Part 8/10:
This swiftly grew into a contagion, affecting neighboring countries that shared similar economic structures and vulnerabilities. As foreign investors retreated amidst the collapsing Thai currency, the entire financial framework of Southeast Asia began to unravel. By the end of 1997, the net capital inflows to these countries shrunk dramatically—from USD 66 billion in 1996 to just USD 36 billion in 1997.
The ripple effects were profound. Currency values fell, stock markets collapsed, and economic forecasts that once projected growth turned abruptly negative. A crisis that began in Thailand quickly enveloped South Korea, Indonesia, and Malaysia, becoming a full-dress Asian financial crisis.