Activity strengthened across Emerging Europe in Q1 and we expect this to be sustained over the coming quarters, with GDP growth in most economies exceeding consensus expectations in 2024. This is likely to be accompanied by renewed inflation risks. We expect headline inflation to pick back up in some (including Poland, Hungary and Israel) and to fall more slowly than central banks and many analysts expect in others (e.g. Russia, Turkey and Romania). Against this backdrop, the scope for interest rate cuts this year is looking increasingly limited and our forecasts lie on the hawkish side.
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