Comparing Financial Crises: What Lessons for Asia from the Eurozone Crisis?

Abstract

The Eurozone crisis, that began in 2009, most badly affected the Southern Eurozone countries consisting of Greece, Ireland, Italy, Portugal and Spain (GIIPS). A combination of extremely sluggish growth and harsh fiscal consolidation forced these economies to undergo a painful process of deleveraging to reduce their high public and private debts. Also, facing a rapidly ageing population that is likely to add to greater stress to their future fiscal burdens, there is a growing need for these countries to undertake painful structural reforms (“internal devaluation”) to restore their lost competitiveness and get back on a fiscally sustainable growth path.