The centrifugal compressor is designed for gas and vapour. If the separation efficiency  goes down than the water carryover in next stage increases, which is very dangerous for compressor internals because the gas & vapours are compressible fluids while the liquid is an incompressible fluid.

As a result a rapid and exponential rise in hydraulic pressure will be occur and also vibrations. So, overall, vanes and impellers are the main victims of liquid droplets in a centrifugal compressor, or any compressor. Two phase flow in a compressor always damage its internals and it may damage the casing deposition takes place on internals. If any problem like this appeared than check efficiency of inter-stage separators by taking a 15-20 liter bucket and measure water in 15-30 min and calculate for one hour. Then apply following procedure to determine separator efficiency. This paper intended how to calculate inter-stage separator efficiency.