That’s a pretty important caveat. I would take it one step further to say that it only matters in non-communist governments. Yes, maybe China can pull it off. But even losing a large chunk of 40% of the economy will be pretty bad and they’d have to switch to something pretty close to fully communist pretty quick to pick up the slack.
I don’t think you necessarily need GDP growth to have a healthy small amount of inflation. Inflation has more to do with monetary supply than GDP growth.
The problem with deflation is that people end up hoarding all their cash because you get a return on it without doing anything with it.
So large swathes of money start getting taken off the playing field. Investment dries up, growth slows, people get laid off, and this cycle continues, one thing causing the next, causing the next in a circle. It’s one of the most destructive forces possible to an economy.
That’s why the central banks strive for around 2%. It’s enough to force people with cash lying around to invest it in something useful which will create jobs, etc, but not so high that it will make everyone panic and run the banks.
Economists would call this leveraged economic growth and not consider it a bad thing.