Investment, freight declines reflect Cuban woes
Wed Sep 8, 2010 12:14pm EDT
* Investment down 14.7 percent through June
* Freight traffic down 12.2 percent through June
* Critics say reform too slow
By Marc Frank
HAVANA, Sept 8 (Reuters) – Cuban investment and freight transportation
fell significantly through June as the Caribbean nation grappled with a
two-year old financial crisis and recession, according to government
reports released this week.
The National Statistics Office (NSO) reported that all investment, in
foreign currency and local pesos, fell 14.7 percent from January through
June and freight traffic 12.2 percent, compared with the same period in
Investment was reported down across the board, from construction to the
purchase of machinery and agricultural inputs.
Investment fell just over 15 percent in 2009 and freight transportation
5 percent, according to the government.
Cuba does not release overall performance data until the end of the
year, but the statistics office (ONE.CU) had reported earlier that
manufacture stagnated and food production fell 7.5 percent through June.
Local economists say import-dependent Cuba's economic performance has
always been tied to the level of supplies purchased abroad the previous
With further reductions in spending in place for 2010, Cuba's economic
problems will likely continue for a while, they said.
The declines follow severe budget cuts and a reduction of more than $5
billion or 30 percent in imports last year as Cuba fought off the
effects of the international financial crisis, hurricanes, policy errors
and the long-standing U.S. trade embargo against the communist-led island.
Economic growth has fallen from 7.3 percent in 2007 to 4.1 percent in
2008 and 1.4 percent last year, according to the government.
LIVING WITHIN ITS MEANS
President Raul Castro, who took over for his brother Fidel Castro in
early 2008, replaced his economic cabinet last year and declared the
country had to live within its means and improve efficiency.
Castro has warned of hard times throughout the year even while promising
to modernize the Soviet-style economy, the last on the planet except for
He announced last month that as much as 20 percent of the state's labor
force, or 1.2 million people, would be let go or transferred over five
years and said he would allow more family businesses and private hiring
to pick up part of the slack.
"We have to erase forever the notion that Cuba is the only country in
the world in which people can live without working," he said.
Castro's critics at home and abroad have repeatedly warned he has been
too slow off the mark with needed changes.
He has undertaken a series of reforms in agriculture, from leasing
fallow state land to loosening the state's straitjacket on farmers'
purchase of supplies and sale of their produce.
Similar reforms began this year in the retail sector where some minor
services were leased to employees, more licenses to peddle food granted
and cooperatives planned.
Modernization will also include warming up to foreign investors, local
analysts believe, with the government recently extending from 50 years
to 99 years the amount of time they can lease land. (Editing by Jeff
Franks and Jerry Norton)