The decline in long-term interest rates in the core European countries and many other countries around the world that has occurred may work, if it is sustained, to lessen the adverse impact on growth in those countries.
If policymakers in other regions responded to the potential euro area weakness by leaving policies easier than they would otherwise have been, this too would have some offsetting impact, though possibly at the cost of more unbalanced growth. As to the effects on Australia, the euro area takes only about 5 per cent of Australia’s exports.