Growth across Emerging Europe is likely to pick up in 2017-18, but it will be softer than most anticipate. While the region’s largest economy, Russia, will return to positive growth in the coming quarters, the recovery will be sluggish. In Central Europe, there’s no sign that Brexit has had any impact, but the tailwinds that propelled these economies last year are starting to fade. We expect growth to slow and settle at a more normal pace of 2.5-3.0%. Weaker growth in Russia and Central Europe will be accompanied by lower-than-expected inflation and a shift towards looser monetary policy. Indeed, we generally expect interest rates to be lower than the markets are pricing in. Turkey will be something of an outlier within Emerging Europe. Growth is likely to slow sharply, yet the economy is also likely to see higher inflation and interest rates by next year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services