Energy windfall for Russia & woe for Turkey

Russia is a beneficiary from the conflict in the Middle East due to the rise in energy prices and a likely rise in export volumes. But we don’t think this materially alters the growth outlook. The net energy importers in Central Europe will suffer a hit to the terms of trade and higher inflation. It looks much less likely that central banks in Hungary and Czechia will cut interest rates at meetings later this month. The impact on Turkey will be larger. A rate cut is now out of the question at the CBRT meeting next week; if anything, a hike is looking more likely.