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Economics

South Asia Debt Woes Evoke Fears of Another 1997-Style Crisis

Back then, Thailand’s devaluation led to a global market collapse. A sequel might be in the works.

A Sri Lankan money-changer in Colombo. — A Sri Lankan money-changer in Colombo.
Photographer: Chamila Karunarathne/EPA-EFE/Shutterstock

By

Michelle Jamrisko,

Faseeh Mangi, and

Anusha Ondaatjie

August 3, 2022, 8:00 PM UTC

Pakistan is scrambling for a bailout to avert a debt default as its currency plummets. Bangladesh has sought a preemptive loan from the International Monetary Fund. Sri Lanka has defaulted on its sovereign debt and its government has collapsed. Even India has seen the rupee plunge to all-time lows as its trade deficit balloons.

Economic and political turbulence is rattling South Asia this summer, drawing chilling comparisons to the turmoil that engulfed neighbors to the east a quarter century ago in what became known as the Asian Financial Crisis.