Cuban Economy Update,

[El Presidente]

 

 

https://www.reuters.com/world/americas/cuban-economy-minister-says-no-quick-fix-devastating-crisis-2023-07-22/

Cuban economy minister says no quick fix to devastating crisis

By Nelson Acosta

July 23, 20234:39 AM GMT+10Updated 3 hours ago

 

People wait in line to enter a store in downtown Havana, Cuba, October 3, 2022. REUTERS/Alexandre Meneghini/File Photo

HAVANA, July 22 (Reuters) - Cuba's economic growth is less than 2% this year and remains 8 percentage points below pre-pandemic levels, while production in sectors such as agriculture, mining and manufacturing was further behind, Economy Minister Alejandro Gil said on Saturday.

Speaking before the country's parliament, Gil said the primary sector, which includes agriculture, mining and other basic production, was down 34.9% compared with 2019, while manufacturing was off 20%. A third sector that includes services such as tourism, communications and education was down 4.9%.

Cuba, heavily dependent on food, fuel and other imports, largely blames U.S. sanctions and the coronavirus pandemic for more than a 50% decline in its export earnings, which are needed to purchase imports, while admitting that market-oriented reforms have moved too slowly in the Communist-run country.

Gil said export earnings so far this year were $1.3 billion, 35.7% of what had been expected, while imports were $4.4 billion, also well below the Cuban government's forecast.

The minister said inflation was raging at a 45% clip this year, on top of last year's 39% jump, a figure many economists say underestimates the rate as it does not adequately account for a growing informal market driven by scarcity.

Cuba has resorted to increased price controls to slow inflation, with little success to date, while conceding that other factors are driving up prices, such as low productivity and output.

"If there is no supply and production, we will not achieve effective price control," Esteban Lazo Hernandez, the president of Cuba's parliament, said during a session earlier this week.

Gil said the crisis, which has left residents reeling, protesting and leaving the island nation, was "complicated," but he added that the government was working on solutions.

"The gradual recovery of the Cuban economy has not yet reached the necessary pace," he said. "Growth (this year) is very light at 1.8% and also asymmetric. In other words, it does not occur in productive sectors."

Additional reporting by Marc Frank; Editing by Paul Simao

[Corylax18]

Weird. I thought selling everything to Russian gangsters was going to solve the problem. I'm stunned that hasn't generated any dividends yet...............

[SCgarman]

I thought the $2,000/box for larger Cohiba and $700/box Montecristo #2 would have them "rolling in the dough". You mean to tell me the new business model isn't working? Blimey!!

[01Vert]

Sad part is that they will double down with the new scheme and increase prices while cutting production again and again.  Then when they lose more total sales income they will blame it on sanctions rather than a failed business model.  

[BoliDan]

Surely they're managing all that income from China and Russia to support farmers and means of production. 

[Corylax18]

4 hours ago, 01Vert said:

Sad part is that they will double down with the new scheme and increase prices while cutting production again and again.  Then when they lose more total sales income they will blame it on sanctions rather than a failed business model.  

To be clear, the government isn't cutting production intentionally. The steady decline in Cuban productivity is a result of decades of neglect from the Cuban government. Its the result of the military and top level politicians skimming every penny they can and putting it their own pockets. Its the result of actively avoiding even the potential for private sector growth or profitability in the name of "socialism". 

We can use cigars as an example, but the same basic lack of inputs is affecting the entire economy. Cigar factories don't have enough water, electricity or trained workers to reach anywhere near their capacity. The structures are old, falling apart and unmaintained. Farmers don't have enough gas to run their tractors or even generators to irrigate crops. They don't produce any of their own fertilizers and don't have the currency to import any. They don't have the trucks or again, the fuel, to pickup the tobacco that is grown, or to truck the tobacco to the stripping/sorting warehouses, or into the factories in Havana. They don't have the capability to make most of their own packaging or the money to import it from other countries. Tourism (and the flights that result) are still a small fraction of what they where, so even when they do manage to roll and package a few cigars, it costs more and takes longer for them to reach buyers. 

The entire system is decrepit and continuing to decline. The people in charge don't know what they're doing and if they did, they would just pocket any gains that where generated. Its been a long, slow decline since 1959. 

[SCgarman]

10 hours ago, Corylax18 said:

To be clear, the government isn't cutting production intentionally. The steady decline in Cuban productivity is a result of decades of neglect from the Cuban government. Its the result of the military and top level politicians skimming every penny they can and putting it their own pockets. Its the result of actively avoiding even the potential for private sector growth or profitability in the name of "socialism". 

We can use cigars as an example, but the same basic lack of inputs is affecting the entire economy. Cigar factories don't have enough water, electricity or trained workers to reach anywhere near their capacity. The structures are old, falling apart and unmaintained. Farmers don't have enough gas to run their tractors or even generators to irrigate crops. They don't produce any of their own fertilizers and don't have the currency to import any. They don't have the trucks or again, the fuel, to pickup the tobacco that is grown, or to truck the tobacco to the stripping/sorting warehouses, or into the factories in Havana. They don't have the capability to make most of their own packaging or the money to import it from other countries. Tourism (and the flights that result) are still a small fraction of what they where, so even when they do manage to roll and package a few cigars, it costs more and takes longer for them to reach buyers. 

The entire system is decrepit and continuing to decline. The people in charge don't know what they're doing and if they did, they would just pocket any gains that where generated. Its been a long, slow decline since 1959. 

Things have definitely devolved there badly in the past couple years. Titanic managed to stay afloat longer than possible, but she (Cuba) is quickly headed to the bottom of the ocean floor. No doubt about it.