As the global credit crunch intensifies, those countries in Emerging Europe with large external financing needs have been forced to turn to the IMF and EU for emergency funding. Hungary and Ukraine have already agreed programmes, while Latvia and Turkey look set to follow suit. Swift intervention by the IMF and EU has so far averted a full-scale financial meltdown and supported a small rebound in financial markets. But the need to narrow external imbalances means that we now expect each of the ‘Super Deficit’ economies (Hungary, Ukraine, Turkey, Romania, Bulgaria and the Baltic States) to contract outright next year.