Russia and Turkey had a strong first half to the year, but large policy tightening is likely to result in a sharp slowdown in 2024. Inflation pressures look set to keep building and further interest rate hikes lie in store. In contrast, downturns across Central and Eastern Europe (CEE) now appear to be bottoming out and we think activity will recover over the coming quarters. With last year’s inflation shock unwinding, a monetary easing cycle is taking shape. We expect the Czech central bank to follow Hungary and Poland in cutting interest rates in Q4, although we think policy will be eased by less than investors expect in CEE over the next two years.
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