ETH is not deflationary and it is a good candidate to be used as currency.
The characteristics that make Bitcoin unsuitable as a currency right now isn't is deflationary printing, it's that it's unregulated, uncontrolled, and subject to tragedy of the commons (as is seen with the multiple rejected block size increases).
I'm guessing you're opposing EIP1559 then
Intuitively (have no idea how to do this), it would be interesting to have Country's coin supply grow (approx.) with its GPD/productivity.
ETH2 won't be deflationary because such things is nearly impossible in a PoS network. You need issuance to rewards validators. It can't be network fees because if network fees are high, the network is doom to fail.