ECONOMY

Bad loans have soared in last two months

Banks are particularly worried about the rise in nonperforming loans (NPLs) that the continuing recession in the first half of the year has generated. The rate has now come to 18 percent of all loans, according to bank officials.

In the last three-and-a-half years the number of bad loans has quadrupled and their total currently stands at an estimated 46 billion euros, an all-time high for the local banking system.

What is even more disquieting, say bank sources, is the rate of growth of NPLs, as they appear to have risen by a percentage point per month in May and in June, thereby rising from 16 to 18 percent, owing to the political uncertainty, the widespread worry about the outcome of the crisis and a possible Greek exit from the eurozone.

The same sources note that economic activity has shrunk by 14 percent in the last four years, while for this year alone the contraction is estimated at 6 percent, wiping out about a decade of growth in the process. Greece?s gross domestic product has declined by 6.5 percent year-on-year so far in 2012.