After collapsing across the board earlier in the year, consumer and business confidence indicators have rebounded sharply over the past six months. In some cases, they are approaching pre-crisis levels and are consistent with a return to positive economic growth. Meanwhile, investor confidence has risen too. However, there are still a number of reasons to think that the recovery in Emerging Europe will be relatively weak. First, to the extent that car-scrapping schemes in the eurozone just bring demand forward, industrial confidence and activity in Central Europe could yet suffer a further set-back next year. Second, fragile banking sectors are likely to keep credit conditions tight for some time to come. Third, tighter fiscal policy is on the horizon in every country. As a result, we expect the region as a whole to expand by just 1% in 2010.