Industry in the highly-open economies of Central Europe has gathered steam in recent months, with output expanding by as much as 6-7% y/y. Manufacturers have been supported by the strengthening of the German economy, into which they are integrated via supply chains. In stark contrast, Russian industry has stagnated over the past year as production has bumped into capacity constraints. Turkey lies somewhere in the middle. Industry held up well at the end of 2013, but there are signs that it has come off the boil at the start of the year. All in all, this reinforces our view that Central Europe is set for a period of outperformance, while growth in Russia and Turkey is likely to be sluggish.
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