However, an issue worth investigating could be whether the initial conditions underlying these projections have changed or not, perhaps reflecting effects from the recent financial developments. What information does € contain in this respect? First of all it confirms the overall positive outlook pointing to an underlying growth rate still between 2.5 and 3 per cent for the euro area as a whole.
A related consideration is the effect of these capital flows on exchange rates in the region. In general, there is considerably less tolerance for large movements in exchange rates in many of these countries than there is in Australia. In our own case, movements in the value of the Australian dollar are largely seen to be a stabilising force for the economy.