Geopolitics has once again taken centre stage. Certain regions are feeling the effects of the Russian imposed ban on Western imports more than others. In Eastern Europe, the Baltic States ship roughly 15% of their exports to Russia. This does not look likely to affect global GDP growth, yet the key risk we face is an escalation in tensions between Russia and the West that results in sanctions against the oil and gas industry. Baltic nations (as well as Slovakia and Bulgaria) are highly reliant upon Russia for their imported energy needs. Reductions in exports and/or potentially higher energy costs could have led us to downgrade growth forecasts for Poland, Latvia and Lithuania in 2014 and 2015.
Tom Higgins, chief economist, Standish
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