The impact of the Eurozone crisis on Australia and South Korea

The sovereign debt crisis inflicting the Eurozone member states has both international economic and European integration significance. Rarely has a regional economic crisis had such clear and immediate effects on even distant nations such as Australia and South Korea. This crisis is a sovereign debt crisis in which some Eurozone governments are facing unsustainable bond market rates of repayment for having high public debt and low level measures to resolve these debts. Moreover these states are inflicted by low or no economic growth and a no exit solution given they are members of a single currency scenario in which monetary policy is a combined approach and not specific to member states. Countries such as Australia and South Korea will ultimately feel this decline in lower levels of investment, lower levels of exports and potentially decline in the GDP. The aim of this paper is to ascertain in what ways they will feel the effects of the crisis. These are two different economic realities which theoretically should respond differently to this sovereign debt crisis. The paper also seeks to understand the similarities and the differences in the way these two nations will defend themselves from this economic tsunami and what factors will explain this economic defence.