Paul Krugman

The crisis-hit Asian economies will not have a quick V-shaped recovery but an extended workout with debt rescheduling, losing two or three years of growth (through about 2000) rather than a decade.

“That is, I predict (OK, guess) that there will be an extended workout, in which countries will be obliged to keep negotiating with their creditors for delays in repayment, but that the situation will gradually improve. I don't think Asia is headed for a Latin-America-in-the-80s (or Japan in the 90s!) "lost decade" of zero growth; more like a lost two or three years.”

Said on

1 March 1998 · Speech "Will Asia Bounce Back?" for Credit Suisse First Boston, Hong Kong, March 1998, text on Krugman's MIT web page (exact day not given)

Source

Will Asia bounce back? · Paul Krugman (MIT web page)

Should come true

2000

How sure they sounded

I predict (OK, guess); I don't think

Categories

EconomyBanking

Importance

3 of 5 · The recovery path after the 1997 Asian financial crisis mattered for several large economies and global markets.

Outcome

Partly right

He rejected the V-shaped scenario, but South Korea had one: GDP fell about 5 percent in 1998 and grew over 10 percent in 1999, with Malaysia and Thailand also recovering in 1999. Indonesia did go through the slower, rescheduling-heavy workout he described, so the "lost two or three years" call fits some countries and not others.

Evidence:

• https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=KR-ID-TH-MY
• https://www.imf.org/external/np/exr/ib/2000/062300.htm