The deterioration in Turkey’s real economy is accelerating, with political uncertainty, early elections and bloody conflict with Kurdish militants taking their toll on the economy in general. Statistics by the Banks Association of Turkey Risk Center show a dramatic increase in both the number and value of bounced checks, especially in August, when the Kurdistan Workers Party stepped up its terror attacks. The problem seems to be particularly rife in the predominantly Kurdish provinces in the east and southeast, where since August 2014 the number and value of bounced checks increased by up to 115%, well above the national average, with local economies struggling amid the simmering unrest.
In the first eight months of 2015, the overall number of bounced checks rose 21% compared to the same period in 2014, while their total value was up 49%, according to the RIsk Center. Some 15 million checks worth 429 billion Turkish lira were presented to banks for clearance, with legal action launched in regard to 490,000 bounced checks worth 17.6 billion Turkish lira ($5.8 billion; 1 Turkish lira = $0.33).
The regional breakdown for August indicates how political uncertainty and the rekindled Kurdish conflict have put a serious strain on businesses across Turkey, including the country’s economic powerhouses in the west. In the southeast, the trend is even gloomier. In August, five southeastern provinces topped the list of regions with the worst rate of bounced checks in terms of value. The rate was the highest in Bitlis and Bingol, at 11.1%, followed by Van at 10.6%, Hakkari at 9.3% and Mardin at 8.4%.
Another alarming signal from the real economy stems from the number of protested promissory notes, which stood at 646,229 in the first eight months of the year. The figure is expected to reach some 1.5 million by year's end, up from 1 million in 2014. In terms of value, the protested notes were worth 6 billion Turkish lira for the eight months. As a result of the accelerating downturn, the figure is expected to hit 10 billion Turkish lira by the end of the year, up from 8 billion Turkish lira in 2014. Bounced checks worth 17.6 billion Turkish lira and another 6 billion Turkish lira in protested promissory notes signal that payment chains in the economy have begun to break.
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