Q3 GDP figures, the fall of the wall

The Q3 GDP figures due next week are likely to show that Russia’s economy struggled while Central and Eastern Europe (CEE) held up well. However, weakness in the euro-zone means we doubt that this strength in CEE will last. Meanwhile, 30 years on from the fall of the Berlin Wall, one lesson that emerges from the performance of the Eastern European economies is that those countries which liberalised the most also grew the most. With reform progress now waning, income convergence with advanced economies is likely to be slower, or stall completely in the case of Russia.