Recoveries across CEE, but Russia and Turkey to slow

Russia and Turkey have outperformed the rest of the region this year amid support from loose policy, but both economies look set for a slowdown in 2024 while recoveries take shape across Central and Eastern Europe (CEE). Further large currency falls and increases in inflation and interest rates lie in store in Russia and Turkey. In contrast, last year’s inflation shock will continue to unwind in CEE and we think that central banks will cut interest rates fairly quickly over the coming months. That said, we think the pace of easing will become more gradual from mid-2024 as the disinflation process slows. The scope for interest rate cuts will then become increasingly limited in parts of the region, including Poland and Hungary.