Set for a sluggish and uneven recovery

The slowdown in Emerging Europe appears to have bottomed out at the start of the year. We expect growth to pick up over the second half of 2013, but the risk of a flare-up in the euro-crisis, the fragility of the region’s banks and the threat of a spike in global investor risk aversion should ensure that growth remains sluggish and uneven. In broad terms we expect that over the course of 2013-14 Central Europe will outperform South Eastern Europe. And of the major economies, we think that Turkey should outperform Russia, where the recent slowdown partly reflects structural factors.