GDP across Central Europe expanded strongly in Q1 and the latest figures for March and April suggest that activity has remained resilient since the war in Ukraine started. Russia’s economy has not (yet) fallen off a cliff as had been expected. Industry in CEE is coping well with renewed supply chain disruptions. Consumer-facing sectors have been supported by strong wage growth and loose fiscal policy. And Turkey’s economy seems to have adapted to the high inflation environment. We maintain our view that activity will weaken in Q2 and that some economies will enter recession (particularly Russia) as the effects of the war bite harder. At this stage, however, there are some clear upside risks to our GDP forecasts emerging.
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