Governments in Central and Eastern Europe stepped up support this week for firms and households against surging inflation, but we don't think they will prevent some economies from contracting in Q2. Meanwhile, current account deficits have blown out this year and will only deteriorate further due to high commodity prices and supply-chain disruptions. One country where the current account is looking concerning is Turkey and the central bank took steps this week to shore up its FX reserves. At the same time, policymakers are pushing their lira-isation strategy but this is likely to raise risks in the banking sector further down the line.
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