Europe in deflation

1 April 2009

I was reading the Standard, or De Standaard to be exact, which reported that Belgium is flirting with deflation. Among the countries which adopted the euro, Spain is already in deflation and other countries, such as Belgium, will soon be in deflation as well.

Deflation is pernicious and difficult to get out. Being a pessimist, I do not think any economy can escape from the repercussions of the current economic crisis. Europe, which may not be as much to blame as the US or the UK, still will feel the negative effects.

Yet, this time last year, we were worried about inflation and high interest rates. How things can change quickly.