Fiji Time: 10:22 AM on Monday 29 August

Fiji Times Logo

/ Front page / Business

Risks to economic recovery

Bbc.Co.Uk
Tuesday, January 28, 2014

THE head of the International Monetary Fund has warned that deflation remains a real risk to economic recovery in the eurozone.

Despite signs of recovery across the world, Christine Lagarde said potential risks must not be ignored.

One of these was the fact that eurozone inflation, at 0.8 per cent, remained "way below" the 2 per cent target set by the European Central Bank (ECB).

She was speaking on the final day of the World Economic Forum, in Davos.

Deflation can hinder growth, as prices and the value assets continue to fall.

Ms Lagarde told a Davos debate on the global economic outlook, that — despite signs of recovery everywhere, there were old risks and new risks

Old risks included any failure to continue banking reforms and re-balance economies, she said.

New risks were, how emerging economies responded to the winding down of economic stimulus measures in the US, and the problems facing economies whose inflation rate remained stubbornly below target.

Mario Draghi, president of the ECB, told the same conference that the bank was ready to act if necessary, but he insisted that deflation was not yet an issue for the eurozone.

He said eurozone inflation is subdued, and expected to remain subdued for about two years.

"The longer it stays at a low level, the more serious risk of deflation," he said.

But he said the fall in inflation was primarily because of slowdowns in four heavily-indebted countries: Greece, Spain, Ireland and Portugal.

These countries were now seeing much better economic growth, which is why eurozone inflation would likely return to target in the medium term, Mr Draghi said.

In Japan, prolonged deflation stunted economic growth for years.

But government stimulus measures — so-called Abenomics — appear to be breathing new life into the world's third-largest largest economy.








Fiji Times Front Page Thumbnail

Kaila Front Page ThumbnailFiji Times & Kaila Frontpage PDF Downloads

Use the free Acrobat Reader to view.

Westpac
Code Inward TTs Outward TTs
CAD 0.63920.6202
JPY 50.895347.8953
GBP 0.37390.3659
EUR 0.43980.4278
NZD 0.68750.6545
AUD 0.65400.6290
USD 0.49370.4767

from

$0.00

Exchange Rate updated on 29th August 2016

Today's Most Read Stories

  1. AGM dispute
  2. Labasa thumps Ba
  3. Need for freedom and not freebies, says Rabuka
  4. Road death toll up
  5. Division in TISI Sangam
  6. Growers leave farming, claims Kumar
  7. Whippy-Knight: Make-up artistes play critical role
  8. Club sells clothing, offers free medical checks
  9. FLOTSAM AND JETSAM
  10. Carnival to fund hall

Top Stories this Week

  1. Mata signs new deal Sunday (28 Aug)
  2. Wong helps Rawaca get a gold medal Friday (26 Aug)
  3. 1 charged, 2 under probe for break-in Thursday (25 Aug)
  4. Taliga eyes Tokyo Tuesday (23 Aug)
  5. Veremalua gets help from Ryan on overseas contract Saturday (27 Aug)
  6. 7s top job Tuesday (23 Aug)
  7. 'Ryan a loss' Tuesday (23 Aug)
  8. Ryan may return Friday (26 Aug)
  9. Violence stops TISI Sangam annual meeting Sunday (28 Aug)
  10. Kolinisau surprises fans with Macuata dialect Friday (26 Aug)