After a strong Q2, growth in Emerging Europe as a whole slowed in Q3, from 3.5% y/y to around 2.8% y/y. In Russia and Poland, this slowdown has been relatively gradual and driven by weakness in manufacturing sectors. Turkey’s economy has, unsurprisingly, slowed more sharply. Even there, though, the slowdown so far hasn’t been quite as abrupt as we had anticipated – indicators of domestic spending have collapsed, although there appears to have been some offsetting impact from export-led sectors that may be benefitting from the weaker lira. While Turkey’s economy looks set to fall into recession, the recent slowdown in Russia should be temporary and there’s scope for a pick-up in growth in the coming months.
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