Miami publication creates new Cuba economic index

A woman purchases vegetables at a stand in Old Havana.
A woman purchases vegetables at a stand in Old Havana. AFP/Getty Images

A Miami-based publication says it is launching a new effort to measure Cuba’s economic pulse.

The Cuba Standard Economic Trend Index, compiled by a team of Cuba-born economists, will offer a monthly outlook on Cuba’s economy by using an “independent measurement,” according to a statement released last week.

Organizers say the index will fill the “information gap” for potential investors, academics and others with an interest in Cuba’s economy, for which there are few accurate reports available. The only official data on the island’s GDP and economic development are released twice a year during sessions of Cuba’s National Assembly, or through partial reports issued by the National Information and Statistics Institute (ONEI), which are almost always months late.

The index measures five main categories: imports, exports, terms of trade, external funding and dependence on Venezuela.

According to preliminary calculations of the five main categories included in the index, the only one that shows improvement in 2014 are the terms of trade, mainly because of a 35 percent rise in the price of nickel, and a 4 percent rise in the price of sugar since the end of 2013. Cuba’s likely GDP growth for this year is estimated at 0.8 percent, according to the publication’s September report.

The calculations for the monthly index will be based on publicly available data, such as prices of goods and commodities in the international market, the transactions reported by Cuba's trading partners and statistics from international organizations.

“Cuba is quite a special place to do business,” said Johannes Werner, a Cuba Standard editor. “In almost every country there are measurements for how the economy is doing because there is timely information available. We are putting together information through unusual channels in order to make the forecast.”

Because all data used by CSETI come from outside sources — except the arrival of tourists to Cuba, the only monthly figures regularly reported by the ONEI — currencies such as dollars or euros are used, so the dual currency in Cuba does not affect the calculations, “which is an advantage,” said Pavel Vidal, who leads the CSETI’s economic team. He worked for Cuba's Central Bank and now teaches at the Javeriana University in Colombia.

However, Werner said the index is less accurate than similar measures in other countries because no data can be obtained on agriculture, manufacturing or investments other than through Cuban agencies. “We will try to overcome these gaps and make the index as reliable as possible despite the lack of information,” he said.

The new index has already attracted the interest of some investors, Werner said.

In a telephone interview from Colombia, Vidal explained that although some variables are not available, indirect estimates can be made from other key performance indicators, which if known, will capture trends.

The general terms of financing that Cuba receives through foreign banks can be obtained from an analysis of the LIBOR (the acronym for the London Interbank Offered Rate, a benchmark rate that some of the world’s leading banks charge each other for short-term loans) and the country risk rate imposed on Cuba — that is, the premium you must pay to borrow on markets — Vidal said.

But information about preferential agreements with partners such as China, Russia and Venezuela is restricted, although it is possible to know the volume of trade with these countries. “If there are more imports than exports, one can assume that Cuba is getting some sort of financing,” he said.

“Creating this index takes a fairly complex statistical process usually performed by the central banks of the countries and the Federal Reserve in the United States,” Vidal said. “The ONEI would be better at building an index like this. It has all the data but does not handle it publicly.”

Follow Nora Gámez Torres on Twitter @ngameztorres.

Related stories from Miami Herald