Eastern Europe gains strength

Economic activity in the eurozone has reached six-year highs, according to recent data, so it’s no wonder that the emerging region most exposed to the single currency area, eastern Europe, is also beginning to motor.

The average reading of economic sentiment indicators compiled by the European Commission is close to a nine-year high, notes Capital Economics. That translates to regional growth of around 4% in the first quarter of 2017 – quite a jump from 3% in the previous three months.

Poland has been doing especially well, with output likely to have expanded by 4.5% in the first quarter, . Longer term, there should be plenty more growth to come for the region as it continues to converge with western Europe. In Estonia and the Czech Republic GDP per capita is still around $33,000 and $30,000 respectively, compared to $42,000 in the UK.

The good news, according to Chris Colunga of the BlackRock Emerging Europe trust, is that the rebound has yet to be priced in. Emerging Europe is on a p/e of below nine, compared with the emerging market average of 12.5, he says.

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