Cuba sees econ­omy shrink

Blames slump on Venezuela’s trou­bles

Kuwait Times - - BUSINESS -

Cuba an­nounced Tues­day that its econ­omy shrank this year for the first time in nearly a quar­ter cen­tury as a plunge in aid from Venezuela over­whelmed a surge in tourism set off by de­tente with the United States. Econ­omy Min­is­ter Ri­cardo Cabrisas and Pres­i­dent Raul Cas­tro told Par­lia­ment that the is­land’s gross do­mes­tic prod­uct fell nearly 1 per­cent af­ter see­ing av­er­age an­nual growth rate of nearly 3 per­cent in 2011-2015. 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 univer­sity in Colom­bia, told The As­so­ci­ated Press.

Cabrisas, whose speech was par­tially trans­mit­ted on pub­lic TV, also blamed the eco­nomic slump on US sanc­tions on Cuba, with of­fi­cials pre­vi­ously say­ing that the 55-year-old em­bargo 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 health or ed­u­ca­tion.

HA­VANA: Cuba’s Pres­i­dent Raul Cas­tro ad­dresses the Na­tional Assem­bly.

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