The Cuban Economy is Not Taking Off, According to Cepal

Vendors at the Vedado Farmers’ Market in Havana (El Nuevo Herald)

14ymedio bigger14ymedio, Havana, August 29, 2018 — Cuban experts consulted by 14ymedio agree that the predictions of Cepal (the UN Economic Commission for Latin America and the Caribbean) confirm the stagnation of the national economy. Some even doubt that the growth of the Gross Domestic Product (GDP) reaches the 1.5% announced last week by this body of the United Nations.

According to Cepal’s report, GDP will grow an average of 1.5% on the whole continent, far from the 2.2% that it predicted in April.

“Instead of surpassing 2017 figures, Cuba is stagnating,” says the economist Elías Amor Bravo, who also points out that the Cuban government itself has set 3% as the necessary growth to overcome its external and internal structural problems.

For Amor Bravo, president of the Cuban Center for Human Rights (OCDH), based in Madrid, there are two causes that have led the Island to have one of the lowest prospects of growth in the region: on one hand, there is deficient investment in infrastructure, communications, energy, or housing, and on the other, there is a high public deficit, more than 11.5% of the GDP in 2017.

The Cuban researcher Pavel Vidal, professor at the Universidad Javeriana de Cali (Colombia), warned during a conference in Miami that the decapitalization of the Island’s economy and the fall in productivity have opened a “breach” with Latin America that can only be closed with a raise in the investment rate to around 10-15% of the GDP. This figure is far out of reach according to Amor Bravo, who maintains that the prominence of investments in the Island’s GDP has been only around 9% between 1995 and 2017.

2018 has been a difficult year for the Cuban economy, especially due to a 6.5% fall in tourism in the first half of the year, attributed by the Government to the fall in trips from the United States because of the restrictive measures of Donald Trump’s Administration, especially the restrictions on American nationals staying in hotels managed by the Armed Forces.

In contrast, the number of visitors arriving on cruise ships has grown, but this is a tourism that generates little income in the country. If, in 2016, a foreign tourist spent on average $765, a cruise passenger would spend only around $50, according to a report from The Havana Consulting Group.

“This year is going to be very negative for Cuba, especially when you start to notice the fall in oil shipments from Venezuela, in remittances, and especially a very bad tourist season. Combining all these factors, the Cuban economy is going to experience a growth that is practically nothing, or maybe even negative,” predicts Amor Bravo, president of OCDH and also a university professor in Valencia (Spain) and author of the blog Cubaeconomía.

Nor will the sugar harvest be able to help improve the battered national economy, now that it can’t manage to overcome the downhill slope it has been traveling for years. In the sugar harvest of 2017-2018 the Island produced a little more than a million tons of raw sugar instead of the expected 1.6 million, a steep drop from the all-time high reached in the last century of 8 million tons (plus or minus).

For the economist Jorge Sanguinetty, who directs the Latin American Program in Applied Economics at American University and currently resides in Miami, the prospect of 1.5% growth for the Island is a realistic figure even though Cepal uses data provided by Cuban institutions to make their predictions.

“In any place where there are economic statistics, you know where your data is coming from and how it is calculated. In Cuba that is not the case. They only have large-scale estimates,” says Sanguinetty. This statement is shared by Amor Bravo, who points out that the Island does not have data to predict the behavior of the economy in the short term, which makes it difficult to make accurate predictions.

“Whatever the growth of the economy may be doesn’t mean that it is a growth in consumption. The economy can grow by 10% and the spending of the Government can absorb all the growth so that it is not reflected in people’s lives,” says Sanguinetty.

From Pinar del Río, where one must face the difficulties of real life every day, the independent economist Karina Gálvez confirms this perception: “The GDP is not just a number, it’s basically an indicator that should be reflected in the economy of families and should mean something in everyday life in people’s pockets.”

And, “with nominal salaries that leave people practically destitute,” adds Amor Bravo, private consumption, which is key to economic growth, cannot be stimulated.

Translated by: Sheilagh Carey


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