Invesco's Greenwood: Why the Eurozone is still heading for deflation

Invesco Pereptual's chief economist John Greenwood has sounded a warning on the Eurozone, predicting GDP and inflation will both undershoot their already low targets.

GDP growth for the Eurozone slowed to 0.2% in Q1 2014, down from 0.3% in Q4 2013, meaning growth of only 0.9% year-on-year. Currently the consensus expectation is for 1.1% growth in 2014 - well below the 2.5% pre-crisis level. However, Greenwood predicts this will disappoint, forecasting GDP growth of just 1% and inflation of just 0.6%. "The recovery is at best bumping along the bottom, and remains acutely vulnerable to a rise in global oil prices or even a mild financial shock," he said. "I maintain my long-standing forecast for deflation in the Eurozone. "The fiscal and monetary ...