Thanks to massive liquidity provision by the European Central Bank and financial support to Greece, the possibility that the European debt problem will induce turmoil in global financial and capital markets through funding problems of financial institutions has at least lessened. However, it is not yet known whether European peripheral countries can smoothly carry out more drastic measures of fiscal and economic structural reform.
The export of natural resources and the spending of the revenues thus generated in the domestic economy can also cause real exchange rate appreciation, which damages the competitiveness of the non resource traded goods sectors of the economy, such as agriculture and manufacturing; this is a phenomenon called “Dutch disease”.