Rapidly growing Balkan states are facing the risk of a burst bubble, with the most pessimistic analysts believing that the day is not too far away. Others however, with a more optimistic outlook, believe that better days lie ahead and see the current repercussions as merely the symptoms of a rapid transition to mature economies. »These countries are reminiscent of Greece, with its stock exchange excesses in 1999 and household overborrowing after the opening up of consumer credit in summer 2001,» a high-ranking executive with a Greek bank told Kathimerini. «There are some excesses but the system will balance out,» the executive added. International credit rating houses remain cautious, having recently – especially after January 2008 – downgraded prospects in a number of Balkan states. The main fear expressed by rating houses and Greek bankers is connected with the course of macroeconomic indicators. Balkan counties are characterized by significant fiscal imbalances. Their rapid growth, on the back of foreign capital inflows and extremely quick credit expansion, means they are exposed to high inflation and higher interest rates. Standard & Poor’s and Fitch have so far downgraded the economic outlook for Romania, Bulgaria and Montenegro. An S&P report on emerging economies, published on April 14, refers to growing concerns and says that by 2009 there will be more downgrades of both prospects and creditworthiness. S&P divides emerging economies into two basic groups. The first includes economies giving out positive indications, such as Russia, Poland and Slovakia, as well as Brazil, China, Malaysia, Peru and Uruguay. Hungary, Serbia, Turkey, Ukraine and Pakistan are in the second group of economies with less positive prospects. Regarding Turkey’s economic outlook, the National Bank of Greece has a different opinion. It believes that the country’s slower growth is only temporary and that reforms currently under way will bear fruit. Both foreign and Greek credit institutions, including National Bank, Alpha Bank and EFG Eurobank, are adamant that the Former Yugoslav Republic of Macedonia (FYROM) is a different case. They see that there is political will to advance daring reforms to boost competitiveness and build the infrastructure to make foreign investments productive for the entire spectrum of the economy, without giving rise to inflationary pressures. A number of problems facing other Balkan states in general include high inflation and unprecedented rapid credit expansion. The factors at play are highly sensitive and depend on international food and oil prices. Skyrocketing household and corporate debt can only be compared to the US. By way of indication, private sector loans in Montenegro are this year projected to account for 120 percent of the county’s GDP. Corruption Corruption is another problem, for example in Bulgaria, and in some cases entails political risks, as in the case of Serbia. And despite strong growth, unemployment is exceptionally high and incomes still very low. Balkan countries are also highly dependent on inflows of foreign capital, with any slight drop bringing an immediate decline in growth, as happened in Romania last year.