The Cuban economy is identified by its openness; ie, depends heavily on imports and exports. In such a way, that condition makes it more vulnerable to international circumstances, mainly regarding the status of its closest trading partners.
According to José Luis Rodríguez, Advisor to the Research Center of World Economics (ICES), is a situation in which most countries recorded growth in 2013 below the previous year, confirming a downward trend.
This happened in Venezuela, the main destination and origin of Cuba’s foreign trade. Its GDP increased 5.6 percent in 2012; however, ended December with 1.2 percent, plus an internal inflation of 54 percent. “Without doubt, this has implications for all economic and social activity,” Rodriguez said.
The same applies to Spain, which again decreases over the past year, and during 2014 a small increase is expected. In the case of China, although it has a comparatively favorable rate (7.5 percent) also shows levels of deflation. To this we must add a change in its growth model oriented for a more domestic market and less investment, which implies a lower external demand for raw materials and fuels.
It has been said that the 2.7 percent increase in Cuban GDP was lower than expected and estimates for 2014 are even smaller, about 2.2 percent. According to the specialist, the main impact here is due to the decline in external revenue. For example, exports of goods, nickel declined in volume, due to the closure of the “René Ramos Latour” plant in Nicaro (Holguín), while there was a sharp fall in prices, by 17 percent.
Meanwhile, sugar prices declined 15.5 percent, and while domestic production volumes grew, the established plans were not met. In this regard it should be mentioned the timid growth in tourism, 0.5 percent, and other background factors such as losses of 7 billion dollars to Hurricane Sandy, in 2012.
Rodriguez said that this year the analysis indicates an upward movement at different scales for both sugar and nickel. It is also expected to lower the price of fuel, a phenomenon with beneficial consequences, if we talk about imports, but with adverse implications for exports of petroleum, one of the first Cuban 5 items for the foreign market. “We have to see to what extent an effect may offset the other,” he says.
It is also expected a takeoff on tourism, from 13 per cent higher than reported in January, and remains the desired goal of 3 million visitors, despite a marked seasonality that causes uncertainty. As for the export of medical services, the presence in Brazil and Ecuador brings new revenue.
Another aspect is of significant importance is with regard to the external debt with Japan, Russia and Mexico. “Cuba has done two things: renegotiating with favorable process in 2013, and paying the already renegotiated debt. This has a positive impact in terms of credibility, but another negative for liquidity; paves the way for further negotiations and agreements, but also need to meet these commitments, “Rodriguez says.
Completing this stage the revival of foreign investment in the country, with emphasis on the new law that will govern that activity from its upcoming entry into force, and the Special Development Zone Mariel; with remittances, of which all the estimated yield increasing numbers each year, with the difference only, not intended for consumption, but as capital to the private sector.
Aside from the complex international situation, Professor Juan Triana, the Center for the Study of the Cuban Economy, sees possibilities. “Crises have a great virtue, and force us to change, like it or not. The story of the crisis is also the story of the success of many countries that have managed to substitute others in their position in the global market. “
Thus Latin America and the Caribbean, as “natural environment” of the island, offer significant advantages. Triana thinks Cuba has not been able to take advantage from the economic point of view of political spaces made in the continent, for example, the ALBA and CELAC.
Something similar happens with the Latin American Integration Association (ALADI by its Spanish acronym), in which has exploited only some tariff preferences, industrial and trade of intermediate goods; nor are there free trade agreements and economic complementation for the liberalization of services.
“Within the policy of the country is explicit the need to diversify our business partners. I think what is going on with Brazil at the moment is a clear indication of the intentions and policies aimed at it. “
Authors
Eileen Sosin Martínez,
eileen
