News and Facts about Cuba

Cuba sees economy shrink 1 percent despite detente with US

Cuba sees shrink 1 percent despite detente with US
Associated Press December 28, 2016

HAVANA (AP) — Cuba announced Tuesday that its economy shrank this year
for the first time in nearly a quarter century as a plunge in aid from
overwhelmed a surge in set off by detente with the
United States.

Economy Minister Ricardo Cabrisas and told
Parliament that the island’s domestic product fell nearly 1
percent after seeing average annual growth rate of nearly 3 percent in

Cabrisas blamed the slump on Venezuela’s troubles and a decrease in
revenue from Cuba’s few exports, which include sugar, refined gasoline
and nickel, whose price has dropped in recent years.

“In spite of the drop in GDP, the free social services that our
population enjoys have been preserved, defying predictions that the
Cuban economy would collapse and upsetting blackouts would return,”
Castro said.

The two men spoke to Cuba’s rubber-stamp National Assembly, which also
passed a law announced by Castro last month banning public memorials to
his brother Fidel, the revolutionary leader who died on Nov. 25 at age 90.

The last time official figures showed a fall in Cuba’s gross domestic
product was in 1993 after the Soviet Union collapsed, abruptly stripping
away much of the island’s aid and trade.

A global drop in petroleum prices has slammed Venezuela’s oil-dependent
economy, forcing it to reduce shipments of heavily subsidized crude oil
to Cuba, with exports dropping from 115,000 barrels daily in 2008 to
90,000 in recent years to 40,000 in the past few months.

In addition, the number of contracts for Cuban professional services
with Venezuela has dwindled and some payments have not been made,
Cabrisas said. A large number of Cuban doctors have long traveled to
Venezuela, with their salaries going directly to Cuba’s government.

“This confirms what we had said about Venezuela’s situation leading to a
recession,” Cuban economist Pavel Vidal, a professor at a in
Colombia, told The Associated Press.

Cabrisas, whose speech was partially transmitted on public TV, also
blamed the economic slump on U.S. sanctions on Cuba, with officials
previously saying that the 55-year-old has cost the island
$125.9 billion, including $4.6 billion last year.

Tourism, however, has been thriving since U.S. President Barack Obama
ordered the restoration of diplomatic relations between Washington and
Havana two years ago. Overall visitor numbers rose more than 15 percent
in 2015 and again this year.

Cabrisas said he expects the island’s gross domestic product to grow 2
percent next year if the government cuts costs, increases exports and
finds alternatives for certain imports.

Vidal said he was surprised by the prediction.

“They’re thinking things are going to improve in Venezuela,” he said.
“And they’re relying on fiscal spending without backing from revenue.”

Other economic experts told The Associated Press that possible solutions
could include boosting the private sector and deregulating portions of
the public sector, excluding areas such as or .


Andrea Rodriguez on Twitter:

Source: Cuba sees economy shrink 1 percent despite detente with US –

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