Two years ago today, the world got its first exposure to "bahtulism." The Asian contagion then circled the globe, infecting governments in Northeast Asia, Russia and South America. The crisis that followed was the worst since the Great Depression and has shaken the foundations of the world economic architecture. Now, prevailing opinion is that the worst has passed. That may be true, but a relapse is possible; without reforms, it is inevitable.

In April, the International Monetary Fund concluded that the outlook for the world economy was "easing." For Asia, in particular, prospects were improving. Thailand and South Korea, two of the hardest-hit countries, have made remarkable progress. Growth is forecast to reach 2.5 percent and 6 percent, respectively. Output is increasing and rising foreign-exchange reserves have given both governments breathing room. Indonesia has been harder hit by the crisis, but its outlook is also improving. The rupiah has stabilized at more than twice its value at the peak of the crisis and a climbing stock market shows increasing confidence in the economy. A recent survey of business executives across the region reveals that 80 percent say their profits have returned to precrisis levels.

The return to normalcy is welcome. Unfortunately, financial statistics only tell part of the story; the human damage is only now beginning to be understood. Crime is on the increase and public-health expenditures have been falling. More troubling are longer-term dangers: Children have been pulled out of school to help earn money. The opportunities they have been forced to abandon may never return. The Asian Development Bank warns that the crisis has created unprecedented environmental strains as people turn to alternative sources of food and income. Asia will resume its growth, but it will be slow and steady; the roaring expansion of the past decade is gone. It will take decades to undo the human and environmental damage that has been done.