However, holidaymakers and shoppers can look forward to a bonanza thanks to the devaluation in the Tiger economies. Michael Harrison and Andrew Yates report on the winners and losers from the Asian economic meltdown.
A number of prestige projects have already been postponed in the area. Indonesia has scrapped 80 projects including a new airport on the holiday island of Lumbok, Malaysia has deferred the Bakun dam, and the Hopewell Mass Rapid Transport rail system in Bangkok has been put on ice along with a new international airport.
The Department of Trade and Industry is now advising UK contractors and exporters to approach the region with a great deal more caution. A promotional video launched by the previous President of the Board of Trade, Ian Lang trumpeting the Tiger economies as the "Lands of Opportunity" is being remixed with a much more sober voice-over.
"We remain confident of the region in the medium term but the crystal ball is certainly looking a lot murkier in the short term," said one senior UK trade official. "There is no sign at the moment of default to any significant extent but we can't be sure of what is in the pipeline as people are only just beginning to realise the seriousness of it. You cannot rule out contracts being reneged on or projects curtailed as the crisis deepens."
Despite retrenching on many of their overseas investments, the South Koreans are pressing ahead with major domestic projects like the pounds 2.8bn Inchon airport and the Seoul-Pusan high speed rail link on which GEC-Alsthom is a contractor.
British Aerospace, which has a controversial pounds 160m order to supply Indonesia with 16 Hawk trainer aircraft, said deliveries had not yet started but work was beginning on the order and there were no indications of any problems.
The Association of Consulting Engineers said that the Asia Pacific region was by far the biggest growth area with the total value of contracts rising by 52 per cent to pounds 52bn in 1996. The consulting engineer Ove Arup, one of the biggest firms operating in the area, said there was less work in the pipeline now. "The level of private work, like factories and offices is faltering but infrastructure projects that are publicly funded are going ahead," said Olivia Wheaton of Ove Arup's business development department.
There are no such worries for holidaymakers, who are jetting off to the region in their droves to take advantage of increased spending power. All the major tour operators are seeing a rise in the number of customers wanting to take an exotic trip to Thailand or bask on the beach in Bali.
"We are very pleased with Far East bookings at the moment. We have seen a big increase in the number of passengers booking for the Far East in the last few months," said a spokeswoman from First Choice, one of the country's largest tour operators. "Holiday makers are waking up to the fact that they are going to get a deal once they get there."
A spokeswoman from Kuoni said: "The Far East has been better value than ever before." It is not just cheaper prices of local food and drinks which are attracting hundreds of holiday makers. Tour operators have been able to secure cheaper hotels and flights, bringing down the price of many package deals. The currency turmoil could also prompt tour operators like Thomson to buy rivals in the Far East.
Meanwhile shoppers could see prices of microwaves, CD players and white goods manufactured in the region tumble, according to economists and retail experts.
"I think prices are almost bound to fall," said Martin Weale, director of the National Institute for Economic and Social Research. "In South Korea, the value of the currency has almost halved in the last year. How much this will filter through to the shops we don't know but it would be extraordinary if none of it did."