Analysis by the US Treasury Department published this week gained a lot of attention for highlighting that Russia’s economy is now 5% smaller due to the war and sanctions than it otherwise would have been. But perhaps the more important point is that the economy is overheating even though GDP is lower, highlighting the sharp reduction in Russia's supply capacity in the past two years. Elsewhere, Poland's new government officially took power this week and we think a lot of challenges will now need to be overcome if the optimism that has built up in local financial markets is to be sustained.
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