These are dark times for Greece's textiles and clothing industry, which has been particularly hard hit by the country's economic woes.

Vassilis Masselos, managing director of leading underwear manufacturer and retailer Nota Masselos SA and former president of the International Apparel Federation (IAF) tells just-style that "with more than 1m unemployed, slashed wages and pensions and unprecedented taxation, Greeks today have very little disposable income for clothing."

Consumers are cutting their purchases "beyond what would be explained by the drop in their income as they are afraid of what will come next," he says.

Theofilios Aslanidis, general director of the Hellenic Fashion Industry Association (SEPEE), the main representative of the apparel and textile industry in Greece, adds: "Sales have been affected, mainly because of the loss of disposable income."

According to SEPEE the trend is downward across the whole sector, with production dropping by 25.8% in clothing and 21% in textiles from January to November 2011. The domestic market saw a 23.6% reduction in clothing sales and a 17.6% in textiles.

Only exports are stable or even improving, although this does not register in the Greek statistics as many companies export their items via neighbouring countries such as Bulgaria or Romania where buyers finish off their products.

"As a result, a noted drop in Greek exports does not reflect the reality of the situation," says Aslanidis.

The sector is operating in an environment with loss of liquidity as sales drop, banks do not provide loans, and with debts from the state in terms of VAT and tax returns, John Accas, chairman of Hellenic Fabrics SA, one of the three largest denim industries in Europe, tells just-style.

As the Greek government lacks cash, "the Greek revenue service is irrationally withholding VAT refunds to textile manufacturers, who are mostly exporters, thereby killing them by asphyxiation," agrees Masselos.

In an environment of uncertainty, foreign suppliers are asking for cash payments and will not accept credit or bank guarantees.

The discussion of a looming default "has led the whole industry to desperation and stripped the foreign markets" of any confidence, says Aslanidis. "It took us a long time to convince long-standing clients that their orders are not in danger because of the problems in the country.

"The media played their part in that perception," adds Accas. "Our clients were seeing Greece on the front pages of newspapers or watching Athens burning on TV and they were obviously worried about the future of their collaboration with Greek businesses," he tells just-style.

Things are not better in retail. Many shops and small industries have closed. According to a report by the National Confederation of Hellenic Commerce there is an "epidemic of closures" of shops and small manufacturers. March 2012 data shows almost one-third of businesses in Athens having closed since last year.

Firms have responded by cutting costs and focusing on exports with the help of SEPEE.

"Nota, like most Greek companies, has slashed expenses and decreased staff levels, while concentrating efforts on exports as the local market continues to shrink for four years in a row," says Masselos.

It is the same for Hellenic Fabrics' Accas: "Almost all our sales are in exports. The company was always an exporting one but it became more so in the last couple of years."

Although the international bailout loans to Greece have helped prevent a disorderly default, "we have yet to see crucial reforms as well as funds to support investment and job development," warns Masselos.

Despite the difficulties, Accas does not even want to contemplate failure. "I have to be optimistic," he says, while warning that with rising unemployment at 21%, if new jobs are not created things can only get worse.