Spain and Portugal are the Eurozone countries at most risk of “prolonged low inflation”

Portugal crisisTC

There is a certain level of controversy surrounding the issue of whether moderate inflation or even deflation are really harmful for the economy or more a byproduct of necessary adjustments being made by countries.

“Deflation driven by technological innovation and productivity growth is good for the economy, while deflation driven by a weak economic environment is harmful,” say Cortal Consort experts.

In that sense, the introduction of important structural reforms may explain the evolution of prices in Spain, Portugal or Greece, but not the Netherlands, France or Italy. In these and other cases, economic weakness is the explanation. The output gap, which assesses the difference between actual and potential GDP, is “a good measure of slack remaining in the economy and, for all countries of the Eurozone except Germany and Malta, the gap is still considerable”.




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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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