V. Key characteristics of the euro area

The individual countries that now comprise the euro area were relatively open economies before they joined the euro area. However, they are now part of a larger, much more self-contained economy. The size of the euro area makes it comparable with major economies such as the United States and Japan.

The euro area is one of the largest economies in the world, with a population of 318 million in 2006.The European Union as a whole has 27 Member States and a population of 493 million. By comparison, the United States and Japan have 299 and 128 million inhabitants respectively.

In terms of gross domestic product (GDP) expressed in purchasing power parities, the United States was the largest economy in 2006, with 19.7% of world GDP, followed by the euro area with 14.3%. Japan’s share was 6.3%.The shares of the individual euro area countries are significantly smaller: the largest accounted for 3.9% of world GDP in 2006.

Although the euro area can be significantly affected by developments in the global economy, the fact that the euro area has a less open economy means that movements in prices of foreign goods have only a limited impact on domestic prices. However, it is more open than either the United States or Japan. Euro area exports of goods and services as a share of GDP were significantly higher in 2006 (21.6%) than the corresponding figures for the United States (11%) and Japan (16.8%).