ECONOMY

Bouncing checks hit 2 bln euros

The value of checks not being honored in Greece’s financial system hit almost 2 billion euros in the first seven months of the year, rising more than threefold from last year’s levels, in tight liquidity conditions that may persist until the end of the year. Data from Tiresias, a nonprofit group jointly owned by Greek banks that provides credit profiles and other payment information, showed that the value of bad checks in July rose 296.4 million euros to 1.95 billion euros, or about 1.3 percent of the country’s gross domestic product. The figure is a sharp increase from July last year when it stood at 616.3 million euros. The president of the Athens Chamber of Commerce and Industry (EBEA), Constantinos Michalos, called on the government and banks to implement flexible finance schemes that will enable more money to be pumped into the economy. «We believe the problem will continue to get worse in the event that no extra measures are taken,» said Michalos, the head of Greece’s largest chamber of commerce. A lack of liquidity can create a domino effect in the market, sweeping away healthy businesses that up until now had successfully survived the crisis, added Michalos. A recent survey by EBEA found that some 250,000 of its members were unable or finding it difficult to meet their cash flow needs, with more than half reporting a drop-off in demand for their services or products. Greece’s slowing economy, which shrank by 0.2 percent year-on-year in the second quarter of the year, is expected to enter its first recession in 15 years in 2009, due to falling investment, exports and consumption. Earlier this month, the Washington-based International Monetary Fund predicted that the Greek economy will contract by 1.7 percent this year and 0.4 percent in 2010.