For the countries of south-east Asia, 1997 was the year their economic miracle seemed on the point of a sudden and devastating collapse.

A currency and stock market meltdown that began in Thailand spread rapidly to Malaysia, Indonesia and throughout the region. Foreign investors fled, factories and banks closed and millions of people faced redundancy.

The lifestyles of many Asians also took a massive tumble after Hong Kong, Indonesia, Malaysia and Singapore saw share values fall by more than 50%. Many governments had to cut spending to balance their budgets.

Top brass on prowl

Most budgets could only manage souvenir shopping

The regional market for Malaysian big weapons systems used to be one of the fastest growing in the world. But at this year's military display top military brass were window shopping instead of signing big contracts.

The show is a pet project of the Malaysian Prime Minister, Mahathir Mohamed, but even he acknowledged that the goods on display were out of his price range.

In coming to terms with the economic climate, the Malaysian government is pruning defence spending, including plans to buy 80 armoured personnel carriers. The Turkish company involved has been told to wait.

Dr Mahathir spent most of 1997 trying to have things his way. But, says the BBC's south-east Asia correspondent, shrugging off the extent of Malaysia's financial and stock market meltdown proved as fruitless as trying to blame it on foreign currency speculators.

Back home in Kuala Lumpar, businesses were already feeling the pinch - among the first to suffer were the status symbols of the new Malaysian elite.

Luxury car sales plummeted

Luxury car dealers have seen sales fall by 50% in months, with worse certain to come. Car salesman Melvinder Singh said: "The financial turmoil was no shock but we didn't realise how great its impact would be. There's always some optimism but it's starting to look like it is going to be really bad."

A new Porsche or Ferrari was well within reach in Kuala Lumpar's boom in the 1980s and early 1990s. Many ordinary Malaysians cashed in on the share bonanza only to see their paper fortunes vanish overnight as soon as the market crashed.

Kenny Tay never gambled on the stock market but his business - composing musical jingles for TV adverts - has also fallen on hard times. Plans to expand are on hold because local companies, whose products he helps sell, are struggling.

"Clients just aren't spending," he said. "Advertising agencies are ringing to say they're going to use last year's jingle instead of commissioning a new one."

Miracle becomes a mirage

One of Kuala Lumpa's many construction sites

Kuala Lumpar's many construction sites still hum with activity. A new urban transport system must somehow be completed so the city can host the 1998 Commonwealth Games.

The same deadline applies to more than 30 new hotels. But once the games are over, the prospects for the property market - like in many other capital cities in the region - look bleak with capacity far outstripping supply.

The much-vaunted economic miracle in Asia has transformed cities like Kuala Lumpar in a few short years. But many are now wondering if the miracle will turn out to be a mirage.

Thais are forced to sell off their jewellery

Those doubts are most acute in Thailand, where economic upheaval was triggered in July. Here once-affluent families must suffer the indignity of selling luxury consumer items their depleted incomes can no longer justify. The result is a golden opportunity for bargain hunters. One said: "You can get 60-70% off because people are broke. You have to take chances while you can."

When the Bangkok Government ordered the closure of 56 badly indebted finance houses in early December, the humbling of Thailand's middle classes hit a new low. But much worse discontent is expected as the country prepares for economic restructuring.

Finance Minister Tarrin Nimmanahaeminda said: "We have to endure social problems which may lead to political problems. The poor and needy are bearing the brunt of the problems.

"They've been hit by inflation, higher consumption tax and unemployment so we must look to the full recovery of the economy."

Protests in mid-October

Whether Thailand has the patience to wait for the country's return to good health is questionable, though. Protests in mid-October threatened order in Bangkok's commercial district, with the wrath of the mainly white-collar workers directed at the administration of Prime Minister Chavalit Yongchaiyudh .

The Government was seen as obsessed more with internal power struggles than the deepening economic turmoil and it soon became the first casualty of the economic and political meltdown.

"Outlook is solid"

In Indonesia, those tensions burst into public view when finance minister ordered closure of 16 insolvent banks, including one owned by President Suharto's son, Bambang.

He initially tried to contest the decision but later backed down. Depositors were left to retrieve what they could of their savings.

Apart from pleasing the International Monetary Fund, by now involved in a costly rescue package of Indonesia's economy, the move against Bambang's empire suggested that in the future, political connections alone would not be enough to save companies of their own commercial folly.

If the IMF's arrival in the region has proved a necessary evil to restore economic confidence, its officials have dampened concern that necessary achievements of south-east Asia were about to be swept away.

The reality is, argues Michael Camdessus of the IMF, that the long-term outlook is as solid as ever. "The economy will emerge stronger than ever."

Benefits must be for all

Ordinary Asians are quickly having to come to terms with harsh realities. They were still waiting for their share of the economic boom when the bubble burst around them.

Even if the tiger economies can be restored to life, leaders will still face the challenge of ensuring its benefits are more widely enjoyed than before.

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