First the bad news. This will be the year, analysts predict, when the Asian crisis hits bottom. Which means more misery for millions of people in the form of unemployment, hunger and social unrest. It means airlines cancelling orders, resort hotels lying empty, stores closing down and the suicide rate going up.
The social inequities opened up by the crisis are nowhere more visible than in the Indonesian capital, Jakarta. In the suburbs there are rows of burned-out shops, looted by hungry mobs. At traffic lights, mothers with babies beg a few rupiah from drivers. Half of Indonesia's pre-school children go hungry.
Yet in the upscale shopping mall known as Plaza Indonesia, well-heeled customers buy designer clothes among artificial Christmas trees, protected by armed soldiers and coiled razor wire outside.
One of the lessons of 1998 is that the poor have been forced to pay too high a price for the harsh prescriptions adopted by world financial institutions to deal with the crisis, and that class divisions have widened.
Not that Asia's new middle classes hasn't been affected too. In Bangkok, at markets for the formerly rich, unemployed executives are forced to sell their tennis racquets and BMWs, and in Tokyo and Seoul, scores of people have ended it all by jumping off bridges or in front of trains.
This was the year when governments fully realised the catastrophic effect on developing economies of large-scale capital flows. In its year-end report, the World Bank had this to say:
"The conventional response to the East Asia crisis failed to recognise its profound social cost, and in particular, along with drought and soaring prices for stable food in some countries, its disproportionate impact on the poor.
"Although East Asian countries had reduced poverty and boosted living standards at a pace unrivalled in history, cross country research shows that protracted crises produce more poverty, greater income inequality and deteriorating social indicators such as malnutrition that have serious long-term consequences.
"In Indonesia, South Korea and Thailand, unemployment is expected to more than triple, while the number of people falling back into poverty in 1998 could reach 25 million in Indonesia and Thailand alone, and could be much higher if income inequality rises."
The good news is that after 18 months of suffering, there are signs that the stricken economies will embark on the road to economic recovery in 1999. This has been made possible by lower world interest rates and economic reforms.
The result of cutting imports, closing unsound financial institutions, and renegotiating short-term debts into long-term loans, is already evident: the currencies of southeast Asia have rebounded in the last quarter of 1998, stock markets are recovering and interest rates are down.
Most importantly the Japanese government is at last tackling its ailing banking system and has stimulated its economy, raising hopes of an improved market and banking facilities for Asia neighbours.
The International Monetary Fund predicts that the five most affected countries - South Korea, Indonesia, Thailand, Malaysia and the Philippines - will have a current account surplus of US$57 billion this coming year, compared with a deficit of that amount in 1998.
The Asian Development Bank forecasts that the Asian crisis will ease in the second half of the new year. Any signs of improvement are welcome after the worst year since the second World War. By the start of the year the full impact of the crisis had yet to be felt, and there was still hope that the IMF's multi-billion rescue packages for Thailand, Indonesia and South Korea would mean a quick recovery.
But in January in Hong Kong, Peregrine, one of Asia's largest independent investment banks, collapsed under a mountain of bad loans to Indonesia. Shares fell sharply in Hong Kong, China and Singapore. On January 22nd the Indonesian rupiah collapsed and for the first time US Federal Reserve Chairman Alan Greenspan warned that Asia's financial crisis could spread.
Indonesia failed to carry out reforms and the IMF delayed payments to Jakarta, hastening President Suharto's overthrow in May. In Tokyo there was panic as the full extent of the Asian crisis was realised. Share prices and the yen fell, and Japan's central bank governor pronounced every economic indicator bad while the chairman of Sony warned that the Japanese economy was on the verge of collapse.
In late May the focus shifted to Seoul where South Korean shares plummeted, hit by labour unrest. For the first time Asian leaders like Hong Kong's Tung Chee-hwa warn of recession throughout the region. The once-booming economies of Hong Kong, Indonesia and Malaysia all contracted in the first two quarters.
In June the yen fell past 140 to the dollar, sending a shudder through Asian markets and unnerving China, which warned that a weak yen could force Beijing to devalue its yuan. Markets across Asia tumbled.
IMF managing director Michel Camdessus called it a "crisis within the crisis" but after unprecedented selling of the dollar by the US and Japan, the yen began to recover.
By mid-summer South Korea finally took tough action against ailing banks and industrial conglomerates to meet IMF conditions. But unemployment in a country with no social safety net, reached 7 per cent and tent cities for the homeless have sprung up in the parks of the gleaming capital.
Under new management, Indonesia also met IMF conditions for disbursement of more loans but political turmoil continued, frightening away investors. The crisis also took a political toll in Japan, where the ruling LDP was trounced in elections in July and Prime Minister Ryarto resigned.
In mid-August it was Hong Kong's turn to face a major challenge to its currency. The government decided to buy stocks to squeeze out investors accused of playing the currency and interest rates against the market. The tactic works, though it hurt Hong Kong's image as the world's most free market.
Days later Russia devalued the rouble and declared a moratorium on some foreign debt, and Asian markets plunged again. By the end of August, Wall Street had suffered its second-largest point loss in history, causing another series of stock market routs in Asia.
In September Malaysia shut itself off from the world, imposing foreign exchange controls to contain speculation and restrict capital flows, despite IMF warnings that the move might undermine investor confidence.
The first good news of the year came in early autumn when Wall Street staged its second-largest comeback in history, sparking off a rally in Asian markets. It was a welcome respite, after the first three quarters when Southeast Asia experienced the worst period of the crisis.
According to the Asia Development Bank, in 1998 the gross domestic product contracted 16 per cent in Indonesia, 7 per cent in Thailand, and 6 per cent in Malaysia. Hong Kong saw 7 per cent negative growth in the third quarter and sees no real recovery until the year 2000.
The loss of international confidence in the five most troubled nations is illustrated by the fact that $25 billion of private capital fled outwards during the year, compared with a net inflow of US$94 billion in 1997.
Recovery may be in sight but it will be painfully slow, economists say. Banks are still overburdened with bad debt and are not lending. World demand for Asian exports, particularly electronics, is down. Consumption within the region is weak because of declining living standards. Japan is likely to remain in recession until the new century, despite optimism over reduced taxes and higher spending.
In its most recent world economic outlook, the IMF estimated a fall in global growth of 2 per cent for 1998 and only a small rise to 2.5 per cent in 1999. The brightest spot on a bleak horizon is Thailand. The Thai baht has climbed back 12 per cent since mid-year and direct investment has returned. Social stability in Thailand has attracted sun-seekers who might otherwise have gone to Indonesia or Malaysia.
Every cloud has a silver lining. The crisis began in Thailand and it is there that the recovery may begin too. Europeans can do their bit for Asia by taking a vacation there, especially while it is still cheap.