Although relatively closed in comparison with the individual constituent countries, the euro area economy is still rather open – particularly when compared with the two other largest world economies, the US and Japan. The experience of the first few years of EMU has shown that the euro area continues to be subject to a broad range of economic impacts originating from outside its borders, and that the extent of some external impacts are possibly higher than what might have been expected given the relatively-more internationally-insulated aggregate economy of the euro area. For example, the euro area was affected rather strongly by the ICT-related global downturn in early 2000, despite its relatively-low dependence on the ICT sector.

A full explanation of the above developments is a daunting task, particularly because aspects related to the effects of the creation of the monetary union are occurring at the same time as other impacts which are connected with global trends, such as rapid growth in world trade in goods and services, increased mobility of international capital, rising financial integration across the world, and rapid growth in the internationalisation and relocation of production. These difficulties notwithstanding, in several years of analysis of the external environment of the euro area we have learned quite a lot in terms of identification of the transmission channels of external shocks and their impacts.