An expected hike in European Central Bank rates from 1% to 1.25% on Thursday will further weaken countries like Ireland, Nobel prize-winning economist Nouriel Roubini said.
The New York University economics professor said a higher eurozone rate rise would make it more difficult for countries like Ireland, which are struggling with massive sovereign debts, to recover.
"My fear is that tightening by the ECB is going to exacerbate the growth, fiscal and financial stresses of the periphery."
ECB president Jean-Claude Trichet and his 22 fellow policy makers meet in Frankfurt on Thursday when they are expected to announce a 0.25% rise.
Last month, Mr Trichet surprised market watchers by signaling an increase in the ECB's key rate as inflation accelerated to 2.6% in March, the fastest in more than two years.
But the rate hike could prompt an international backlash with a number of economists saying it is premature and potentially dangerous for the smaller eurozone countries.
Some 600,000 Irish homeowners will be facing increases of €15 for every €100,000 borrowed on their mortgages. The rise will be passed on to around 200,000 who have variable rate mortgages, despite a number of lenders already raising their variable rates this year.
Homeowners with trackers will also be impacted as ECB rises are automatically passed on to these mortgage holders. It will be the first time in almost two years that tracker mortgage holders will have faced a rise.
The first eurozone rate rise in almost two years is expected to push thousands more into arrears. Almost 80,000 homeowners are struggling to repay their mortgages, according to the Central Bank.
Ireland has one of the highest proportion of mortgage holders who are exposed to ECB rate rises, with 85% on either a tracker or variable rate.
This compares with 15% of mortgages in Germany, according to the Brussels-based European Mortgage Federation.
A Bloomberg News survey predicts the central bank will lift its main rate to 1.75% by year-end, based on the median estimate of 31 economists.
Michael Dowling of the Independent Mortgage Advisers Federation said there was "no doubt that a rate rise will see more people going into arrears".
He said many households with trackers were just about managing to pay their mortgage at the current record low rates.
The problem for householders is that a rate hike is likely to be the first in a series of rises, with some economists expecting rates to rise up to six times in the next 18 months, Mr Dowling said.
Chief economist at Standard Chartered in London, Gerard Lyons, warned: "The challenge in Europe is that 'one size' does not fit all."