Cuba turns back economy’s slowdown

The government expects to close 2015 with a 4 per cent GDP growth, after it ended last year with a minimum one per cent. The first signs are beginning to show in the first semester with a 4.7 per cent.

Las inversiones vuelven a acumular atrasos en el primer semestre.

Foto: Jorge Luis Baños

After several years of continuous economic slowdown, the Cuban government revealed during the Parliament session that concluded on July 15 a more solid reaction of the economy in 2015, despite the reiterated inefficiencies in investments and the already usual delays in the import of equipment and other resources.

Economy and Planning Minister Marino Murillo Jorge reported that the gross domestic product (GDP) grew 4.7 per cent in the first semester, a more precise data than the one announced weeks ago and another sign of a possible end to the increasingly greyer streak of previous years; in 2014 the economy registered a minimum increase of one per cent.

 

At the end of 2015 the GDP would close with a growth “of around 4 per cent,” President Raúl Castro told the deputies. “The tendency toward the slowing down of growth has certainly been turned back,” he commented.

 

The annual result can be even bigger, judging by the usual tendency of the Cuban economy, which in the second semester usually accumulates a greater profit due to the recovery of the delays of the first half of the year. This 2015 it will follow the same line.

 

Murillo said that from July to December 66 per cent of the investments must be executed. He admitted that “the figure is not too high.” It is a reflection of the inefficiencies and delays in the arrival to the country of equipment and resources previewed in the plan. That deficiency in planning also affected the sugar harvest. To compensate for the delay, a meeting of the Council of Ministers held before the parliamentary session decided to use means of transportation and construction equipment from the State Reserve. It also agreed “to bring forward the contracting of the equipment initially considered in the plan for 2016,” the Cuban president announced. The measures could speed up the investment activity in the next months, with the subsequent effect on the economy’s general indicators.

 

Cargo transportation is one of the activities with the most serious failure to comply with the plan, according to the analyses of the National Assembly of People’s Power. The railroad system and the truck companies failed to transport 700,000 tons from January to June, a non-compliance that should reach 1.9 million at the close of the year. In general, however, transportation grew 6.5 per cent during the semester.

 

The production of material goods is faring better. According to Murillo’s report, “it is what most contributes today to the semester’s GDP growth.” The agriculture, livestock and forestry sector is growing 4.8 per cent; the sugar industry 22.6 per cent, though it did not honour its commitments; the manufacturing industry 8.6 per cent. Other activities that are growing are construction (8.7 per cent), commerce and the repair of personal effects (6.3 per cent), and public health and social assistance (4.6 per cent).

 

Despite these advances, the country is weathering tensions in hard currency liquidity. Though the government expects to close the year with a positive result in the foreign trade balance, Murillo said that the results will be inferior to the plan, among other reasons because of the international drop in the price for Cuba’s principal exports. This is negatively combined with the devaluation of currencies like the euro, with which the country usually operates. The U.S. economic blockade sanctions the foreign banks that handle Cuba’s accounts in U.S. dollars.

 

Export losses were mitigated by savings in food imports. The economy minister and vice president of the Council of Ministers told the deputies that the purchase of food had decreased by 174 million dollars. The commercial credits saved for this concept will be devoted to the import of other foodstuffs like rice. This cereal, fundamental in the Cuban food basket, does accumulate a deficit in national production.

 

The country plans to purchase another 50,000 tons of rice from Vietnam due to the national harvest’s failure to meet the plan, “in which the issue of water has had an influence,” Murillo said. Raúl Castro also referred to the intense drought currently affecting the country and insisted on “the need for a rational use of this vital resource.”

 

On the day this session of the National Assembly concluded, the water collected in the country’s reservoirs was only 36.1 per cent of the national capacity, below the 38 per cent available at the close of June. The seven provinces with the most unfavourable scenario included the three that support the main Cuban rice production: Granma, Sancti Spíritus and Pinar del Río. The others most affected are Guantánamo, Santiago de Cuba, Las Tunas and Ciego de Avila. (2015)

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