1997 crisis still remembered as worst one ever

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1997 crisis still remembered as worst one ever


At the National Assembly in Yeouido, western Seoul, last week, U.S. President Donald Trump listed Korea’s achievements over the past half a century. One success that he highlighted was how the Korean people came together to overcome the 1997 Asian financial crisis.

“When the republic you won faced financial crisis, you lined up by the millions to give your most prized possessions - your wedding rings, heirlooms and gold “luck” keys to restore the promise of a better future for your children,” Trump said.

Tuesday marked the 20th anniversary of former President Kim Young-sam’s decision to request aid from the International Monetary Fund that kick-started one of the worst economic crises that the country has ever faced and led to the bankruptcy of major Korean companies as well as massive layoffs that ended some of Korea’s leading conglomerates such as Daewoo Group.

Even after two decades, the 1997 Asian financial crisis, or IMF crisis, is still remembered as the worst crisis that the country has gone through even including the most recent crisis in late 2008.

According to a survey conducted by the state-run think tank Korea Development Institute released Tuesday, 57.4 percent picked the IMF crisis as the most difficult economic time for the country. The low economic growth after 2010 came second with 26.6 percent.

The 2008 global crisis only came in third with 5.2 percent considering it the worst.

The survey was conducted on 1,000 adults aged above 19 years old. While 59.7 percent said the crisis has had a negative impact on their lives, those that were most affected turned out to be those that were college students at the time (68.9 percent), self-employed entrepreneurs (67.2 percent) and those that were working in the agro-fishery industry (62.5 percent).

More than 64 percent said the IMF crisis has affected their confidence while 57.5 percent said it has changed their view on the government.

So what were the major causes of the IMF crisis? Nearly 40 percent of respondents blamed it on a policy failure including mishandling of the national foreign exchange reserves as well as a failure in overseeing financial institutions’ insolvency. But 32.8 percent also blamed it on corruption, especially the ties between business and the government.

According to the results, the biggest impact of the IMF crisis today is the widening income and wealth gap, followed by unemployment.

However, not all were negative about the lasting impact of the crisis, with 24.5 percent of respondents believing that a positive outcome of the crisis was improving the competitiveness of Korean companies as well as the financial industry through restructuring and reforms. Nearly 23 percent also attributed the IMF crisis to improving the overall transparency of government and business.

The survey also showed that 54.4 percent of people saw the public’s unified campaign as the biggest factor that helped Korea to overcome the crisis, while only 15.2 percent chose the restructuring and reform of Korean companies and the financial industry as the main contributor.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]
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