Cuba’s economy shrinks, even as U.S. trade builds
HAVANA - Cuban officials announced Tuesday that the island’s economy shrank this year despite an increased opening with the U.S.
Economy Minister Ricardo Cabrisas told Parliament that the island’s GDP fell nearly 1 percent after seeing a growth rate of nearly 3 percent from 2011-2015. He blamed the slump on shrinking exports and financial troubles in allied Venezuela.
The last time official figures showed a fall in Cuba’s GDP was in 1993 after the Soviet Union collapsed, abruptly stripping away much of the country’s aid and trade.
A global drop in petroleum prices has slammed Venezuela’s oil-dependent economy, forcing it to cut back sales of crude oil to Cuba. Venezuelan exports dropped from 115,000 barrels daily in 2008 to 90,000 in recent years to 40,000 a day in the past few months.
In addition, the number of contracts for professional services with Venezuela has dwindled, and some payments haven’t been made, Cabrisas said. A large number of Cuban doctors have long traveled to Venezuela, with their salaries going directly to the Cuban 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 U.S. sanctions on Cuba. Officials previously said the 55-year-old embargo has cost the island $125.9 billion, including $4.6 billion last year.
Tourism, however, has been thriving ever since U.S. President Barack Obama ordered the restoration of diplomatic relations between Washington and Havana two years ago. Overall visitor numbers spiked more than 15 percent in 2015 and again this year.
Cabrisas said he expected the island’s economy to grow by 2 percent next year if the government cuts costs, increases exports and finds alternatives for certain imports.
Vidal, however, 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 AP that possible solutions could include boosting Cuba’s private sector and deregulating portions of the public sector, excluding areas such as health or education.