As a result of the crisis, over the period from the end of 2008 until the end of 2013 real GDP contracted cumulatively by 25 per cent, intensifying the debt dynamics and contributing to the self-reinforcing nature of the crisis.
In the remainder of the periphery – especially Ireland, Spain and Cyprus – it was the banking sector that generated a sovereign crisis, not the other way around as in Greece. Capital inflows were channeled mainly through national banking systems to help finance construction. Private indebtedness financed by the capital inflows surged, leaving the countries prone to the unwinding of the capital inflows.