Is Emerging Europe Overheating? A Reality Check


​Accelerating GDP growth combined with tightening labor markets and a rebound in inflation fueled concerns of overheating in Emerging Europe. Yet, a closer look shows that only Romania is seriously overheating as inflation continues to rise and fiscal and current account deficits are rapidly widening. Turkey is a different story: large economic imbalances reflect persistent high country risk. Elsewhere in the region, inflation has leveled off in the meantime and economic fundamentals have remained stable.