Russia and Turkey to drive pick-up in growth

Regional GDP growth is likely to gather pace this year as loose monetary and fiscal policy bolsters recoveries in Russia and Turkey and helps to cushion the slowdown in Central Europe. Interest rates will probably end this year lower than markets are pricing in across much of the region. But we are firmly non-consensus in forecasting that Turkey’s central bank will have to reverse course and hike interest rates towards the end of the year, resulting in slower growth in 2021.
William Jackson Chief Emerging Markets Economist
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Emerging Europe Economics Weekly

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Ukraine's financial markets remained under pressure this week as investors appear to have priced in a more serious outcome regarding Russia-Ukraine tensions. A positive reaction to today's talks between the US and Russia has brought some relief but, even if a renewed conflict doesn't materialise, local markets are set to face a difficult few months. Meanwhile, oil prices closed in on $90pb this week and we've revised up our year-end Brent crude forecast to $70pb (from $60pb). This will help support Russia's budget and current account surpluses, but will add 0.2-0.3%-pts to inflation elsewhere in the region and cause current account balances to worsen.

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