A strong end to 2017 (for most)

Growth in Emerging Europe as a whole slowed in Q4, having hit a six-year high in Q3. But most of that slowdown came in the region’s largest economy, Russia, whose recovery stuttered. Weakness there seems to be the result of the fall in oil production stemming from the 2016 OPEC deal, as well as a fall in output in parts of the manufacturing sector. We think that these drags will prove temporary and that growth will pick up this year. Elsewhere, the economic news was better. Turkey’s economy remained strong in the final quarter of last year, while our Trackers suggest that growth in the economies of Central and Eastern Europe (CEE) was as strong in Q4 as it was in Q3. Rapid growth, coming alongside a rise in inflation, means central banks in CEE are likely to tighten monetary policy this year and by more than most expect.