Economy

HAVANA (Reuters) – Cuba’s booming private businesses braced for impact on Wednesday as the island’s communist-run government implemented a raft of new laws aimed at more tightly regulating the private sector amid a deepening economic crisis.The new rules come after less than three years of the legalization of private businesses following a decades-long ban put in place by former leader Fidel Castro. The measures end incentives for the creation of new businesses, restrict independent wholesalers and add new requirements for applicants seeking to start a company. They also boost taxes, bolster worker’s rights, tighten accounting requirements and sharpen oversight of the private sector. The fresh regulations come into effect as Cuba navigates its worst economic crisis in decades, with severe shortages of food, fuel and medicine and a record-breaking exodus of its citizens. The government says the reforms are necessary to correct distortions and boost the economy, while ensuring private enterprise benefits the broader population. Cities and towns can now deny a license to a business that doesn’t fit within a local development plan, and municipalities may set prices in some cases.”This is not a crusade against non-state forms of management … but rather, it brings them within the framework of legality,” said Economy and Planning Minister Joaquin Alonso Vazquez, adding the measures would help develop the country.William LeoGrande, a professor of Latin American politics and U.S. foreign policy at Washington’s American University said the regulations “all have a similar effect of constraining the private sector, rather than unleashing it.” “The Cuban government needs the private sector to help the economy recover, but distrusts it and wants to keep it under tight state control,” he added.The stakes are high, says Oniel Diaz, co-founder of private business consultancy AUGE, which advises more than 200 Cuban small business clients. Diaz said some of the rules, such as fighting tax evasion, are understandable while others will only slow further the ailing economy.”The question is … whether or not these measures … contribute to getting the country out of the economic crisis in which it has been mired and the answer is no,” said Diaz.FILLING A VOIDThe private sector has been a rare bright spot in an otherwise anemic economy that has failed to recover from the COVID-19 pandemic and remains saddled by a decades-long U.S. trade embargo that has complicated financial transactions by the Cuban government.Cuba in three years has approved 11,355 private businesses. The sector’s employees, together with 600,000 self-employed workers in Cuba, now account for 25% of jobs and 15% of imports, according to official data.Small private retailers – a last remaining reliable and varied source of food – may be hardest hit by new accounting hurdles and a rule that requires wholesalers to work through state companies when importing from abroad, according to experts and business owners consulted by Reuters.These small grocers and corner stores – common now in many Cuban cities – have filled a void left by a near-bankrupt state, importing and distributing more than a billion dollars of food and beverages in 2023, Diaz said. “The(government) wants to restrict the activity … and allow spaces for (the state) to recover lost ground,” Diaz said.Reuters spoke with several business owners who said they were still unclear how the regulations would be applied and how they might affect their business. They declined to speak on the record.For many Cubans, who worry more about putting food on the table, any opportunity to buy goods is welcome – as long as the price is right.”I think small business is the best thing going,” said Alexander Silega, a 36-year-old self-employed Havana resident. “But we need some regulation in terms of prices.” More

The average contract rate on a 30-year fixed-rate mortgage dropped 14 basis points in the week ended Sept. 13, to 6.15%, the Mortgage Bankers Association said on Wednesday. That was the lowest rate since Sept 2022, and followed a 14-basis-point drop the previous week.Applications for home loans, refinancing, and purchases all jumped last week, the MBA said, citing lower borrowing costs and improved housing affordability as home prices rose more slowly. US mortgage rates peaked about 11 months ago at near 8%, and have since fallen as the Fed signaled its 2022-2023 rate-hike campaign had ended and that its next move would be a rate cut, once policymakers became confident inflation was under control.The Fed wraps up its Sept 17-18 meeting later on Wednesday, and along with a rate cut is also expected to publish fresh projections for the policy rate path over the next few years. More

Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

Improved data on borrowing costs and price growth has buoyed consumers, but it might be coming too late to significantly affect the presidential raceAfter more than a year of waiting, hoping and assuring Americans that the economy could pull off a so-called “soft landing,” President Biden and Vice President Kamala Harris appear to be on the brink of seeing that happen.Inflation has cooled. Economic growth remains strong, though job gains are slowing. Mortgage costs are falling and the Federal Reserve is poised to begin cutting interest rates on Wednesday.And yet, it is unclear whether those developments will significantly alter voters’ predominantly negative perceptions of the economy ahead of the presidential election.Recent weeks have brought a run of good data on consumer prices and interest rates for the administration. The price of gasoline has fallen below $3 a gallon in much of the South and Midwest and is nearing a three-year low nationally. Spiking grocery prices have slowed to a crawl. Mortgage rates are down more than a percentage point from their recent peak. The Census Bureau reported last week that the typical household income rose faster than prices last year for the first time since the pandemic. The overall inflation rate has returned to near historically normal levels, and the Fed is poised to begin cutting interest rates from a two-decade high.The Biden administration, which has taken heat from Republicans and many economists for fueling inflation with its economic policies, has begun to celebrate those developments in bold terms. Officials are claiming vindication for their multi-trillion-dollar efforts to boost households and businesses in their recovery from the pandemic recession.Mr. Biden’s Council of Economic Advisers published a blog post on Tuesday highlighting economic and job growth under Mr. Biden that has surpassed projections. Lael Brainard, who heads Mr. Biden’s National Economic Council, told the Council on Foreign Relations in New York on Monday that the American economy has now reached a “turning point.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

U.S. billionaire Ray Dalio named the top five forces at the front and center of the world’s economy. 
The founder of Bridgewater Associates named key factors which he deemed are interrelated, and often cyclical.

Ray Dalio, founder of Bridgewater Associates, speaks onstage during The Wall Street Journal’s 2024 The Future Of Everything Festival at Spring Studios on May 22, 2024 in New York City
Dia Dipasupil | Getty Images Entertainment | Getty Images

SINGAPORE — U.S. billionaire Ray Dalio named the top five forces at the front and center of the world’s economy. 
Speaking at the Milken Institute’s Asia Summit in Singapore, the founder of Bridgewater Associates said the five factors are interrelated and often cyclical. Dalio made his remarks Wednesday ahead of the U.S. Federal Reserve’s interest rate decision.

1. Debt, money and the economic cycle

With uncertainty still circling around what the Fed will do at its meeting this week, Dalio raised concerns about how the country’s debt will be managed.
“We’re going to have a Fed interest rate change, and [what will] that whole dynamic do? What happens to all the debt? How will that be dealt with?” he mused. 

The U.S. central bank has kept benchmark rates at their highest level in 23 years, leading the government to allocate $1.049 trillion for debt service — an increase of 30% compared with a year ago. This is part of an anticipated total of $1.158 trillion in payments for the entire year.
“What is the value of it and as one man’s debts or another man’s assets? How is it as a storehold of wealth? These are important questions that are pressing questions,” he threw the question out to attendees.

2. Internal order and disorder

“The second is the issue of internal order and disorder,” Dalio said, referring to U.S. politics ahead of the election.

“There are irreconcilable differences between the right and the left, prompted by large wealth and value gaps… and they call into question even the orderly transition of power,” he added.
For the first time in the 2024 election cycle, Vice President Kamala Harris is now considered more likely to win than former President Donald Trump, a CNBC Fed Survey released Tuesday showed.
Last week, the candidates debated issues from abortion rights to tariffs and other policy proposals.
Still, no matter who occupies the White House, the president’s policy agenda has limited impact on the overall health of the U.S. economy.

3. Great power conflicts

Dalio cited geopolitics as his third concern: namely, the relationship between the U.S. and China.
The U.S.-China relationship has been defined by a range of ongoing tensions, such as territorial issues in the South China Sea, Taiwan’s political status and economic tariffs.
“I think probably, there’s a fear of war that will stand in the way — mutually assured destruction. But it’s disorder,” he emphasized later, without naming a specific ignition point.

4. ‘Acts of nature’

Dalio then said “acts of nature” have historically posed a bigger threat to humanity and society than war.
“Acts of nature, droughts, floods and pandemics have killed more people and been responsible for more domestic orders and international orders changing,” Dalio noted.
And the cost of climate change is about to increase, he emphasized. According to the World Economic Forum, the climate crisis results in a 12% loss in global GDP for each 1°C increase in temperature.

5. Technology

Technology is going to “be fantastic” if one is able to adopt and invest in it appropriately, the billionaire said.
“The potential productivity benefits of that are enormous,” he said, elaborating that technology produces unicorn companies, and when it does — a sliver of the population fares better.
“Whoever wins the technology war is going to win the military war,” he further said.
As he assessed the five factors on a whole, Dalio concluded that the “surprises are more on the downside than the upside,” he said. More

Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More