Cuba Faces Economic Challenges  

Cuba is facing economic challenges. First, certain economists are projecting difficult economic times for 2017.[1] Second, ordinary Cubans already are facing difficulties finding basic foodstuffs.[2]

Carmelo Mesa-Lago, an economist and professor emeritus at the University of Pittsburgh, said, “The short-term prospects are not good.” If in 2015 Cuban GDP (Gross Domestic Product) grew 4.4%, “projections [for 2016] are of stagnation or slight decline, and a far greater fall next year.”

He said the economic reforms initiated by Raúl Castro are positive, but that they are “extremely slow. We are now in 2016, nine years since reforms began in 2007, and there have been tangible effects on the economy,” but there is a “need to find quick and accurate solutions . . . [to] accelerate the pace of the key changes.” For example, Mesa-Largo said, the development of the non-state sector “authorized only . . . generally unskilled jobs, [with] extremely low productivity.”

The other economist, Omar Everleny Pérez Villanueva, stated the Cuban economy will only grow an estimated 0.4% in 2016 and decline -2.0% in 2017. “Cuba must make major changes in its economy to rapidly overcome its structural problems in 2017.” He believes it is necessary for Cuba to develop small and medium enterprises, increase wages, allow foreign investment and accept portfolio investments (with the issuance of fixed income securities (bonds) and equity (shares)).”

On a personal level, ordinary Cubans have great difficulty in finding food to eat, due in part to increased competition for food supplies to feed the increasing number of foreign tourists who can pay more for food.

A U.S. journalist reports that the tourists’ “surging demand for food has caused] ripple effects. . . .Tourists are quite literally eating Cuba’s lunch. . . . [G]oods that Cubans have long relied on are going to well-heeled tourists and the hundreds of private restaurants that cater to them, leading to soaring prices and empty shelves. . . . Without supplies to match the increased appetite, some foods have become so expensive that even basic staples are becoming unaffordable for regular Cubans. . . . Rising prices for staples like onions and peppers, or for modest luxuries like pineapples and limes, have left many unable to afford them. Beer and soda can be hard to find, often snapped up in bulk by restaurants.”

To meet this immediate need for more food in Cuba, this blog has proposed that Cuba impose a requirement that all arriving airlines and cruise ships deliver to the Cuban government set quantities of certain foodstuffs.

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[1] The economic challenges of the island by 2017 according to two experts, Diario de Cuba (Dec. 13, 2016)

[2] Ahmed, Cuba’s Sure in Tourism Keeps Food Off Residents’ Plates, N.Y. Times (Dec. 8, 2016); Severson, For Cuban Home Cooks, Ingenuity and Luck Are Key Ingredients, N.Y. Times (May 17, 2016).

 

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dwkcommentaries

As a retired lawyer and adjunct law professor, Duane W. Krohnke has developed strong interests in U.S. and international law, politics and history. He also is a Christian and an active member of Minneapolis’ Westminster Presbyterian Church. His blog draws from these and other interests. He delights in the writing freedom of blogging that does not follow a preordained logical structure. The ex post facto logical organization of the posts and comments is set forth in the continually being revised “List of Posts and Comments–Topical” in the Pages section on the right side of the blog.

6 thoughts on “Cuba Faces Economic Challenges  ”

  1. Cuba’s Tourism Sector Projects Successful 2016 and 2017

    Granma reports that in 2015 tourism on the island generated over $2.8 billion, making it the second largest economic sector for the island. In 2016 (through October) tourist visitors were up 12% with 3.7 million foreign tourists projected for the entire year and 4.1 million for 2017.

    There now are 65,000 hotel rooms and 17,000 privately-run Bed and Breakfasts on the island. The article also states, “By the end of October 2016, there were a registered 3,138,000 B&Bs on the island,” There was no explanation of this apparent inconsistency.
    ====================
    González Cuba’s dynamic tourist sector in 2016, Granma (Dec. 14, 2016), http://en.granma.cu/tourism/2016-12-14/cubas-dynamic-tourist-sector-in-2016

  2. Cuba’s Economic and Political Challenges for 2017

    The Associated Press emphasizes this post’s assertions that Cuba faces major economic challenges in 2017. It states that in 2017 Cuba “faces what could be [its] toughest year since [Raúl Castro] took power in 2006:”. . . a possible economic recession and a U.S. president-elect who has promised to undo Obama’s normalization unless the Cuban government makes new concessions on civil rights.”

    The anticipated economic growth of less than 1% for 2016 is evidence of the many problems facing Cuba that will continue next year: “long-term mismanagement of the Cuban economy;” Venezuela’s sharp declines in exports of subsidized oil to the island and imports of Cuba’s medical services; low world prices for nickel, a major Cuban export; and lower productivity in Cuba’s few domestic industries resulting from “cutbacks in imported industrial inputs this year.”

    Next year also is the time for planning for the political transition from Raúl Castro’s presidency to a successor, “widely expected to be Miguel Diaz-Canel, a 56-year-old official with neither the Castro name nor revolutionary credentials.” According to Pavel Vidal, a Cuban economist at the Universidad Javeriana in Cali, Colombia,”Raul Castro’s government has a year left and it should be planning what needs to be done. Above all, it will be managing a crisis.”

    Assoc. Press, Cuban President Raul Castro Faces Deep Problems in 2017, N.Y. Times (Dec. 26, 2016), http://www.nytimes.com/aponline/2016/12/26/world/americas/ap-cb-cuba-year-of-uncertainty.html?_r=0

    Cuba’s Economic Ties with Venezuela Are Fraying, dwkcommentaries.com (Dec. 15, 2016), https://dwkcommentaries.com/2016/12/14/cubas-economic-ties-with-venezuela-are-fraying/

  3. Cuban Government’s Bleak Economic Assessment for Cuba

    On December 27, Cuba’s President, Raúl Castro, told the country’s legislature, the National Assembly, that Cuba’s economy shrank 0.9% in 2016, but that “we hope that gross domestic product (GDP) will grow moderately, by around 2 percent (in 2017)” even though “financial tensions and challenges that might intensify again in certain circumstances will persist.” (Emphasis added.)

    For the last half of this year, he said, “Restrictions in cash and in the provision of fuel worsened.” This comment after 1% growth in the first half of the year and the nearly 1% annual decline of the economy is an understatement. Instead Reuters opined Castro’s speech “suggests sharp economic contraction in the second half after the cash-strapped government slashed imports, investment and fuel in response to lower exports and a drop in cheap oil deliveries from Venezuela.”

    Still, the long slump in global fuel prices is hurting many of Cuba’s top trading partners such as Angola, Venezuela and Brazil, and revenue from the sale of professional services to those countries has dropped. Most importantly Cuba’s “key ally Venezuela has slashed its provision of cheap oil and the drop in global commodities prices is punishing Cuban exports of nickel, refined oil products and sugar.”

    Castro also said it was necessary to “overcome the obsolete mentality, full of prejudices towards foreign investment. We are not going towards capitalism, but we cannot be afraid of, or put obstacles in the way of, that which we can do within our laws.” Such investment in the energy sector was key, he said.

    The National Assembly also was addressed by Ricardo Cabrisa Ruiz, the Minister of Economy and Planning. He blamed the slump on Venezuela’s troubles and a decrease in revenue from Cuba’s few exports, which include sugar, refined gasoline and nickel, whose price has dropped in recent years. The Minister also said the number of contracts with Venezuela for Cuban professional medical services has dwindled and some Venezuelan payments for these services have not been made.

    Minister Cabrisa said the highest growth rates for next year are expected in the sugar industry and tourism (hotels and restaurants) while increases also are expected in the transport, storage, communications, gas and water supply, agriculture, forestry, trade and manufacturing industries.

    Raul Castro: The best monument to Fidel is to realize the concept Revolution (+ Photos and Video), CubaDebate (Dec. 27, 2016), http://www.cubadebate.cu/noticias/2016/12/27/raul-castro-el-mejor-monumento-a-fidel-es-hacer-realidad-el-concepto-revolucion/#.WGO1RrYrLj0

    Figueredo & Concepcion, After tense 2016, Cuba aims to grow by two percent in 2017, CubaDebate (Dec. 27, 2016), http://www.cubadebate.cu/noticias/2016/12/27/tras-tenso-2016-cuba-aspira-a-crecer-un-dos-por-ciento-en-2017/#.WGOzVLYrLj0

    Raul: We will not go to capitalism, that is totally rules out, Granma (Dec. 27, 2016), http://www.granma.cu/cuba/2016-12-27/raul-no-vamos-ni-iremos-al-capitalismo-eso-esta-totalmente-descartado-27-12-2016-16-12-40

    Reuters, Cuba Says Economy Shrank This Year in Tandem With Venezuela Crisis, N.Y. Times (Dec. 27, 2016) http://www.nytimes.com/reuters/2016/12/27/world/americas/27reuters-cuba-economy.html

    Assoc. Press, Cuba Sees Economy Shrink 1 Percent Despite Détente with US, N.Y. Times (Dec. 27, 2016) http://www.nytimes.com/aponline/2016/12/27/world/americas/ap-cb-cuba-economy.html

  4. Cuban Private-Ownership Sector Faces Dual Uncertainties

    The Wall Street Journal reports that small-business owners in Cuba are facing two major uncertainties: future government policies in the U.S. and in Cuba.

    With conflicting signals from a new Trump administration, U.S. policies seeking to normalize relations with Cuba are uncertain. The same is true in Cuba, as President Raúl Castro “has offered his country’s budding entrepreneur class no indication that he intends to press on with measures he began six years ago to ease the way for some private businesses.” As a result, “Cuba’s small businesses inhabit a fragile sector, . . . susceptible to policies on either side of the Florida Straits.”

    “Being an entrepreneur remains a daily struggle in Cuba, a country with a highly controlled economy and a government that frowns on the very idea of accumulating wealth.” For example, “restaurateurs scour Havana for ingredients, while mechanics look for parts. Permits and regulations are stringent, as the government purposefully keeps businesses from growing too large. Importing necessities is nearly impossible.”
    These dual uncertainties already are putting a damper on certain Cuban projects such as five of eight remodeling projects for a Cuban architect.
    ===================================
    Forero, Cuba’s Budding Private Sector Looks Nervously to Future, W.S.J. (Jan. 10, 2017) http://www.wsj.com/articles/cubas-budding-private-sector-looks-nervously-to-future-1484044230

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