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Soaring bad debts sound alarm in Turkey

Political uncertainty and conflict with the PKK are taking their toll on the Turkish economy, with the number and value of bounced checks on the rise, threatening company bankruptcies and fresh woes in the banking sector.
A 20 lira banknote is seen through a magnifying lens in this illustration picture taken in Istanbul January 28, 2014. Turkey's central bank governor raises hopes of emergency rate hike in face of opposition from Prime Minister Tayyip Erdogan, denying he is hostage to political pressures and vowing to fight rising inflation and tumbling lira. REUTERS/Murad Sezer (TURKEY  - Tags: BUSINESS POLITICS) - RTX17YSG
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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).

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