The robust expansion of Greece since its entry into the euro area has slowed significantly under the weight of the international crisis. However, the economy has weathered fairly well the initial impact of the shock that plunged most of the OECD countries into a serious recession. Growth remained positive until the end of 2008 thanks to relatively buoyant exports to the Balkans and large wage increases which supported consumption. The banking sector has benefited from marginal exposure to the toxic assets which were at the root of the international storm. Even so, the impact of the crisis substantially shook the confidence of households and businesses, which are reining in spending. Furthermore, persistent structural imbalances, illustrated by the poor state of public finances and the large current account deficit, limit room for policy manoeuvre, and Greece’s exposure to south-eastern Europe has increased the country’s vulnerability to the crisis. In the wake of a general increase in risk aversion, the long-term sovereign interest rate spread vis–à–vis Germany widened sharply in early 2009. In line with market assessments, rating agencies downgraded the sovereign debt and credit risks of the leading Greek banks, as in a number of other European countries.