On January 31, the rating agency Fitch followed its earlier move on Lithuania and downgraded the outlook for Estonia and Latvia, citing "heightened downside risks." Will the skeptics, who have long considered that the Baltics' rapid convergence (with per capita incomes surging by up to 50 percent since EU accession alone) has been too much too fast, be proven right after all? Now that cheap financing is drying up in the wake of the global credit crisis, will the imbalances built up during the boom'slarge current account deficits, heavy private sector debt burdens and overheated real estate ...
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