Europe cannot survive without inflation
The euro zone economy is showing signs of serious troubles. Falling prices can be considered one of them.
From December 2013 to December 2014 prices fell by 0.2%, which is a sign of approaching deflationary crisis, The Guardian columnist Heather Stewart believes. This crisis is characterized by consumers and investors postponing purchases until further price reduction and stabilization of the economy, which leads to a slower economic growth, lower investment and, as a consequence,industry downturn and rising unemployment.
It is unclear, the Guardian writes, whether there is a way out of this situation: deflation is complicated by the rapid decline in oil prices. The policy of quantitative easing suggested by the chairman of the European Central Bank, Mario Draghi, might bring temporary relief, the author believes.
Thus, in the near future, Europe might experience a crisis similar to the one experienced by Japan in the 1990s, Stewart writes.
The euro zone economy is showing signs of serious troubles. Falling prices can be considered one of them.
From December 2013 to December 2014 prices fell by 0.2%, which is a sign of approaching deflationary crisis, The Guardian columnist Heather Stewart believes. This crisis is characterized by consumers and investors postponing purchases until further price reduction and stabilization of the economy, which leads to a slower economic growth, lower investment and, as a consequence,industry downturn and rising unemployment.
It is unclear, the Guardian writes, whether there is a way out of this situation: deflation is complicated by the rapid decline in oil prices. The policy of quantitative easing suggested by the chairman of the European Central Bank, Mario Draghi, might bring temporary relief, the author believes.
Thus, in the near future, Europe might experience a crisis similar to the one experienced by Japan in the 1990s, Stewart writes.
