Prior to the crisis, the emerging economies of East Asia recorded real GDP growth rates that were among the highest over a sustained period for any region in the world. Nominal GDP per capita increased at a rapid and steady rate while unemployment rates dipped to historical lows. This rapid and sustained growth was achieved with relatively modest levels of inflation (see table below).

Table 1: Key indicators prior to the crisis in a selection of developing countries
	Average nominal GDP per capita growth rate (%) from 1987-1996	Average annual inflation rate (%) from 1987-1996	Average unemployment rate (%) from 1992-1996
East Asia
Indonesia	11.1	8.4	3.7
South Korea	14.0	6.0	2.3
Malaysia	10.5	3.2	3.1
Philippines	8.0	10.0	9.3
Thailand	14.1	4.8	2.4
Rest of Asia
India	1.3	16.6	n.a.
Pakistan	4.6	9.7	5.1
Sri Lanka	7.3	12.2	n.a.
Africa
Morocco	5.6	4.8	n.a.
Tunisia	6.1	6.2	n.a.
Middle and Eastern Europe
Hungary	6.5	22.1	11.9
Poland	8.4	112.5	14.8
Turkey	6.3	71.3	7.3
Latin America
Argentina	10.3	608.3	12.4
Brazil	9.7	1,099.5	5.3
Chile	13.1	15.6	6.5
Colombia	8.0	25.1	9.6
Mexico	8.2	41.7	3.8
Peru	2.2	1,220.3	8.6
Venezuela	1.6	51.3	9.2
Source: Economist Intelligence Unit and Datastream/ICV

Not only did the afflicted economies register strong macroeconomic performance, the usual indicators of an imminent crisis-slowing growth, large and increasing fiscal deficits, high inflation, low saving rates and low investment rates, etc.-as highlighted in the traditional literature on financial crises were not apparent during much of the period before the crisis (see table below)¹³.

Table 2: Real GDP growth and fiscal deficits in the decade prior to the crisis in a selection of developing countries
	Average real GDP growth rate (%) for the period 1987-1996	Average fiscal deficits as a percentage of nominal GDP for the period 1987-1996
East Asia
Indonesia	6.9	-0.5
South Korea	8.4	0.1
Malaysia	8.4	-1.6
Philippines	3.7	-1.4
Thailand	9.5	2.2
Rest of Asia
India	5.9	-6.9
Pakistan	5.2	-7.2
Sri Lanka	4.5	-8.4
Africa
Morocco	3.1	-3.3
Tunisia		-3.8
Middle and Eastern Europe
Hungary	-0.9	-17.2
Poland	1.2	-3.0
Turkey	4.4	-4.3
Latin America
Argentina	2.8	-0.9
Brazil	1.9	-4.9
Chile1	7.2	1.7
Colombia	4.2	-0.7
Mexico	2.0	-0.1
Peru	1.7	-3.5
Venezuela2	2.4	-1.2
Source: Economist Intelligence Unit and Datastream/ICV
1 Average fiscal deficits is for 1989 to 1996, data for earlier years, not available. 2 Average fiscal deficits is for 1989 to 1996, data for earlier years, not available.

However, during the period immediately prior to the crisis, some imbalances began to appear in the external sectors of the East Asian economies. These were characterised by, among other things, real-exchange-rate appreciation, slowing export growth, large current account deficits, and increasing short-term external debt.

Footnotes:

13. See for example "A Model of Balance of Payments Crises" by Paul Krugman, Journal of Money, Credit and Banking, vol. 11, 1979, pages 311-325 and "Collapsing Exchange Rate Regimes: Some Linear Examples" by Robert Flood and Peter Garber, Journal of International Economics, vol. 17, 1984, pages 1-13.