Despite the deepening crisis in the euro-zone, data released over the past month showed that growth accelerated in a number of countries in Emerging Europe in the third quarter of this year. Yet while Q3 GDP data were a welcome surprise, the monthly activity data suggest that the region is now starting to feel the effects of the crisis in the euro-zone. The most open economies in Central Europe – notably the Czech Republic and Hungary – appear to be sliding into recession. Indeed, the growing risk of contagion via the banking system has hit Hungary particularly hard, and forced the government to turn to the IMF for financing assistance. So while Q3 growth was surprisingly solid, Q4 growth will be a lot weaker. Moreover, with no end in sight to the euro-crisis, there is a growing risk that things will turn very ugly in 2012.