FRANKFURT -- The chief economist of International Monetary Fund (IMF) thinks the deflation risk in the euro area is real, a German newspaper reported on Monday.

The IMF chief economist Olivier Blanchard warned in an interview with the German daily Handelsblatt, a part of which was published on the newspaper's website, the inflation remains positive but the risk of deflation remains in the euro area according to the baseline scenario of the IMF.

He argued that deflation will increase the real debt burden even in southern periphery countries including Portugal and Spain as it improves the competitiveness there.

The negative effect will outweigh the advantages and could make economic output lower, Blanchard warned.

Commenting on the monetary policy stance of the European Central Bank (ECB), Blanchard believed that there is still some room for expansive monetary policy although the central bank has lowered interest rates as far as possible.

Last week, the ECB decided to keep the interest rates unchanged at record low levels. ECB president Mario Draghi told a news conference that the inflation is likely to remain at the current level for a period but there are no signs of deflation in the euro area.