After a decade of explosive loan growth triggered by Greece’s entry to the eurozone, the country’s banks are experiencing the downside of a financial cycle for the first time as the economy stutters in the global downturn.

Exports are declining, the tourist season has got off to a poor start and the Greek economy is projected to shrink by about 1 per cent this year, according to the International Monetary Fund. Years of excessive spending have pushed up the public debt to almost 98 per cent of gross domestic product.