Slowing growth across Emerging Europe in recent quarters has set a downbeat tone heading into 2025. With domestic and external headwinds remaining strong, we think that most economies in the region will disappoint consensus expectations for growth next year. Despite this, above-target inflation will keep interest rates higher than most expect through to end-2025. The downside risks to growth from higher US import tariffs are smaller than in many other EMs, although we expect a fairly poor performance from financial markets next year. One upside could come from an agreement to end the war in Ukraine, although we suspect the impact outside Russia and Ukraine will be fairly limited.
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