Despite concerns about deflation, a recession in Russia and sluggishness in the euro-zone, the latest data out of Central Europe have been surprisingly robust. Industrial production growth has accelerated in recent months and retail sales are rising at the fastest pace in several years. What’s more, rather than being a concern, deflation seems to have boosted real wage growth and consumption. All in all, Q1 is shaping up to be pretty strong for Central Europe. But the same cannot be said of the region’s two largest economies. Russia is sliding deeper into recession, with consumers bearing the brunt of the economy’s problems, while growth in Turkey appears to have slipped back below 2%.
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