Credit contraction recorded in May
The financing of the private sector has decreased by some 20 billion euros since the end of 2014, taking the total loss for the economy to about 65 billion euros since the outbreak of the crisis.
The credit contraction, which has left the private sector without vital funding, is one of the biggest consequences of the crisis and culminated with the wave of bank deposit outflows after the end of 2014 (reaching up to 38 billion euros) that led to the imposition of capital controls two years ago.
Bank of Greece statistics show that the financing rate of enterprises and households remains in negative territory, as in May it came to -1 percent, while the funding flow reversed the positive trend of the two previous months to turn negative by 395 million euros. The negative flow means that loan repayments or write-offs exceeded new issues by banks, creating a funding deficit.
The strong trend of credit contraction that started in 2010 was contained in the latter half of 2014, when the financing rate of the economy stabilized. That trend was reversed in the first few months of 2015 after the wide-scale flight of deposits due to uncertainty about the expiry of the second bailout program. Deposits then stabilized, but loan issues have kept shrinking.
