The turmoil that has hit global financial markets will reach Eastern Europe, bringing financing problems to the most vulnerable economies and slowing economic growth, chief economist of the European Bank for Reconstruction and Development (EBRD) Erik Berglof,said.

In a note to EBRD staff, Berglof said that, with the the economies of Eastern Europe and the former Soviet Union growing at record rates and market-oriented reforms in place, most countries "have weathered this turbulence in financial markets very well," Financial Times reports.

His comments echoed a World Bank report published in late September 2007 which argued the turmoil has so far left EU's new member states in Eastern Europe "relatively unscathed" but could still hit countries with high current account deficits.

Berglof said, "We are certain that the crisis in the west will be a serious one which will last for some time and this means it will definitely have an impact on our countries. We distinguish between two different effects: short-term liquidity problems and more long-term increases in borrowing costs."

Five of the countries with high current account deficits which have "come under pressure at some point" were Latvia, Hungary, Bulgaria, Romania and Serbia, Berglof said.

The World Bank report said that preparations for future euro membership, combined with monitoring from Brussels, have put the 10 new EU members in a strong position.

The report named the Baltic states as having the largest external account imbalances, and described Bulgaria as vulnerable, Financial Times said.