Ten years after the Asian crisis: Is the IMF ready for “next time”?

Ten years after the Asian crisis unfolded, much has changed in Asia. With the present conjuncture, there seems little likelihood of a repeat of the capital reversals of 1997-1998. But this conjuncture is neither sustainable nor sensible: leaving China to one side as a special case, these countries should be investing much more, importing capital, running current account deficits and allowing their exchange rates to appreciate. When this happens, they will grow faster, which they need to do to make up for the “lost years” after the crisis. With the return to normalcy, the core vulnerabilities of the crisis period will re-emerge: volatile international capital flows and fragile financial markets.