The lack of strategies against deflation

According to the daily Neatkariga Rita Avize the financial crisis and sinking oil prices could soon lead to a period of deflation for which Europe is ill prepared: "The average citizen may be delighted to hear that prices are going down, but when deflation continues for a certain amount of time it has a negative impact on economic growth. ... Large companies in particular are wary of deflation because it lowers their prospects of growth and making profits. Yet although the Western states have their strategies for combating inflation, they know little about dealing with deflation. The Japanese government, for example, has been trying to combat deflation in its country since the 1990s, without concrete results."

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