As mentioned earlier, the July events and various financial crises in Southeast Asia adversely impacted Cambodia's economic performance in 1997. Economic activities in the key sectors highly dependent on the regional and world markets were mostly impacted, namely internal trade, investment, tourism and construction. For sectors such as agriculture which were not exposed to significant external economic uncertainty, no major negative impact was noticeable. The public sector, however, was seriously hit by the sudden reduction of aid inflows and by the damage caused by the political events on revenue collection and expenditures.
Some people say that Cambodia is too small to be affected by the current regional crisis.
This is untrue. We are living in the world of globalization and interdependence. No one is insulated from the events in neighboring countries. This crisis will impact all countries that have economic relations with countries undergoing turmoil. According to some experts, the main reasons of this depreciation were domestic and psychological factors rather than effects from the regional financial crisis.