The raft of Q1 GDP data released this month showed a growing divergence in the region. The crisis in Ukraine and threat of Western sanctions took a heavy toll on the Russian economy, which seems to be slipping into recession. By contrast, growth in the Central European economies continued to strengthen, supported by the recovery in Germany (and apparently unaffected by events to their east). Meanwhile, the region’s financial markets have stabilised in recent weeks as tensions in Ukraine appear to have eased following conciliatory comments from Russia’s President, Vladimir Putin. But in spite of the markets’ relative optimism, the situation in Ukraine remains fraught with uncertainty and unrest could flare up again following the presidential election on 25th May.
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