Investment, freight declines reflect Cuban woes

* Investment down 14.7 percent through June

* Freight traffic down 12.2 percent through June

* Critics say reform too slow

By Marc Frank

HAVANA, Sept 8 (BestGrowthStock) – Cuban investment and freight
transportation fell significantly through June as the Caribbean
nation grappled with a two-year old financial crisis and
recession, according to government reports released this week.

The National Statistics Office (NSO) reported that all
investment, in foreign currency (Read more about trading foreign currency. and local pesos, fell 14.7
percent from January through June and freight traffic 12.2
percent, compared with the same period in 2009.

Investment was reported down across the board, from
construction to the purchase of machinery and agricultural
inputs.

Investment fell just over 15 percent in 2009 and freight
transportation 5 percent, according to the government.

Cuba does not release overall performance data until the
end of the year, but the statistics office (ONE.CU) had
reported earlier that manufacture stagnated and food production
fell 7.5 percent through June.

Local economists say import-dependent Cuba’s economic
performance has always been tied to the level of supplies
purchased abroad the previous year.

With further reductions in spending in place for 2010,
Cuba’s economic problems will likely continue for a while, they
said.

The declines follow severe budget cuts and a reduction of
more than $5 billion or 30 percent in imports last year as Cuba
fought off the effects of the international financial crisis,
hurricanes, policy errors and the long-standing U.S. trade
embargo against the communist-led island.

Economic growth has fallen from 7.3 percent in 2007 to 4.1
percent in 2008 and 1.4 percent last year, according to the
government.

LIVING WITHIN ITS MEANS

President Raul Castro, who took over for his brother Fidel
Castro in early 2008, replaced his economic cabinet last year
and declared the country had to live within its means and
improve efficiency.

Castro has warned of hard times throughout the year even
while promising to modernize the Soviet-style economy, the last
on the planet except for North Korea.

He announced last month that as much as 20 percent of the
state’s labor force, or 1.2 million people, would be let go or
transferred over five years and said he would allow more family
businesses and private hiring to pick up part of the slack.

“We have to erase forever the notion that Cuba is the only
country in the world in which people can live without working,”
he said.

Castro’s critics at home and abroad have repeatedly warned
he has been too slow off the mark with needed changes.

He has undertaken a series of reforms in agriculture, from
leasing fallow state land to loosening the state’s straitjacket
on farmers’ purchase of supplies and sale of their produce.

Similar reforms began this year in the retail sector where
some minor services were leased to employees, more licenses to
peddle food granted and cooperatives planned.

Modernization will also include warming up to foreign
investors, local analysts believe, with the government recently
extending from 50 years to 99 years the amount of time they can
lease land.
(Editing by Jeff Franks and Jerry Norton)

Investment, freight declines reflect Cuban woes