Growth gradually picking up

A raft of GDP data released over the past month confirmed that growth in Emerging Europe accelerated in Q3, albeit gradually. Overall, we calculate that regional GDP expanded by 1.8% y/y, up from 1.6% y/y in Q2. The recovery is being led by Central and South Eastern Europe, supported by the strengthening euro-zone and, in some countries, a rebound in agricultural production. Meanwhile, inflation has fallen across these countries, allowing monetary policy to be loosened to support the recovery. By contrast, growth in Russia remains extremely sluggish and it looks like Turkey’s economy has slowed. To compound matters, inflation is above target in both countries.