Thailand 1997

About Thailand 1997

Thailand devalued the baht on July 2, 1997, triggering the Asian Financial Crisis. The baht had been pegged to the US dollar. Thai companies had borrowed heavily in dollars. When the baht was devalued, dollar debts became unpayable. The stock market fell 75 percent. Finance companies collapsed. The IMF provided a 17 billion rescue package. The crisis spread to Indonesia, South Korea, Malaysia, and the Philippines. Thai GDP fell by 10 percent in 1998. Approximately 1 million Thai workers lost their jobs. The crisis ended Thailands economic miracle. Thailand recovered slowly, with GDP not returning to pre crisis levels until 2002. The Thai crisis demonstrated the risks of dollar pegged exchange rates combined with large short term foreign currency borrowing.