The failure of the Russian authorities to contain the coronavirus outbreak and the lack of urgency with which policymakers have stepped up fiscal support has made us increasingly concerned about a prolonged economic downturn and a sluggish recovery. Putin’s approval rating fell to a two-decade low in April and this would create a toxic backdrop that would further damage Putin’s support before his term ends in 2024. Meanwhile, the batch of GDP figures to be released next week are likely to show that the Central and Eastern European economies escaped the sharp contraction in Q1 that gripped the euro-zone economy. However, the latest indicators are ominous and, while virus restrictions are slowly being lifted, we expect the region to contract sharply in Q2.
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