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South Korean Financial Crisis
Pages 6 (1506 words)
The year 2007 marks the 10th anniversary of the South Korean financial crisis and reminds us of the struggle that shocked the Korean economy in the last quarter of 1997. Undoubtedly, this had a significant impact on the South Korean economy, and led to Korea's worst recession since the aftermath of the World War 2.
I hope that this essay will help in further understanding why the crisis happened and how the economy can be better managed to prevent such disasters in the future.
Korea was progressing well in 1996 and had become a part of the Organisation for Economic Cooperation and Development (OECD). As people celebrated, nobody knew of the impeding disaster about to strike.1 During the latter part of 1996, the current account deficit increased to 5% from previous year's 2%, a decrease attributed to lessened competition among Korean industries. The GNP declined from 14.1% to become 7.1% and foreign debt rose to a high 100 billion dollars. These and various other debt related indicators were showcasing the upcoming crisis for Korea.2 The first half of 1997 surfaced a few more indicators of the disaster. Foreign investors in Korea were starting to get wary of the market and lacked confidence in investing because of long recessions, large deficits in current accounts and growing short-term external debt. In January 1997, Hanabo Steel, the 17th largest Korean seller went into bankruptcy. ...
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