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Overheating in Russia and Turkey, recoveries in CEE

Economies in Central and Eastern Europe (CEE) ended last year in stagnation, but headwinds to growth are lifting and we think that 2024 will be a year of modest recovery. Inflation has fallen sharply in recent months but in some parts of the region (notably Poland and Hungary) we expect it to rise back above central bank target ranges later this year, which will prevent interest rates from being cut as far as most analysts anticipate. In Russia and Turkey, overheating pressures will keep GDP growth strong and inflation high for most of this year, although fast rates of growth are unlikely to be sustained for long as policy tightening and structural capacity constraints take their toll.

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