Central Europe heading for a sharp contraction in Q2

The restrictive measures implemented by the authorities across Central and Eastern Europe to stem the spread of the coronavirus, as well as the spillover effects from the downturn elsewhere, will result in a sharp fall in regional GDP in Q2, of perhaps as much as 10% q/q. Recent interest rate cuts in the Czech Republic and Poland are likely to be followed by further easing which, alongside fiscal loosening across the region, should help cushion some of the blow and help to support a recovery later in the year.