Inflation in Thailand and Indonesia and the Asian Financial Crisis Essay

Inflation in Thailand and Indonesia and the Asian Financial Crisis Essay

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There is a close relationship between Gross Domestic Product (GDP) and the unemployment rate as it will relate to the decrease or increase of inflation rate. The inflation rate will increase when GDP and unemployment decreases, because it will affect the purchasing power of the people of a particular country.

From 1997 to1998, both countries : Thailand and Indonesia reached their highest peak of inflation, which is 9.24% and 75.27% respectively. It is caused by the Asian financial crisis which hit most of the asian countries. The crisis is started in Thailand as its currency, Baht is attacked by the currency traders, and eventually devalued after they found out that the market is unstaintable. For Indonesia, the nation belived that It is triggered by a sudden flow out of assets and money from Indonesia. Hence, the value of Rupiah and Baht moved sharply lower and led to a high inflation rate. It also brought about severe unempoyment rate and caused proverty to strike the country.

The inflation rate of Thailand was the lowest during 1998. From 1997 to 1998, to solve the Asian financi...

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