Emerging market competition also strengthens the incentives to reform our economies and make further progress in terms of structural reforms, which are, in any case, needed. The euro area has the potential to take advantage of the new opportunities. In trade terms, the euro area is actually more open than other major economies.
While the buffer stock of foodgrains and better supply management could mitigate the adverse effects to an extent, imports are not an easy solution given the requirement. Although inflation pressures emanating from higher food prices may limit the scope for monetary policy action, there are implications for inflation expectations. Furthermore, unlike the major advanced economies, growth remains positive.