Reforms, cooperation key to sustaining Asia's growth

THIS month marks 20 years since the Asian financial crisis. It's appropriate to consider at this juncture why the crisis happened, and what we have learned about how countries can safeguard their economies from future shocks and deliver sustainable and inclusive growth.

The combined currency and banking crises started in Thailand in July 1997 and quickly spread to South Korea, Indonesia, Malaysia and the Philippines. In little more than a year, gross domestic product at the five crisis-affected countries fell by a combined 30 per cent.

The crisis can be traced to the premature opening up of capital accounts before domestic financial systems and regulations were ready. Short-term borrowing was liberalised even more than long-term foreign direct investment in those countries.