First quarter GDP estimates for Emerging Europe published this month beat expectations across the board and suggest that growth in the region as a whole picked up to a three-year high of 2.3% y/y. Romania was the region’s star performer, growing by close to 6% y/y, the Central European economies expanded by a robust 3-4% y/y, and Russia’s gradual recovery from recession continued. Early signs are that conditions improved further in Q2. Admittedly, April’s activity data for Poland were a bit disappointing, but those from Russia point to faster growth. More generally, survey measures across the region have stayed extremely strong. For now, there are no signs that these data will prompt a shift in monetary policy. Policymakers in Central Europe have continued to toe a dovish line, and rate hikes still seem to be some way off. Elsewhere, Russia’s central bank is paying more attention to the fall in inflation and its easing cycle still has a lot further to run.
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