Economic Affairs

What lies ahead: Deflation, inflation or stagflation?

All are possible. The era of the 'Goldilocks economy' is over.

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One of the hottest topics under discussion these days among economists, investors and bankers is what kind of "flation" we will get over the next three years. Will it be more deflation, a rise of inflation, or a combination of both, namely "stagflation" (a word that combines economic stagnation and inflation)?

The vast majority of economists agree that deflation will continue at least through next year. But beyond that, the consensus breaks down. Some say the deflation will persist. Others say higher inflation will be unavoidable and a few suggest that stagflation is eventually inevitable. So it's worth exploring what the different views are.

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A version of this article appeared in the print edition of The Straits Times on September 09, 2020, with the headline What lies ahead: Deflation, inflation or stagflation?. Subscribe