Consequently, using the term “deflation” for the euro area would arguably be an overstatement, with the ECB not expecting the euro area to fall into deflation. However, the risks of low inflation appear to be linked to the risks of subdued growth or weak recovery (see also below).
Quarter-on-quarter real GDP growth in the euro area was 0.3% in the last quarter of 2014, year-on-year change in 2014 was 0.9%, while the ECB’s March prediction for this year was at 1.5%. Euro area growth rates are still a full percentage lower than in the decade leading up to the crisis (2.5%), and are uneven across countries.