Deflationary risks generally arise from one or more of the following factors – the bursting of an asset price bubble, difficulties in the financial sector or ongoing losses by businesses. Clearly these triggers are generally interconnected, and can reinforce each other. These interdependencies make deflation such a difficult problem and its impact widespread and corrosive.
A comparison with China is also instructive: in the year 2000 the incidence of R&D on GDP was 0.1 percentage point lower than in Italy, at 0.9 per 2  cent; 18 years later it was almost a full percentage point higher, at 2.2 per cent (an even more impressive increase if we consider the striking growth of Chinese GDP). 9.