The Eurozone faced challenges due to the complexity arising from productive concentrations and different country strategies. The four largest countries in the monetary union were the most important, with significant differences between them. Despite disruptions from the subprime crisis, there were many reasons for a recommencement of a clear appreciation of the euro against the US dollar and the Japanese yen.

When a country has imperfectly distinguished, refined production, its exporters are forced to decrease their prices when the country’s currency appreciates recollecting their market shares. Germany had the highest increase in the ratio related to the export price over the unit wage cost of all countries, showing its strongest product diversification. The central American financial institution, the Federal Reserve, was likely to stay more responsive than the European Central Bank in the event of an economic slowdown or financial crisis, confirming current developments in monetary policy and market outlooks.

The slowdown in growth was expected to be stronger and more durable in the United States than in the Eurozone. The US witnessed a collapse in construction activity due to the very high stock of unsold houses, while Eurozone countries experienced a slight weakening in construction activity after a period of strong growth. The United States found it difficult to sell securitized assets to the rest of the world as non-residents were less attracted to assets issued in that country. Additionally, emerging countries accepted a faster depreciation of the dollar, making it increasingly difficult to stabilize.

Japan cannot continue regular processes with a strong yen. With the decline in the real income of Japanese households, the only drivers of demand were exports and associated investments, which weakened with the US slowdown. Germany’s big burden of imports came from outsourcing to emerging countries, taking advantage more from the drop in import prices due to the appreciation of the euro.

The appreciation of the euro reduced the import prices of the four biggest Eurozone countries during 2002 and 2003, so the change in the amount of the sensitivity of exports to changes in the euro is a function of concentration. Countries that concentrate on distinguished, high-end products typically have lower export price elasticity and lower export trend growth. The appreciation of the euro during 2002 and 2003 also affected the markets of the other three countries, i.e. France, Italy, and later Spain, much more than it was the case in Germany. This has shown that there is a rule in this process, where, if a particular country has a big, progressively growing nontradable service sector, it is to some extent resistant to fluctuations in the euro. The differentiation of the Spanish industry and market shows that it is definitely not the case in that country.