What country in Southeast Asia was most severely affected by the 1997 Asian Financial Crisis, and what happened to its economy during that time?
Answer (1)
Indonesia was one of the Southeast Asian countries most severely affected by the 1997 Asian Financial Crisis. The crisis started in Thailand, but it quickly spread to neighboring countries, and Indonesia experienced the worst of its effects. Before the crisis, Indonesia had enjoyed strong economic growth. However, when foreign investors lost confidence in the Southeast Asian markets, they began pulling their money out of these countries. This caused the value of local currencies, including the Indonesian rupiah, to collapse.In Indonesia, the rupiah lost over 80% of its value against the U.S. dollar in a short period of time. This meant that prices of imported goods rose very fast, and ordinary people found it harder to buy basic necessities. The crisis also caused banks and businesses to fail. Thousands of workers lost their jobs, and the unemployment rate increased sharply. Inflation, which is the general increase in prices, became very high and made life even harder for families.The crisis also caused political instability. President Suharto, who had been in power for more than 30 years, was forced to step down after mass protests and public anger over corruption and the worsening economy. Riots and violence broke out in cities like Jakarta, showing how deeply the crisis had affected people’s lives—not just financially, but also socially and politically.The Indonesian experience during the 1997 crisis shows how a financial disaster can affect every part of a country—its currency, jobs, prices, politics, and daily life. It also serves as a warning for other countries to make their financial systems more transparent, stronger, and better prepared for unexpected problems in the global economy.
