the peso at one time 15% in the evening of February, so as to promote exports, reduce imports, prevent capital outflow and stabilize the foreign exchange market. As a result, the unexpected peso exchange rate plummeted, which eventually led to serious problems. 1February 1997, Thailand's financial situation began to deteriorate, and the government did not take rescue measures. In May, the Thai baht depreciated to the lowest point 14, and the government still insisted on controlling the exchange rate. For financial institutions that should be closed down, the government still implements the practice of injecting capital and spends a lot of money in vain. In July, after being forced to implement a managed floating exchange rate system, the Thai baht continued to depreciate and foreign exchange reserves continued to decline. However, the government is still burdened with years of high-speed economic growth and the reputation of a "tiger" country, and hesitates about the IMF's aid plan, leading to more and more contradictions and difficulties. In addition, the unstable political situation in Mexico and Thailand, the widening gap between the rich and the poor and the deepening social contradictions are also contributing factors to the outbreak of the financial crisis.