Report says Cuban economic growth hasn’t quickened despite reforms

Cuba said Monday its economy will grow by no more than 3 percent this year, about the same as in 2012 but far short of the 3.6 percent goal and another indication that ruler Raúl Castro’s reforms are generating little new economic activity.

Castro, nevertheless, seemed pleased with the reports on his reforms submitted Friday to a meeting of the Council of Ministers and detailed in a story Monday in Granma, the official newspaper of the ruling Communist Party.

“We continue advancing and the results can be seen. We are moving at a faster pace than can be imagined by those who criticize our supposed slow pace and ignore the difficulties that we face,” he was quoted as saying at the meeting.

Since succeeding older brother Fidel in 2008, Castro has allowed more private enterprise and cut state payrolls and subsidies. But many economists have dismissed his reforms as too slow and too weak to rescue Cuba’s Soviet-styled economy.

Minister of the Economy and planning Adel Yzquierdo told the Cabinet meeting that he expects Gross Domestic Product will grow by between 2.5 and 3 percent, far short of the 3.6 percent goal. The country’s GDP grew by 3 percent last year.

GDP growth for the first half of this year was estimated at 2.3 percent, compared to 2.1 percent for the same period last year, he added. Cuba uses a unique way of counting GDP that exaggerates the number when compared to other countries.

Yzquierdo blamed the shortcomings on a broad range of factors that went from last year’s Hurricane Sandy — it caused an estimated $2 billion in damages — to what Granma called “the deficiencies that are part and parcel of the Cuban economy.”

Granma and Yzquierdo ticked off a list of reasons for the economic stagnation, from delays in projects to broken contracts and “the low productivity and shortage of the labor force” as well as the economic situation in Latin America and the rest of the world.

Spending on social services remained stable for the first semester of this year, Yzquierdo declared, and many parts of the economy grew at a 2.9 percent clip or better. But the sugar harvest fell 192,000 tons short of goal and bean production fell 6,000 tons short.

Government spending on construction and other capital projects was 16.6 percent higher than in the first semester last year but 9 percent short of goal because of delays and others issues, the minister said.

Exports grew by 5 percent, Granma reported, and lower prices on imported food meant savings of $168 million. But shortcomings in Cuban farming forced the government to import an unplanned $46 million worth of food. Cuba must import more than 70 percent of the food items it consumes, at a cost of more than $1.5 billion a year.

Underlining Cuba’s economic stagnation, Vice President Marino Murillo, in charge of implementing the Castro reforms, told the Cabinet that the government will “promote” the use of bicycles to cover gaps in public transportation, according to Granma.

“We will evaluate the sale at cost of parts for their maintenance,” Murillo was quoted as saying in the lengthy Granma report summing up the Cabinet meeting.

The government sold Cubans more than 1 million bicycles, most of them made in China, after the Soviet Union collapsed in the early 1990s and halted it massive cash and oil subsidies to the communist-ruled island.

But by 1996 about one-third of Havana residents had stopped using their bikes because of the lack of spare parts, the bad state of Cuba’s streets and lack of night lights, according to a report in 2011 by the Agence France Press news agency.

The AFP report noted that Havana authorities had already decided to cut the price of spare parts by 30 percent, guarantee the work of 105 repair shops and 110 air pumping stations and try to create about 100 miles of bike lanes.

Murillo also listed a series of problems with the public transportation system — bus passengers not paying their fares and bus company employees stealing the money, and a black market for fuel and spare parts mostly stolen from state enterprises.

The government plans to use plastic cards to control fuel purchases by public transport employees — the principal source of black market fuel — crack down on the theft and offer higher salaries to sector workers, he said, without raising prices.

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