Past the worst

The coronavirus crisis has dealt a heavy blow to the economies of Emerging Europe over the past few months but the worst of the downturn now appears to have passed. As infection curves have flattened, most countries have eased lockdowns in recent weeks and activity is rebounding quickly in parts of the region. Large fiscal and monetary support means that we think recoveries will be faster in Central and Eastern Europe compared with Russia and Turkey, although in all cases there will be some long-lasting scars. Financial markets have also recovered some lost ground, with equity markets rallying and central banks’ sovereign bond purchases helping to push down bond yields.