Growth peaking

Growth in Emerging Europe probably picked up further in Q3, but we think that this will mark the peak in the economic cycle and expect aggregate regional growth to weaken a little next year. Admittedly, Russia’s recovery, which is only in its early stages, has further to run. However, the economic recovery in Central Europe is now looking mature and growth is likely to soften as capacity constraints start to bite and inflation and interest rates rise. Meanwhile, Turkey’s economy is likely to suffer a sharper slowdown as one-off boosts to growth this year begin to fade. For the region as a whole, we expect growth to weaken from 3.5% this year to 2.8% in 2018 and 2.3% in 2019. And in most countries – with the notable exception of Russia – our forecasts lie below the consensus.