Greece's rebound could be wrecked by deflation, economists say

The austerity measures accepted by Greece as the price of a financial rescue could shut down the economic growth needed to pay off its debt, economists warned. The spending cuts and tax increases sweeping through the EU risk locking the region into an artificially low rate of growth, they said. "How can Greece grow out of its debt if there is deflation? Deflation increases the debt burden, so we are following this virtuous circle that is bringing us toward hell," said Jean-Paul Fitoussi, a professor of economics at the French Institut d'Etudes Politiques.

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