Cuba's economic crisis reflected in drop in sea-borne imports

Posted on Friday, 09.04.09
Cuba's economic crisis reflected in drop in sea-borne imports
By JUAN O. TAMAYO
jtamayo@MiamiHerald.com

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 same 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 Piñon, 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.

Raúl 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
(USCTEC).

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.

Piñon 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 Piñon,
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,'' Piñon added. ``The U.S. is always going to give them an
advantage. The U.S. is Cuba's most natural market.''

In one sidelight, Piñon 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.

Cuba's economic crisis reflected in drop in sea-borne imports - Cuba -
MiamiHerald.com (4 September 2009)
http://www.miamiherald.com/news/americas/cuba/story/1217755.html