Hur­ri­cane Irma dev­as­tates strug­gling Cuban econ­omy

Kuwait Times - - BUSINESS -

Cuba’s cash-strapped econ­omy has suf­fered this year from a de­cline in aid from its chief ally Venezuela, lower ex­ports and a brake on mar­ket re­forms. And then came Hur­ri­cane Irma.

The strong­est storm to strike Cuba in more than 80 years rav­aged in­fra­struc­ture through­out the coun­try, col­laps­ing the power grid and dam­ag­ing crops af­ter it slammed ashore late Fri­day. In the keys along the north­ern coast, it bat­tered beach re­sorts pop­u­lar with for­eign tourists and knocked out the air­port they use. The cost of re­build­ing as well as the lost rev­enues from tourism and agri­cul­ture, sec­tors that had helped off­set some of the econ­omy’s weak­nesses, are heavy blows as the Com­mu­nist na­tion strives to pay over­seas cred­i­tors and sup­pli­ers.

“The prob­a­bil­ity that the econ­omy stays in re­ces­sion are now much greater,” said for­mer Cuban cen­tral bank econ­o­mist Pavel Vidal, now a pro­fes­sor at Uni­ver­si­dad Jave­ri­ana Cali in Colom­bia, of chances for a sec­ond straight full-year con­trac­tion in 2017.

“With the im­pact on in­stal­la­tions in the keys and on the coun­try’s gen­eral in­fra­struc­ture, tourism will lose dy­namism.” A tourism boom in Cuba over the past few years sparked by warm­ing re­la­tions with the West has helped sus­tain the econ­omy. Cuba is still la­bor­ing un­der a 57-year US trade em­bargo and suf­fer­ing from a steep de­cline in sub­si­dized oil from its cri­sis-stricken So­cial­ist ally Venezuela. Of­fi­cial data - which gives heavy weight­ing to Cuba’s uni­ver­sal free health­care and ed­u­ca­tion - shows ho­tels and restau­rants ac­count for just 4.4 per­cent of the roughly $90 bil­lion-a-year econ­omy, but they are a vi­tal earner of hard cur­rency. A 23 per­cent rise in for­eign visi­tors to Cuba helped the econ­omy re­turn to growth in the first half of 2017, the govern­ment said, af­ter it tipped into re­ces­sion in 2016. The out­look has dark­ened in the sec­ond half of the year.

First US Pres­i­dent Don­ald Trump said he was tight­en­ing re­stric­tions on Amer­i­cans trav­el­ing to Cuba. Then the Cuban govern­ment said last month it would not hand out new li­censes for much of the pri­vate sec­tor un­til it had “per­fected” its func­tion­ing. Then Irma ar­rived, graz­ing along the is­land’s coast from east to west. Pack­ing sus­tained winds of more than 157 miles (253 km) per hour, it pum­meled the north­ern keys, though it left the big­gest beach re­sort area of Va­radero mostly in­tact. The keys - whose pris­tine beaches are home to around a quar­ter of Cuba’s four- and five-star ho­tels - are now lit­tered with felled trees and lamp posts, an­i­mal corpses and shred­ded fur­ni­ture, ac­cord­ing to state-run me­dia.

Irma also de­stroyed much of the area’s sin­glerun­way air­port, which re­ceives more than 485,000 pas­sen­gers a year. Pres­i­dent Raul Cas­tro vowed on Mon­day that tourism in­fra­struc­ture would be fixed be­fore the start of the win­ter high sea­son at yearend. Eric Peyre, a rep­re­sen­ta­tive at French ho­tel com­pany Ac­cor SA which runs the Cuba-owned Pull­man ho­tel in Cayo Coco, said that dam­age would be cov­ered by in­sur­ance and he ex­pected 90 per­cent of what the ho­tel needs would be in place by mid-De­cem­ber.

“As long as you have the main kitchen and the main res­tau­rant and rooms (ready), you can nor­mally wel­come guests,” he told Reuters. “The ten­nis court and things like that, that can come af­ter.” Still, ho­tels in the keys face rev­enue loss for the months that tour pack­age op­er­a­tors sent their clients else­where and it could prove tricky to re­build the area’s rep­u­ta­tion. Dam­age in the agri­cul­tural sec­tor will both weigh on state fi­nances as well as tighten food sup­ply in the short term. Fuller reser­voirs due to Irma’s tor­ren­tial rains could in the long run prove ad­van­ta­geous af­ter a se­vere drought. Some 300,000 hectares (740,000 acres) of sug­ar­cane - an area roughly twice the size of Hous­ton - were af­fected to dif­fer­ent de­grees, the state su­gar mo­nop­oly said.

Forty per­cent of mills were dam­aged in the in­dus­try that re­mains one of Cuba’s most im­por­tant in terms of em­ploy­ment and ex­port earn­ings. Even though Cuba had rushed to har­vest what it could be­fore Irma hit, other crops such as pla­tano and rice had also re­port­edly been af­fected, said Laura Melo, the Cuba rep­re­sen­ta­tive for the United Na­tions’ World Food Pro­gram. — Reuters

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.