The Economist : Cuba will have 500% Inflation this year

[Nino]

From the Economist Intelligence Unit - Cuba's economic outlook, inflation and debt for this year as reported on 14yMedio :

https://www.14ymedio.com/cuba/Cuba-inflacion-ano_0_3068693108.html

Cuba will have an inflation of 400 to 500% this year

The report on the first quarter of the Cuban economy was prepared by the British ‘think-tank’ Economist Intelligence Unit

14ymedio, Havana | April 02, 2021

The Cuban economy is going from bad to worse according to the latest projections presented by the experts of the Economist Intelligence Unit (EIU), which announces an inflation of at least 400% in 2021. Production will grow by 2.7%, well below the official forecasts of 6 to 7%, and totally insufficient to compensate for the drop of 11.3% registered last year.

The report on the first quarter of the Cuban economy, prepared by the British think-tank and shared by the economist Pedro Monreal, predicts "a weak recovery in 2021, with annual inflation of 399.6% or 505.6%, depending on how it is measured. "

The growth forecast of the Gross Domestic Product (GDP) of Cuba is far from the official estimate that is between 6 and 7% for 2021. The Minister of Economy, Alejandro Gil, when announcing these forecasts assured that, although the negative effects continue After the pandemic, a reestablishment of "economic activity" is forecast. So much so that he spoke of planning "the recovery in the next two years (2021 and 2022)".

However, the first three months of 2021 show where the country is going, which in the midst of a pandemic decided to implement monetary reunification, eliminate subsidies and considerably increase the cost of living for Cubans. Although Monreal is one of those who remains hopeful: "The very high inflation of 2021 would be reduced later, but it would still have a very high level of 32.3% in 2022," he writes on his Twitter account.

Regarding the EIU report, the economist details that Cuba "projects a reduction in international foreign exchange reserves, assuming that the cost of servicing the rescheduled debt would increase." He adds that there are "several economic assumptions that are debatable. Like any forecast, it should be taken with caution.

 

"The growth estimate between 2020 and 2025 seems to assume that an increase in the current account deficit would be sustainable, that is, to import more and more than what is exported. The deficit would increase from 0.9% in 2020 to 6.2% in 2025. It is a problematic assumption, "explains Monreal.

Meanwhile, the Cuban government intends to achieve economic growth with what, year after year, it defines as a priority: financing the national industry, "from not importing what we can efficiently produce in the country."

To achieve "the planned goals," reported the daily Granma, the government plans "to ensure, as essential objectives, food, fuel, fertilizers and pesticides, medicines, and the demands of the defense."

However, just to cite one example, the country announced at the end of last year serious difficulties in the supply of fertilizers and pesticides in the 2020-2021 cold season, which would affect compliance with food production for the coming months. This, together with inefficient management models in the food industry, does not allow us to envision a promising outlook.

Monreal was clear: "A country with a significant food deficit cannot afford to dedicate (only) 5% of total investment to agriculture, livestock and fishing."

[Mickey D]

Interesting article. 

[Corylax18]

Just like the U.S.!

[griller]

I really hate how this affects the average Cuban. A government that can't feed its people, and enforces restrictive/punitive "laws" that limit their fulfilling their most basic human needs, must be called out by the international community. I don't understand why there isn't some kind of outcry to begin food aid to Cuba as well. The large amount of Cuban expats in S. Florida should know the situation with their island relatives, and see that dollar subsidies they typically provided them may not be sufficient in today's environment.

[Tstew75]

Sigh.

[MrBirdman]

Thank you for sharing @Nino, though it’s terrible to hear how the situation continues to deteriorate there. 

[Nino]

1 hour ago, MrBirdman said:

Thank you for sharing @Nino, though it’s terrible to hear how the situation continues to deteriorate there. 

Sure, happy to pass on facts.

The situation there has continued to deteriorate for more than 60 years now ...