Russia's economy is in the early stages of a deep recession and we now expect a 12% contraction this year. Elsewhere, we've revised down our GDP growth forecasts by 1.0-1.3%-pts in Central and Eastern Europe due to the spillovers from higher commodity prices and disruptions to supply chains. Inflation and interest rates will be higher. From an economic standpoint, one of the key events next week will be the Russian government’s $117mn Eurobond payment due on Wednesday. A sovereign default is looking increasingly likely.
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