BRUSSELS, Dec 3 (Reuters) - Deflation is not a real risk in the euro zone, European Economic and Monetary Affairs Commissioner Joaquin Almunia said on Wednesday, adding he hoped economic recovery would come in the second half of 2009.
“Some people are talking about that (deflation). I don’t think this is a real risk for the euro zone,” Almunia told reporters.
“We have different conditions than in other countries. We have a labour market that is organised in such a way that makes it extremely, extremely difficult to go towards deflation.”
He noted, however, that inflation was falling because of a drop in oil and commodity prices and the weakening of the economy, saying the recession currently hitting the 15-country euro area created a difficult situation for jobs.
He said he hoped a 200 billion euro ($252.8 billion) fiscal stimulus plan announced by the European Commission last week, along with monetary policy, would help avoid a deep slowdown.
“I hope we will adopt decisions using the fiscal stimulus, using monetary policy ... to avoid a protracted recession and to prepare the economy for a recovery that I hope will come in the next quarters, hopefully in the second part of 2009,” he said.
Euro zone inflation slowed to 2.1 percent in November from 3.2 percent year-on-year in October, compared with the European Central Bank’s target of just below 2 percent. (Reporting by Jan Strupczewski, writing by Dale Hudson)