The outlook for much of Emerging Europe has brightened in recent months and we expect growth in most countries to accelerate over the coming quarters. The strengthening of the euro-zone should support local industry while a gradual recovery in domestic demand will also boost growth. And with inflation likely to be subdued, monetary policy will remain supportive in most countries. That being said, while the outlook is improving, the conditions for a strong and sustained recovery are not yet in place. Most obviously, the region will remain vulnerable to a fresh flare-up of the euro-zone’s debt crisis, which is by no means resolved. All of this means that the region’s recovery is likely to be uneven and prone to relapse. We expect Emerging Europe as a whole to grow by 2.5% in 2014 and 3.0% in 2015, up from 1.8% this year.
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