Industrial output across the entire region has collapsed in recent months. While there are some country-specific factors at play, such as falling oil output in Russia and the ongoing turmoil in Ukraine’s steel sector, there is one common cause: plummeting demand from Western Europe. With leading indicators now pointing to double digit contractions in industrial output in most countries this year, any misplaced hopes that Emerging Europe had somehow ‘de-coupled’ from the world economy have been well and truly crushed. The region is facing its most challenging period since the 1998 Russian crisis, and with the world economy likely to stagnate at best in 2010, the pain will extend well into next year.