Russia’s mobilisation, external conditions tighten

President Putin's "partial mobilisation" of Russian military reservists this week as part of its ongoing war with Ukraine could have important macro implications for Russia's economy through additional Western sanctions, increased pressure on the public finances and greater issues facing Russia's labour supply. Meanwhile, external financing conditions tightened further this week as the US Fed's hawkish interest rate hike strengthened the dollar and pushed up Treasury yields. Turkey remains the most vulnerable economy in the region to this (and more so after this week's 100bp rate cut) but parts of Central Europe could also find it more difficult to finance their widening current account deficits.