On the whole, Emerging Europe looks well placed to weather a global economic slowdown. Providing growth in the euro-zone does not slow too sharply, the region should expand by around 6% this year. But this is largely a result of a positive outlook in Russia and the bulk of Central Europe. Countries with large current account deficits, particularly those in the Baltics and Balkans, will suffer from a deterioration in financing conditions. While we still expect these countries to undergo a gradual rebalancing, a harder landing is still possible if investor risk appetite falls further.