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What to pick and avoid in Emerging Europe for 2014

This year will present plenty of risk for central and eastern Europe but the region still has opportunities and a rosy growth outlook, according to emerging market economists at Nomura.

"We're basically waiting for the exit from the crisis globally but in eastern Europe there's going to be a lot of opportunity for interesting monetary policy to go on," Peter Attard Montalto, emerging market economist at Nomura International, told CNBC.

"Versus this 'rates on hold forever' mantra for markets seen through last year [there is] more interesting stuff going on this year," he added, saying that central banks in Hungary, Poland and Czech Republic could well face pressure on their monetary policies throughout the year.

(Read more: Hungarian central bank completely independent: Governor)

This could occur, he said: "whether it's in terms of Hungary having to fight a political urge to keep rates low with higher inflation on the one hand -- or perhaps even to hike rates but actually loosen monetary policy through additional liquidity measures elsewhere -- or for a more orthodox central bank in Poland policy having to hike rates in response to the recovery in growth and inflation coming through as well."

The Hungarian capital
Balint Porneczi | Bloomberg | Getty Images
The Hungarian capital

"Then of course we have the Czech story on top of that that markets have followed last year and the intervention that finally happened in the currency that happened last year [to counteract slowing inflation] – but when that might stop in the second half of the year as inflation starts to bounce back," he said.

Attard Montalto co-authored a Nomura report entitled "CEE: Risk themes for 2014." In it, he and co-author Dmitri Petrov forecast that CEE countries could see an upswing in inflation with Hungary predicted to see inflation rise from 0.9 percent at the end of 2013 to 4.2 percent at the end of 2014.

The report's two authors said this would mean the Hungarian central bank would make rate cuts until February and March before inflation rebounded and forced the bank to "go postmodern" in the second half of the year, hiking rates in order to combat the increase.

(Read more: Emerging Europe's real problem? Politicians)

Despite the risk posed by a volatile inflation landscape, economic growth in central and eastern Europe was forecast to remain on track. Hungary recorded a 1.6 percent rise in gross domestic product (GDP) in the third quarter of 2013, compared with the same quarter a year earlier, while Poland recorded 1.7 growth in the same quarter and Romania, meanwhile, posted the strongest economic growth of 4.1 percent year-on-year, according to data from statistics agency Eurostat.

Nomura's Attard Montalto and Petrov were confident for growth in CEE despite the risks posed by "changes in the monetary policy cycle and a shift in the external environment."

(Read more: Can Emerging Europe's central banks fight the Fed?)

"For the region we are still fairly optimistic on the macro front and growth especially because of the recovery in the euro zone that we expect – we have raised our GDP growth forecast to plus 0.7 percent this year (in 2014) from minus 0.4 percent last year and up to plus 1.0 percent next year (2015)."

Such increases are partly attributable to global investors searching for higher-yielding assets in emerging economies over the last few years following the "tapering" of the U.S. Federal Reserve's monetary stimulus program.

Attard Montalto and Petrov said in Nomura's CEE risk report that "the influence of taper may grow through the year however and so with it the market's attitude to risk" but that, in addition to the taper, risk events in the CEE area were posed by elections, in Hungary, Ukraine and Turkey.

(Read more: Own Turkish stocks? You may want to brace yourself)

Furthermore, Attard Montalto said CEE banking systems could come under pressure this year, particularly during the asset quality review (AQR) of European banks, the large-scale risk assessment and stress test of the region's banks to be held by the European Central Bank (ECB).

This will "cause further deleveraging and will cause some issues around weaker Eastern European banking systems but could also highlight potentially some of the stronger banking systems like in Romania and Poland."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt