There is no link between deflation and poor economic conditions. Here is a study of the data for 17 countries over a period of more than a 100 years which concluded: "The data suggest that deflation is not closely related to depression. A broad historical look finds
many more periods of deflation with reasonable growth than with depression and many more periods
of depression with inflation than with deflation. Overall, the data show virtually no link between
deflation and depression."
http://www.minneapolisfed.org/research/sr/sr331.pdf