Korea leads the recovery

The country where the signs of recovery are clearest is Korea.

When the crisis hit home, many South Korean workers went on strike

The country is the world's 11th biggest economy, and is expected to grow by 4.5% this year. Its highly productive basic industries, from shipbuilding to computer chips, have become even more competitive because of the devaluation of the won.

The spirit of public co-operation was also demonstrated when people voluntarily started to hand in their gold to the government to help save the currency, the won.

Now there is also a huge trade surplus.

But tackling the grip of Korea's big conglomerates, the chaebols, has been difficult.

The newly elected government grasped the nettle of corporate reform, trying to weaken the power of the huge companies who dominate the economy. It has been trying to force them to merge or close their debt-laden subsidies.

Unions have fought against any closures which might mean job losses.

And the companies themselves have been reluctant to focus on their core business and sell redundant units of their sprawling empires.

One example: The government-backed plan for Samsung to sell its car unit to Daewoo in return for acquiring Daewoo's electronics business (the so-called "Big Deal") recently collapsed.

"The 'Big Deal' only worsens company's financial structure by adding more capacity. The concept is a failure," said Rho Boo Ho, a professor at Sogang University.

And while several foreign companies have been interested in buying some of the bankrupt firms, there is a suspicion that foreign investment is still not really welcome in Korea.

Mixed picture in Southeast Asia

In contrast to Korea, the recovery is far more uncertain in the countries of Southeast Asia that were the initial focus of the crisis.

Sell, sell, sell - the US dollar ruled supreme as Asia's currency took the plunge

Although the Thai economy has shown its first quarter of economic growth for two years, the problems of the financial sector are far from over.

But foreign investment is flowing back in, and tourism and exports, especially of electronics, are up.

"What we are seeing is evidence of a strengthening economy ... several months ago I thought there is no way that's going to happen," said Jeff Erhart of Seamico Securities.

The picture is more glum in Indonesia, where the economic collapse has pushed the majority of the population into poverty.

The problems have been compounded by political uncertainty, with the recent elections appearing to sound the death knell for the old regime, whose leader Suharto was overthrown as the crisis began. Indonesia's economy was dominated by cronyism, with members of the ruling family running many major companies.

Now that the process of reform has begun, the problem of selling off or liquidating many of the failed banks and companies has proved difficult. The new political leadership initially toyed with the idea of returning to a fixed exchange rate - the 85% collapse in the value of the rupiah being a major contributor to the rise in the cost of food.

The government is likely to bow to the reality that access to international aid depends on maintaining a free-floating currency.

But business confidence will only return when the political situation is finally resolved.

Those who escaped: China and Malaysia

In contrast to the rest of Asia, two countries succeeded in insulating themselves from the worst effects of the Asian crisis by protecting their currencies.

Malaysia introduced capital controls to prevent speculative flows of money out of the country, and held the ringgit stable - but only after the currency had already lost sharply and bottomed out against the US dollar.

Hong Kong's administration dabbled on the stock markets to counter the crisis

China, whose currency is not traded on international markets, managed to avoid devaluation - and Hong Kong, whose currency is traded and fixed to the dollar, bought billions of dollars worth of shares on the stock market to indirectly support its currency.

In both cases the short-term success may have long-term damaging consequences.

The Malaysian economy is expected to recover to 1% growth this year, boosted by government spending.

But foreign firms may prefer to invest in other countries like Singapore and Thailand, and may withdraw capital when the 1-year moratorium expires in September.

"Capital controls can sometimes be some discouragement to outside investment ... we would like to see capital controls lifted as soon as reasonably possible," said Alistair Newton, an official at the UK Foreign Office.

The long-term consequences of the Asian crisis may be even more damaging to China, delaying the modernisation of the economy and its integration into world economic structures.

China's exports have suffered from competition with countries whose currencies are now cheaper. After growing at a rate of 20% per year, they are now expected to show no growth this year.

That has put a strain on China's economy. The government needs a high growth rate to help ease the pain of closing inefficient state firms, as that is bound to trigger mass unemployment.

China came close to signing a deal that would involve substantial opening up of its economy to competition in return for membership in the World Trade Organisation - but dithering by the Clinton administration and the fury at NATO's attack on the Chinese embassy has put paid to that.

Now it appears that that deal will be delayed, perhaps until after the next world trade round and for many years. That means that many of China's industries will not have to face competitive pressures to modernise.

And it could also protect the inefficient banking sector, which has a huge backlog of hidden debt, from having to rationalise.

"Stability kept China more competitive during the crisis, but other countries were forced to undertake reforms,"said Xiao Geng of Hong Kong University.

Uncertainty over Japan

The biggest question mark hanging over the whole Asian region is Japan, by far the largest economy. Japan was the engine of economic growth, supplying investment to China and Southeast Asia and consuming raw materials and finished goods from throughout the region.

Japan's stock market plunged, economic activity slumped and the country went into recession

The slump in Japan - which was not a currency crisis, but part of the long-term problem of excessive debts in the banking sector - is exacerbating the problem of regional recovery.

Now at last, after a year which saw three government rescue plans and long drawn out negotiations on a bank rescue package, the Japanese economy is showing signs of recovery, with strong growth reported in the most recent quarter.

But economists are sceptical that Japanese consumers, who are experiencing mass unemployment for the first time in a generation, are really ready to spend again.

The Japanese government is hoping that by keeping the yen weak, it can engineer an export-led recovery - but that strategy depends partly on the long boom in the United States carrying on. The recent action by the US central bank in raising interest rates is precisely designed to cool that boom.

Japan is also engaged in a bout of deficit spending, raising the government's borrowing and debt sharply.