Fitch: EZ Deflation Top Risk for World Ratings

Deflation in the euro zone is a bigger risk to corporate and sovereign credit ratings across the world than the fall in the price of oil, Fitch Ratings reported Monday.

“As the world’s second-largest economy, largest importer and largest source of cross-border bank lending, deflation and weakness in the euro zone will have knock-on effects on other regions,” said Fitch in its quarterly “Risk Radar” report.

Prices in the euro area fell by an annual 0.3 percent in February, slightly less than the 0.6 percent decline seen in January, but nonetheless raising the threat of Japanese-style growth-sapping deflation across the euro zone.

CNBC

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