Described last week by the head of the International Monetary Fund as the "ogre that must be fought," deflation is feared because it sparks a vicious cycle of behavior that is difficult to reverse — as the past 20 years in Japan has shown.

If consumers and businesses start to expect prices of goods and services to fall in future they will postpone spending, depressing the economy and causing prices to fall further.

But that is not on the cards, according to hundreds of economists polled last week.

While inflation will remain weak through this year for most developed countries, none of the more than 150 economists polled by Reuters forecast even a quarter of consumer price declines in any of the Group of Seven countries.

"We think the threat of deflation is somewhat overdone. The obvious comparison is with Japan in the 1990s and 2000s, where there was genuinely a deflationary situation," said Philip Shaw, chief economist at Investec.

"But the Japanese experience suggests that deflation is much more of a risk when credit institutions have broken down. And that isn't the case for the majority of developed economies."

Although credit flows in the eurozone are weak and some banks might need recapitalizing, Shaw argues their situation is still healthier than that of Japan 15 years ago.

NO COMPLACENCY

In any case, the weakness of inflation will likely preoccupy central bankers from major industrialized countries at this week's meeting of politicians and policymakers at the World Economic Forum in Davos, Switzerland.

"It looks as though low inflation is a reflection of the waning powers of central banks as they have resorted to unconventional monetary stimulus measures," wrote Stephen King, group chief economist at HSBC, in an outlook for the world economy.

"It is already abundantly obvious that unconventional policies have had a bigger impact on financial asset values than on the real economy."

Even if market economists think deflation an unlikely scenario, few would argue it should be treated lightly by policymakers.

As the severe global recession of 2009 showed, the consensus of market economists and policymakers alike can be completely wrong.

"The IMF has to show it's not being complacent," said Shaw.

"But with regard to the recovery potential, I'd be much more concerned if inflation jumped up because of a surge of energy prices and food costs, as we saw in 2011."

IMF Managing Director Christine Lagarde's deflation ogre may seem a distant menace to many forecasters, but they were largely in agreement with her on the outlook for the global economy — namely that its growth should pick up this year.

Last week's Reuters poll showed the world economy will snap a three-year run of slowing growth by expanding 3.6 percent this year compared with 2.9 percent in 2013 — almost exactly in line with the IMF's forecasts.

RICH-POOR GAP

How the spoils of that growth will be split will be a key theme of this year's Davos meeting, starting on Wednesday.

A chronic gap between rich and poor is yawning wider, posing the biggest single risk to the world in 2014, even as economies in many countries start to recover, the World Economic Forum said on Thursday.

Its annual assessment of global dangers, which will set the scene for its meeting in Davos, concludes that income disparity and attendant social unrest are the issues most likely to have a big impact on the world economy in the next decade.

This week's economic data will at least give an early flavor of whether the global economy is on track to meet expectations of faster growth, and where it might be centered.

Markit's first batch of purchasing managers indexes (PMI) of 2014, due on Thursday, will show how the world's manufacturers started the year in the United States, the eurozone and China.

The Chinese PMI could prove to be of particular interest, given the mixed readings from industrial indicators towards the end of last year in the world's second-biggest economy.

Scores of factories in China's manufacturing heartlands have closed earlier than usual for the country's biggest annual holiday due to weak orders and rising costs, workers and owners say, suggesting a rocky outlook for a key sector of the economy.

Housing sales figures in the United States and January's consumer confidence reading for the euro zone, both on Thursday, make up the rest of the key data for this week. Economists expect a modest improvement on both fronts.