Checks bounce in credit crunch

The number of checks that bounced in the first 11 months of 2008 shot up 30 percent year-on-year, indicating the global crisis is starting to bite into Greece’s real economy, according to bank data made public yesterday. Data from Tiresias, a nonprofit group jointly owned by Greek banks that provides credit profiles and other payment information, showed the amount in bad checks in the 11-month period hit 1.12 billion euros versus 859.7 million in the same period a year earlier. Experts believe the rise in checks bouncing reflects the slowing economy and credit crunch reaching businesses. Lenders have turned off the tap to small businesses, leaving traders having to scramble for cash as economic conditions deteriorate. Greece’s economy is expected to show one of the fastest growth rates in the eurozone this year, expanding by 3.2 percent, but is likely to head for a sharp slowdown next year, despite optimistic forecasts by the Finance Ministry. Gross domestic product is tipped to grow by 2.7 percent next year, according to the ministry, although economists put the target figure close to the 1.0-1.5 percent mark. According to traders, last week’s riots in Athens and other cities around the country have resulted in a sharp drop in turnover as consumers stayed away from shopping districts. The country’s largest chamber of commerce, EBEA, said yesterday that stores in central Athens – where most of the capital’s riots took place – have reported a 90 percent drop in sales. Last week, the conservative government announced steps aimed at providing financial relief to those who suffered damage from protesters. Prime Minister Costas Karamanlis presented an aid plan that offers a 10,000-euro lump sum payment for small businesses, compensation for 50 percent of costs incurred and subsidized loans, among other steps.

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