Emerging Europe Outlook: Brightening prospects – more so if Ukraine war ends

We’ve raised our GDP growth forecasts across most of the region for this year and think that Central and Eastern European (CEE) economies will pick up pace going into 2026, despite the headwind from US tariffs. An end to the war in Ukraine would be positive for the region, most of all for Ukraine itself, and Russia would benefit from reduced imbalances and possibly sanctions relief from the West. We think smaller benefits would accrue to the CEE economies. That said, we remain concerned about high inflation across the region and think that interest rates will remain high for longer than most expect.