Drop in Sea-Borne Imports Reflects Cuba's Economic Crisis
- Submitted by: admin
- Business and Economy
- 09 / 08 / 2009
Cuba's sea-borne imports dropped by nearly two-thirds in the first half of this year compared to the same period in 2008, official data showed, highlighting the depths of the island's economic crisis.
Yet the value of Cuba's U.S. imports for the period dropped only 15 percent, underscoring the U.S. producers' advantages because of the short distance between the countries, trade experts said.
A cargo transportation report issued last month by Cuba's Office for National Statistics shows that imports by sea dropped from 4,626,000 metric tons to 2,309,000 metric tons fir the first half of 2008 to the same period this year. Exports also dropped, from 307,000 to 203,000 metric tons.
"The numbers show the real contraction of the Cuban economy because they reflect not the value but the volume," said Jorge Pinon, a fellow at the University of Miami's Center for Hemispheric Policy who monitors the island's economy.
The Cuban government has been reported to be planning to cut its 2009 imports by at least 30 percent because of its economic crisis. Cuba usually steps up its imports toward the end of each year, according to other analysts who track its economy.
Raul Castro's government is currently facing the worst economic crisis since the Soviet Union collapsed in the early 1990s. Three hurricanes last year caused $10 billion in damages and the world economic slowdown sparked a cut in the price and volume of Cuba's main export, nickel, as well as an estimated $1 billion drop in foreign lending to the island.
Castro has tried to increase domestic production of food and other goods in order to limit costly imports, but there has been no indication so far whether the reforms he put in place — including lending millions of acres of fallow state lands to private farmers — are having a significant impact.
Cuba's imports from U.S. producers have held up far better than imports from other countries, however, according to U.S. government figures gathered by the New York-based U.S.-Cuba Trade and Economic Council.
The value of U.S. food and agricultural exports to the island dropped from $355.6 million for the first six months of 2008 to $301.8 million for the same period in 2009 — a 15 percent drop — according to the USCTEC figures.
"Both the value and the volume of U.S. exports to Cuba have dropped by relatively consistent numbers because of drops in (U.S.) prices, said USCTEC senior policy advisor John Kavulich. "They are buying less and paying less."
"Clearly the (Cuban) government has a cash flow challenge, which isn't surprising because they always have a cash flow challenge," Kavulich added.
Pinon argued that the gap between the 61 percent drop in overall Cuban imports and the 15 percent drop in U.S. imports underlined the advantages that U.S. producers have in supplying the Cuban market, only 90 miles from Key West.
"Even with the additional costs of having to pay cash for U.S. goods, the U.S. is the most competitive market that Cuba has," said Pinon, referring to the U.S. requirement that U.S. exporters be paid in cash even before the shipments can leave American ports for Cuba.
"That's why the lifting of the U.S. embargo is so important to Havana," Pinon added. "The U.S. is always going to give them an advantage. The U.S. is Cuba's most natural market."
In one sidelight, Pinon noted the way in which the Office of National Statistics reported the transportation figures.
The U.S. practice in such reports, for example, would require listing the 2008 figure of 4,626,000, the 2009 figure of 1,775.000 and then the difference as a minus: -61 percent.
ONE instead reported the 2009 figure first, the 2008 figure second and the percentage change — the "dinamica" — as 38.4 percent, without the minus.
Source: The Southern Illinois
Yet the value of Cuba's U.S. imports for the period dropped only 15 percent, underscoring the U.S. producers' advantages because of the short distance between the countries, trade experts said.
A cargo transportation report issued last month by Cuba's Office for National Statistics shows that imports by sea dropped from 4,626,000 metric tons to 2,309,000 metric tons fir the first half of 2008 to the same period this year. Exports also dropped, from 307,000 to 203,000 metric tons.
"The numbers show the real contraction of the Cuban economy because they reflect not the value but the volume," said Jorge Pinon, a fellow at the University of Miami's Center for Hemispheric Policy who monitors the island's economy.
The Cuban government has been reported to be planning to cut its 2009 imports by at least 30 percent because of its economic crisis. Cuba usually steps up its imports toward the end of each year, according to other analysts who track its economy.
Raul Castro's government is currently facing the worst economic crisis since the Soviet Union collapsed in the early 1990s. Three hurricanes last year caused $10 billion in damages and the world economic slowdown sparked a cut in the price and volume of Cuba's main export, nickel, as well as an estimated $1 billion drop in foreign lending to the island.
Castro has tried to increase domestic production of food and other goods in order to limit costly imports, but there has been no indication so far whether the reforms he put in place — including lending millions of acres of fallow state lands to private farmers — are having a significant impact.
Cuba's imports from U.S. producers have held up far better than imports from other countries, however, according to U.S. government figures gathered by the New York-based U.S.-Cuba Trade and Economic Council.
The value of U.S. food and agricultural exports to the island dropped from $355.6 million for the first six months of 2008 to $301.8 million for the same period in 2009 — a 15 percent drop — according to the USCTEC figures.
"Both the value and the volume of U.S. exports to Cuba have dropped by relatively consistent numbers because of drops in (U.S.) prices, said USCTEC senior policy advisor John Kavulich. "They are buying less and paying less."
"Clearly the (Cuban) government has a cash flow challenge, which isn't surprising because they always have a cash flow challenge," Kavulich added.
Pinon argued that the gap between the 61 percent drop in overall Cuban imports and the 15 percent drop in U.S. imports underlined the advantages that U.S. producers have in supplying the Cuban market, only 90 miles from Key West.
"Even with the additional costs of having to pay cash for U.S. goods, the U.S. is the most competitive market that Cuba has," said Pinon, referring to the U.S. requirement that U.S. exporters be paid in cash even before the shipments can leave American ports for Cuba.
"That's why the lifting of the U.S. embargo is so important to Havana," Pinon added. "The U.S. is always going to give them an advantage. The U.S. is Cuba's most natural market."
In one sidelight, Pinon noted the way in which the Office of National Statistics reported the transportation figures.
The U.S. practice in such reports, for example, would require listing the 2008 figure of 4,626,000, the 2009 figure of 1,775.000 and then the difference as a minus: -61 percent.
ONE instead reported the 2009 figure first, the 2008 figure second and the percentage change — the "dinamica" — as 38.4 percent, without the minus.
Source: The Southern Illinois
Comments