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Have you heard about something called the “Asian Economic Crisis” and wondered what it was? What does it have to do with international trade?
Is it something that could hurt the Boomerang Box? What caused it?
During the 1980s and 1990s, many Asian countries grew quickly. They built factories and power plants and skyscrapers. They made things, such as toys, clothes, and televisions, which they sold to people in other countries all over the world. In return, people in many foreign countries began investing in these Asian countries. That means they lent their money to the banks in the Asian countries. With this new money, the Asian banks could make loans to people and businesses in Asia... meaning that even more factories, power plants and skyscrapers could be built. But, just like a family that uses its credit card too much and then can’t pay it back, many Asian countries borrowed too much money too quickly. Then, the Bust After a while, the foreign investors wanted their money back. They wanted to invest it in other things. Unfortunately, Asian banks had already loaned this money out to many different people and businesses, and in some cases, the money lent out was used for projects of questionable value. For example, empty skyscrapers because too many were built. So, the Asian banks had trouble paying the investors back. And that, in a nutshell, is the Asian Economic Crisis.
As Asian currencies became less valuable, people in Asian countries grew less able to buy things — like airplanes or software — from other countries. Let’s think about that for a minute. Let’s imagine that you have $1 and want to buy a candy bar. If each candy bar costs 50 cents, you can buy two candy bars with your dollar. But if the price of candy bars suddenly goes up to 75 cents, you can now buy only one candy bar with your dollar. That’s pretty much what happened in Asia: their money was suddenly worth less than it used to be... and so anything they wanted to buy from a foreign country cost more. You can guess what happened next: people all over Asia started buying less, and trade throughout the world slowed down a little. What about the Boomerang Box? If you’ve been tracking the Boomerang Box all year, you will remember that it spent a long time at a few Asian ports. It spent nearly two months in Manila earlier this winter. The reason that happened was quite simple. Because Asian countries were buying fewer things from overseas, there were fewer products to transport around the region. And so, the Boomerang Box sat empty longer than it normally would have. What About Other Countries? Countries all over the world are worried about the Asian Economic Crisis. People in Asia have bought a lot of things from other countries during the last twenty years. If they suddenly slow down, other countries that depend on selling products to Asia might also slow down. That has happened to some extent. It certainly shows how much countries all over the world depend on each other. But another interesting thing has also happened. Because things made in Asia — and vacations to Asia — are now LESS expensive to people in other countries, other countries have begun buying even more products from Asia, and tourists from other countries have begun traveling to Asia for their vacations. What’s Next? Experts think the Asian Economic Crisis will be solved over the next few years. However, just to make sure, a number of countries have banded together through an organization called the International Monetary Fund (IMF) and pledged to invest $43 billion in Asia to put some money back into those countries. If nothing else, the Asian Economic Crisis shows how quickly things can get stormy in international trade... and why we all need to pay attention to trade, no matter where we live. Do you have something to say about the Asian Economic Crisis? Especially readers from Asian countries, let us know what it’s meant to you: e-mail the Eagle. Resources: |
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