Against the threat of stagnation

After achieving the lowest GDP increase of the last six years, the government aims to boost the economy’s growth to more than four per cent in 2015.

The government is pinning its hopes of a more solid economic growth in 2015 on the reanimation of investments.

The Cuban economy is shaking off the dust of three years of frank slowdown and aims to recover a more solid growth rate through the injection of a strong investment activity, among other factors.

Government Vice President and Economy Minister Marino Murillo this week announced to the rest of the ministers and high-ranking executives of the country that “a slightly higher than four per cent increase of the GDP (gross domestic product) is being planned for 2015, with which the previous moderate rates will be reverted.” In this year about to conclude, the economy would close with a 1.3 per cent increase, a decimal point less than the forecast announced at the close of the first semester, when it was practically at a standstill – 0.6 per cent. The annual data, however, was almost a percentage point below the plan announced a year ago.

The GDP’s growth is the lowest of the last six years, a period during which that indicator rounded off an average growth of 2.3 per cent.

The official report of the recent meeting of the Council of Ministers did not present the reasons for the annual decline, but in mid-year the authorities had reported on the notorious decreases in the manufacturing industry, foreign incomes lower than previewed, adverse climate conditions and “domestic insufficiencies that our economy is still facing.” The investment activity in particular did not meet its plan due to the traditional late delivery of works, the deficit of labour force, its low productivity, the lack of culture in terms of contracts and the inability to efficiently execute foreign financing.

However, one of the areas where the government is now planning stronger reactions is precisely in investments. Murillo announced plans to achieve 7.159 billion pesos in that activity, 1.595 billion more than the estimated amount in 2014. “Productive investments stand at 57.1 per cent and those of infrastructure at 17.7 per cent,” said the economy minister when referring to the plans.

Though the report does not allude to foreign investments and government agreements with other countries, the approval early this year of the new Foreign Investment Law is an important antecedent for the expectations for 2015. In addition to the legal norm there is the work undertaken by the Mariel Special Development Zone to attract foreign capital and the approval by the government of a policy that grants greater importance to the participation of foreign firms for national development.

The plan also previews a reanimation of the manufacturing industry, while it aims to “maintain the basic social services at similar levels to those of recent years.” Other sectors in which a more solid dynamism is expected for 2015 are construction, commerce, forestry, agriculture and livestock.

The greater harvests it forecasts in the rice, bean and maize crops, basic in the Cuban diet, will contribute to reducing the purchase of those foodstuffs on the international market. But, compared to this, the government is planning higher imports of wheat flour and soy beans, wheat and potatoes for seed. To balance this, it previews spending next year 2.194 billion dollars to acquire foodstuffs in foreign markets, representing 137 million dollars more than in 2014.

Regarding the labour policy, always sensitive and subject to important transformations for some years now, the economy minister reported that 2014 concluded with a two per cent employment rate above the planned amount, fundamentally due to the expansion of the non-state sector. It would maintain a similar course next year with a 2.6 per cent reduction in state jobs and 7.4 per cent growth in non-state employment, on account of the development of new forms of management in gastronomy and services.

Meanwhile, the average wage grew 9.1 per cent, a tendency that the official said was due to the wage increases applied in the health and sports sectors, as well as in foreign investment during the last quarter of the year. The government did not give forecasts in terms of wages, but left a door open and numerous interrogations due to the approval in mid-2014 of a regulation, Resolution 17 of the Labour and Social Security Ministry, to implement with greater flexibility the payment by results in the business sphere.

The ministerial meeting also evaluated the performance of the State Budget in 2014 and the proposal for next year that it will present at the end of the year to the National Assembly of people’s Power.

The deputies will also have the opportunity to analyse the process of economic transformations. Giving a preview of the subject at the Council of Ministers meeting, Murillo ratified that “the most important task of the period has been preparing the conditions for the elimination of the double currency,” one of the measures that have generated today among the Cuban population the most expectations and even concerns. (2014)

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