Impact of the Asian Financial Crisis on the SEATEs: The Cambodian Perspective
Keyword: Asian financial crisis, Cambodia economic impact, policy response, social development, foreign direct investment
Abstract/Summary
This working paper examines the multifaceted impact of the Asian financial crisis on Cambodia, one of the Southeast Asian transitional economies (SEATEs). While Cambodia was initially insulated from the immediate financial contagion, the crisis gradually exerted significant pressure on its financial, real, and social sectors. The paper analyzes macroeconomic indicators, trade patterns, foreign direct investment, and consumer behavior, revealing that the crisis compounded the effects of Cambodia’s internal political instability following the July 1997 conflict. Key sectors such as wood, rubber, and tourism experienced sharp declines, while garment exports temporarily offset some losses due to preferential trade agreements. Vulnerable populations, including urban workers and migrant labourers, faced deteriorating livelihoods, rising healthcare costs, and reduced access to education. The government’s policy responses included fiscal tightening, monetary interventions, and structural reforms aimed at stabilising the economy and attracting investment. The paper concludes with lessons for future policy-making, emphasising the need for robust financial systems, improved governance, and democratic institutions to enhance resilience against external shocks.
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