Grounds for cautious optimism

The latest activity data from Emerging Europe provide some grounds for cautious optimism. Growth in the highly open Central European economies appears to be picking up, albeit from low rates. And while there’s no sign yet of a recovery in Russia and Poland, it does at least look like their slowdowns may now have bottomed out. Meanwhile, financial markets in some parts of the region haven’t been as hard hit as other EM regions during the recent sell-off, triggered by concerns of a potential tapering of QE3 in the US later this year. Turkey and Russia are notable exceptions to this – local equity markets have fallen sharply and currencies have come under pressure.