In 2013, quite a few emerging economies have run into financial turbulence. Gloomy stock markets, growing sovereign debts, rising domestic bond yield rates, depreciating currencies and declining GDP growth—all these factors have aroused concerns over whether the 1997 Asian Financial Crisis would be replayed in the developing countries of the Asia-Pacific.

Actually, these emerging economies are facing similar challenges as those that once harassed Asian countries in 1997 and 1998.

Affected by the global financial crisis, the international capital that flowed into emerging economies decreased from $1.2 trillion in 2007 to $600 billion in 2008. Afterward, the figure began to recover rapidly. At the end of 2012, though foreign capital that poured into emerging countries was slightly lower than the peak in 2007, portfolio investment was 50 percent higher, non-bank credit capital doubled, and foreign capital that went to Asia and Latin America surpassed that in 2007.

The easy monetary policies adopted by major developed countries allowed large amounts of international capital to flood into emerging countries from 2010 to 2012, which was largely motivated by the gap of GDP growth rates and yield rates between emerging and developed economies.

However, things changed at the end of 2012. Despite sluggish GDP growth in most developed countries, systematic financial risks had apparently reduced. Going through a period of adjustment and recovery, assets like stocks and real estate seemed more lucrative in developed countries. On the other side, some emerging economies were experiencing a slowdown. For example, Brazil saw its economic growth fall from 7.5 percent in 2010 to less than 1 percent in 2012, while India dropped from 9.5 percent to 5 percent, and China, from 10.3 percent to 7.7 percent.

Therefore, hot money has begun to flee emerging markets. The reversal accelerated in May 2013, when the U.S. Federal Reserve suggested a gradual cut to its asset purchase program by the end of the year.

In addition, the reversal of international capital happened much earlier this time than that during the Asian Financial Crisis. At that time, the Federal Reserve (Fed) began to tighten monetary policies in 1994, and the reversal of international capital didn't happen until 1996. Now, international investors are so foresighted that the reversal closely followed the Fed's announcement of reducing asset purchases, even though it will really tighten monetary policies in 2015 or 2016.

In recent years, some emerging countries, like Brazil, India, Indonesia, South Africa and Turkey, have been confronted with the same circumstances that lead to the collapse of some countries during the Asian Financial Crisis—a deteriorating current account and a reliance on short-term foreign capital to make up for the current account deficit. Other problems include an expanding financial deficit, high inflation and surging corporate debt. Under such circumstances, the currencies of these countries began to depreciate sharply when the reversal of capital occurred.

Of course, emerging economies are not as vulnerable as in the 1990s. Before the eruption of the Asian Financial Crisis, some Southeast Asian nations had a ratio of foreign debt to GDP surpassing 100 percent, while emerging economies now have a more manageable ratio of between 20 percent and 40 percent. Though Turkey is faced with a high ratio of short-term foreign debt against its foreign exchange reserves, other emerging economies hold more foreign exchange reserves than those countries hit hard by the Asian Financial Crisis.

This is an edited excerpt by Pingfan Hong, chief of the Global Economic Monitoring Unit of the UN Department of Economic and Social Affairs, published in Economic Information Daily