Asia is stronger, Fed tapering won’t cause another finiancial crisis

HONG KONG (CNNMoney) Don’t panic: This is not 1997.

Sure, it’s easy to look at market upheaval in countries like India and Indonesia and see echoes of the 1997 Asian financial crisis, a panic that investors still remember.

That crisis, which wiped away hundreds of billions in economic production before bailout funds arrived, started with the collapse of Thailand’s currency before quickly spreading across Asia.

Some analysts now see the ghosts of 1997 in Asian markets. Earlier this year, hints that the U.S. Federal Reserve might soon roll back economic stimulus was enough to prompt some investors to move their assets out of the region. Currencies and stocks in Asia came under pressure, and some central banks were forced to take defensive action.

While Asia got something of a reprieve after the Fed decided to continue pumping money into the markets, the threat of a stimulus taper still looms large.

Yet analysts and governments in the region say that fears of a repeat meltdown are unwarranted. In other words, take your hand off that panic button.

“In my view, Asian countries have learned the lessons from the past and significantly enhanced their capabilities to fend off risks,” Chinese Premier Li Keqiang wrote last month.

Asian Development Bank chief economist Changyong Rhee agrees, arguing that Asia is now in a much stronger position to weather the coming economic storm.