The jump in wholesale European natural gas prices in the early part of this week doesn’t mean the energy crisis in the region is coming back to life. For economies in Central and Eastern Europe, it would take a far bigger rise in prices to materially shift the outlook for inflation or GDP growth. Elsewhere, Romania’s government was forced to ask the European Commission for a higher budget deficit target this week and austerity measures are likely to be implemented soon. The risks to our GDP growth forecasts there have shifted to the downside.
Note: We’ll be discussing heightened EM political risk – including coups in West Africa and Russian macro instability ahead of next year’s election – in a Drop-In on Thursday, 7th September. Register here to join.
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