Results of Financial Crisis 1. What happened in foreign exchange markets? 2. Wha

Question

Results of Financial Crisis

1. What happened in foreign exchange markets?
2. What happened in real markets and banking markets?
3. What happened in securities markets?

(write 200 to 300 wordsour professor gave only this information)

Hong Kong Economic Indice Unit: USD Billion GDP Growth Rate Ind. Production Growth Rate CPI(yoy) Umployeement Rate Export Export(yoy) Import Import(yoy) Surplus/Deficit Y 1989 2.5% 0.8% 10.1% 1.10% 73.23 15.9% 71.76 12.3% 1.47 Y 1990 2.8% -1.0% 10.3% 1.30% 82.02 12.0% 82.41 14.8% -0.39 Y 1991 5.6% 0.8% 11.2% 1.80% 98.58 16.9% 100.24 21.6% -1.66 Y 1992 6.3% 1.6% 9.4% 2.00% 119.51 21.2% 123.43 23.1% -3.92 Y 1993 6.1% -0.8% 8.5% 2.00% 135.25 13.2% 138.66 12.3% -3.41 Y 1994 5.5% -0.1% 8.8% 1.90% 151.4 11.9% 161.78 16.7% -10.38 Y 1995 3.9% 0.9% 9.0% 3.20% 173.75 14.8% 192.77 19.2% -19.02 Y 1996 4.3% -3.7% 6.3% 1.60% 180.74 4.0% 198.55 3.0% -17.81 Y 1997 5.1% -0.8% 5.8% 2.20% 188.08 4.1% 208.63 5.1% -20.55 Y 1998 -5.1% -8.6% 2.9% 4.40% 174.03 -7.5% 184.61 -11.5% -10.58 Y 1999 3.4% -6.4% -4.0% 6.30% 174.08 0.0% 179.66 -2.7% -5.58 Y 2000 10.2% -0.5% -3.7% 5.10% 202.08 16.1% 213.06 18.6% -10.98 Y 2001 0.5% -4.4% -1.6% 4.90% 190.1 -5.9% 201.48 -5.4% -11.38 Y 2002 1.9% -9.7% -3.0% 7.20% 200.32 5.4% 208.02 3.2% -7.7 Y 2003 3.2% -9.2% -2.6% 7.90% 224.04 11.8% 232.58 11.8% -8.54 Y 2004 8.6% 2.9% -0.4% 6.90% 259.42 15.8% 271.46 16.7% -12.04 Y 2005 7.3% 2.5% 1.0% 5.60% 289.51 11.6% 299.97 10.5% -10.46 Source: Financial Authority of Hong Kong

Explanation / Answer

Asian Financial crisis occurred in the year 1997, like the subprime crisis of 2008 this was also a crisis because of overvalued Assets price and was triggered from Thailand. The east Asian or Asian tiger economies were soaring high on high foreign direct investment and exports before crashing in the year 1997. This year marked huge capital outflow from the country, high unemployment rate and deflation (even depression in some nations). Let's see the effect of the financial crisis on different economic variable below:

As per the Data given above the Hongkong saw a decline in industrial output, unemployment increased and exports also decreased and so did imports because the consumption came down considerably. All the effect were seen a year later in 1999 when Hongkong saw a depression and the inflation was in negative numbers.   

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