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Deflation looms for the eurozone despite Germany's strong performance

Business Line

Deflation looms for the eurozone despite Germany's strong performance


The eurozone’s largest economy showed off its muscles in January. German exports grew more than expected, but, much to the European Commission’s joy, so did imports, reducing a trade unbalance that was starting to strain Berlin’s relationship with Brussels.

A few hundred kilometers away, but light-years from an economic standpoint, Slovakia became the latest eurozone country to experience falling prices. So much for the European Central Bank’s firm denial of Japanese-style deflation.

It took a long time and huge economic stimulus packages for the former empire of the rising sun to exit stagnation. Now Tokyo is fighting to bring inflation to 2.0 percent, but its measures could also hurt the Japanese people’s purchasing power. As a result Japan’s prime minister has been pushing businesses to play their part.

In China some companies are about to discover the dark side of the free-market. After the very first default of a domestic bond, leaders hinted government will not always step in to save the day as it has done in the past.

All that in this edition of Business Weekly.

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