Greece enters deflation for first time in 45 years "If you were to see several years of deflation, it would likely mean the government would have to undertake another debt restructuring," said Mr May. Private investors suffered deep losses in December last year when they sold sovereign bonds back to the Greek government for about a third of their value, in order to give the island much-needed debt relief. "There's not much more the private sector can do" in the event of further debt relief, said Mr May. That implies that eurozone governments may need to accept haircuts on their debt, or relax returns on their loans. The ECB might have to take a hit on its debt holdings too. Greek inflation since January 2011 Though three or four years of falling prices could plunge the Greek economy deeper into debt crisis, it could take even longer for Greece to regain the competitive edge needed for a recovery, he added. "I'm not sure you can have a short term period of deflation and a pick up in exports," said Mr May, who noted that if Greece exited the eurozone it could boost competitiveness faster through currency adjustments. We think that Greece could eventually leave the eurozone. It's very difficult to solve these problems within the single currency. Elsewhere in the eurozone, German trade slumped unexpectedly in February, in a signal the economic powerhouse may not be able to lift the single currency bloc out of slump. Imports, which were predicted to rise modestly, tumbled 3.8pc, while exports, expected to hold steady, slid 1.5pc. In France, the central bank's preliminary estimate that GDP grew 0.1pc in the first quarter of this year. If confirmed by official data due in May, the figure would mean the bloc's second-largest economy, which shrank 0.3pc in the last three months of 2012, narrowly avoided entering its third recession since 2008.