Intensive balooning (and swapping) is indication that your esxi-host is running low on physical memory. While ballooning is actually way of reclaiming free memory from VMs, swapping is really the last resort in case of memory shortage. Of course your VMs will suffer performance degradation, very similar to swapping in physical host. You can solve this problem by either reducing number of VMs running, or increasing host memory (and/or number of hosts in esxi-cluster).
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