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Posted May 18, 2009 by publisher in Business In Cuba

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Rob Sequin | Havana Journal

This article below, although well written, deserves much criticism due to the fact that Cuba does not adhere to international accounting practices so their “growth” projections are always very subjective. Of course since there is no independent media in Cuba and since everyone works for the government, none of the statistic or projections can ever be challenged or verified. So, just because this “think tank” is projecting a down turn, it doesn’t mean anything either other than they the downturn is relative to the growth assuming that they at least use the same criteria regularly which, again, there is no way of knowing.

Since there are so many points that I would like to make regarding this article, I will comment in the story in bold print below. Feel free to comment below the article.

By Marc Frank | Reuters

A Cuban university think-tank said on Monday Cuba’s economy would grow only slightly or shrink in 2009 as the island’s financial problems persist against the backdrop of a global downturn.

Not because of the US Embargo?

The forecast followed increasingly strident warnings in recent weeks in Cuba’s state-run media that Cubans must tighten their belts and work harder to confront the impact of the international financial crisis.

The Cuban people are working full time to get food and basic necessities of life. When they have some free time, they work for the government.

“Our forecast (for 2009) is for growth to be around 1 percent,” said an economist at the Center for the Study of the Cuban Economy who requested anonymity.

“But it could fall anywhere between a range of negative 0.5 percent and positive 2.5 percent,” he said. (because we make up the numbers anyway)

Unlike other economic think-tanks which depend on government ministries in the communist-run nation, the Center for the Study of the Cuban Economy is attached to Havana University. (which is run by the Cuban government)

The forecast by the center, whose projections have been more accurate than those of the government in recent years, was the latest sign that after four years of strong growth the Cuban economy was in serious decline.

I agree that the Cuban economy may have been relatively strong due to high nickel prices and increasing tourism but now, due to very low nickel prices, less number of tourists (but of course you won’t hear that from Cuba), three hurricanes last year and a global credit crisis, the Cuban economy will suffer badly. There is no way the Cuban government can make all that smell like a rose, not even to the most brainwashed Fidelistas in Cuba.

Foreign businessmen and diplomats have been complaining they are not getting paid by the Cuban government, while banks have warned they have very little foreign exchange in hand.

Yikes, that doesn’t sound good.

On Monday, the ruling Communist Party’s newspaper, Granma, repeated warnings that Cubans were using too much energy and that electricity blackouts to cut consumption were imminent.

Now that’s funny! Cubans using too much energy? Most Cubans barely have any electricity. How insulting to the Cuban people, really.

“The spendthrift mentality that persists in many of us, as if nothing was happening around us, has become more intolerable in these moments,” it said in an editorial.

And this is hilarious. Really? The Cubans have a “spendthrift mentality”?

Cuba’s government has projected growth of 6 percent this year but cautioned that the international climate was too unstable to make a solid prediction.

The Havana University better get on board with the Cuban government’s estimates otherwise there won’t be a Center for the Study of the Cuban Economy much longer or at least Raul will swap out the Director.

EXTERNAL, INTERNAL FACTORS

Last year, Cuba’s economy, as measured by the gross domestic product, grew 4.3 percent, less than the study center’s forecast of 5.1 percent and well below the government’s original prediction of 8 percent. 

In 2007, the center said growth would be 8 percent, compared with the government’s 10 percent, and in the end GDP increased 7.3 percent.

Pavel Vidal, an economist at the center, recently wrote in an article for International Press Service that growth would be down this year due to both external and internal factors.

No Pavel. Not internal factors? How can that be? Cuba’s problems are due to the Embargo and capitalism. Fidel, you better write a Reflection to say that Pavel’s statements have been “misunderstood” by the media.

He said Cuba would continue to suffer the effects of last year’s dramatic increase in the trade deficit, which rose 70 percent due to high prices for imports and low prices for nickel, Cuba’s main export.

While Cuba’s difficulties were compounded by the global financial crisis and three hurricanes that caused widespread damage, he said Cuba also suffered from low productivity and little diversification of exports.

Cuba has greatly increased “service exports,” especially to Venezuela where thousands of doctors and other personnel are working, but the income has little multiplying effect inside the island, he wrote.

“little multiplying effect” because the doctors don’t get paid much money for their work. Their work is traded for oil from Venezuela.

In 1991, the collapse of the Soviet Union, Cuba’s biggest benefactor at the time, cut off Soviet subsidies to the island and sent the Cuban economy into a tailspin from which it took years to recover. Electricity blackouts were common then. (Editing by Jeff Franks and Cynthia Osterman)

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