The global economy appears to be trapped in Japan-style stagnation, HSBC's high-profile senior economic adviser said on Tuesday, adding his voice to the chorus of economist warnings.

Stephen King said economic activity around the world was slowly deflating, with undershoots in both growth and inflation.

"These shortfalls are reminiscent of Japan's difficulties in the 1990s and beyond. Relative to projections five years earlier, Japan was nursing a 24 percent nominal GDP shortfall by the turn of the century. And many of Japan's problems are now being replicated elsewhere: Low bond yields, falling bank share prices and deleveraging," King said in a report.