Although many Europeans, especially the Germans, have been brought up to fear inflation, deflation can be still more savage (see article). If people and firms expect prices to fall, they stop spending, and as demand sinks, loan defaults rise. That was what happened in the Great Depression, with especially dire consequences in Germany in the early 1930s.
Wrong, The Economist, wrong. With all the due respect to one of the most renowned and oldest economic journals, it does not understand what deflation really is. Nowhere in the world, never in the human history, people have stopped spending in the anticipation of prices to fall. It's an economic urban legend that has never been proven true.
In fact, there are two basic kinds of deflation. First, the well-known and much-debated price deflation, which doesn't really matter. Secondly, there is monetary deflation, which is much more important. Monetary deflation is the dangerous variety, which The Economists, and most of mainstream economists, fail to understand.
This is how both kinds of deflation looked like during the infamous Great Depression:
From 1929 to 1933, there was a severe monetary deflation. The amount of money in circulation and credit sharply fell as banking crisis unfolded. That was why retail and commodity prices fell, too. The price deflation was just a consequence of the crisis, not vice versa as The Economist seems to believe!
Since 1933, banking crisis has been resolved, credit volume growth resumed and so did the money supply. The price inflation remained very low until the WWII for a variety of reasons, including productivity growth.
Money supply growth (or money supply decrease) determines whether the economy would growth or fall. The inflation (or deflation) of consumer prices is relatively unimportant.
That said, there indeed was a credit deflation in Germany starting in 2009: