Ricardo Torres

Ricardo Torres

Doctor en Ciencias Económicas por la Universidad de La Habana. Profesor auxiliar e investigador del Centro de Estudios de la Economía Cubana (CEEC). Diplomado en Econometría por la Universidad de la Universidad de La Habana y Máster en Economía por la Universidad de la Habana.

Photo: Otmaro Rodríguez

Cuba’s economic puzzle and the pandemic

The COVID-19 health emergency has economic implications for all countries, but its impact isn’t symmetrical. Although it is a typical characteristic of developing countries, the Cuban economy is very sensitive to the availability of foreign exchange, on which imports depend. External purchases are key to sustaining consumption and production. A crisis of these proportions can only worsen the already precarious state of the island’s balance of payments. The blow will be resounding. The International Monetary Fund (IMF) predicts a 6.1% drop in GDP in developed economies. The World Trade Organization (WTO) anticipates a decline in trade of up to a third. The Economic Commission for Latin America and the Caribbean (ECLAC) forecasts a 5.6% drop in production in the region. These figures are much worse than in the 2009 recession. At the sectoral levels, tourism and aviation are among the most affected. The World Tourism Organization (UNWTO) advances a severe collapse in travel. For now, the European Union plans to keep the community borders closed until September. The economies most dependent on the sector will suffer a higher impact, including the Caribbean and, of course, Cuba. The economic impact The island’s productive activity had been slowing down markedly since 2016....

Photo: Otmaro Rodríguez.

Cuban economy in the face of COVID-19

The Cuban economy was already showing a bleak picture before the start of the current epidemic. Productive activity had been slowing down markedly since 2016. Average annual economic growth in the 2010-2015 period was 2.7 percent, while it dropped to 1.4 percent between 2016 and 2019. This situation was due to factors such as the economic crisis in Venezuela (main trading partner), the cancellation of contracts for providing medical services (Brazil), the end of the boom in tourism, the limits and contradictions of the domestic economic reform, and the accumulation of new U.S. sanctions. The latter have had a negative impact on several key areas, from trade and foreign investment, to visits by Americans. In 2019, new punitive measures were adopted that affect the sending of remittances, the import of fuel and the activity of foreign companies that operate on the island. The appropriate pondering of one factor or another, and its precedence, continues to be a topic for extensive debate. Unfortunately, there is an intense politicization, which should be left out when considering different mitigation options by the Cuban authorities. For the average citizen, the clearest symptom of economic problems is the increasing shortage of products of all kinds,...

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The multiple “bottlenecks” of Cuban economic policy

It is an unfortunate fact that the debate and the ideas that end up dominating economic policy in areas of great importance do not seem to have moved to a higher level in terms of the issues and alternatives under consideration. Recent measures related to self-employment (SE) and non-agricultural cooperatives (NAC) confirm this. This has happened despite very advanced and balanced proposals from several groups of researchers, without the vast majority finding echo in the last steps, which can be described as limited (there, where there was progress), with clear and uncoordinated setbacks, not only with respect to the letter of the documents guiding the “updating”―it’s more difficult to speak of the spirit―but also to the new economic reality that has been taking shape since the beginning of 2019. The process has been more palliative and delayed, compared to its concrete contribution to unblock the multiple “bottlenecks” that persist. At the center of this apparent contradiction is the old question of how much is enough, in terms of the expansion of the non-state sector in Cuba. Enough would seem to be identified with boosting growth without compromising political stability, even without taking into consideration the “ideological purists” who maintain (and...

Photo: Kaloian

Where are we going?

The economy continues setting the pace for some of the most intense debates in the country's life. Since 2016, economic growth has been significantly moderate: the GDP’s growth rate increased from 2.7 percent per year in 2010-2015, to 1.5 percent between 2016 and 2018. In 2019 it is not expected to exceed 1 percent (ECLAC estimates it at 0.5%). The immediate causes are recognized in Venezuela’s economic collapse, the new U.S. sanctions, the economic break with Brazil, and low prices for some export products, and why not, the little success of the “updating” to boost the economy. The first half of 2019 began marked by the worst shortage of basic goods since the end of the most acute stage of the crisis of the early 1990s. Even the government itself warned that the situation could get worse in the following months. The low availability of fuel has affected public transportation in several provinces. Low growth is not new in the Cuban landscape. The truth is that Cuba does not grow what it should at its best time, and not only that, but now it does so with greater inequality. The short periods of bonanza have been, as a rule, associated...

Trade relations between Cuba and USA in a scenario of normality

After 52 years of commercial estrangement between Cuba and the United States without precedent in the modern world, in the political, academic and business communities of both nations become recurring at least two relevant questions. First, when will this unusual event end? There you can find all kinds of predictions, but since Barack Obama took office in 2009, hopes that the blockade has its days numbered have been fueled. The issue has many sides, but it is not the central issue of this paper. Instead, it comes to exploring the second question, equally far-reaching, what are the effects of this on the Cuban economy? The impact of this event extends in several directions, so particular attention will be dealt with only one of them: the trade. Ultimately Cuba, small island and developing economy, is and will always be very dependent on foreign trade for its economic development, so it is a variable of great importance for future prospects. To analyze this aspect is necessary to consider several premises that let you draw the context in which the various effects are checked. First, it pays to do a little history. It is well known that since the second half of the...