Social Consequences of the Financial Crisis in Asia: The Deeper Crisis

Abstract

The Asian financial crisis has quickly led to marked contrac¬tions in gross domestic product (GDP) and employment in the affected economies. GDP shrinkages in 1998 ranged from nearly 14 percent in Indonesia to 0.5 percent in the Philippines. In turn, these have resulted in adverse social consequences. Although there are signs that the worst of the financial crisis is over and the crisis economies are getting on the road to recovery, the social im¬pacts continue to unfold. The social crisis is likely to be deeper and can be expected to persist long after the crisis economies return to solid growth. This note derives from a study that assesses the social impact of the crisis, based on data drawn from available recent surveys, and supplemented by primary information gathered from local commu¬nities and households using participatory methods. The countries included in the study are Indonesia, Republic of Korea (Korea), Lao PDR, Malaysia, Philippines, and Thailand. The social impacts of the crisis can be gauged mainly in terms of changes in prices and assets, employment, incomes, income distribution and poverty, education, health, social capital, and environment.