Cuban Economy in 2016: GDP Contracted 0.9%
14ymedio, (With information from EFE), Havana, 27 December 2016 – The Cuban economy closed the year with a 0.9% contraction in GDP, well below the 1% growth forecast, according to an announcement from Ricardo Cabrisas Ruiz, Minister of the Economy and Planning, during the final 2016 session of the National Assembly on Tuesday, 27 December.
The minister acknowledged that the island experienced “financial constraints” throughout the last 12 months, due to the decline in income from exports, the economic difficulties of some of the country’s main partners, which were related to the fall in oil prices and the reduction in the amount of fuel supplied from abroad, as well as the ongoing trade embargo imposed on Cuba by the United States.
In 2016, mining revenues fell by 5%, and the minister also confirmed that there is “a tense situation with the availability of hard currency, a shortfall in earnings predicted from exports, and an insufficient supply of fuel,” caused by the reduction in shipments of crude oil from Venezuela.
Cabrisas, however, predicted that GDP would grow by 2% in 2017, thanks primarily to the growth of the sugar industry and the hotel sector, as well as transport, warehousing, communications, supplies of gas and water, agriculture, forestry, trade and manufacturing.
The minister stressed that in 2016 electrical energy generation grew 4.2%, and he estimated that in 2017 the use of renewable resources could grow up to 4.65%. With regards to food imports, according to official forecasts the year’s total will reach 1.75 billion dollars, an increase of 82 million dollars compared to last year. He insisted that the theft of fuel must be avoided, but that “unfortunately it is happening” in the state sector in Cuba, which “comes to light in the controls.”
Cabrisas acknowledged that the share of foreign investment remains very low and represents just 6.5% of the total desired.
The Minister of the Economy also stressed the need to develop a medium-term program to “reverse the critical situation of the food industry” and to “avoid the payment of wages without productive support.”
After growing by 4% in 2015, the Cuban government forecast a GDP growth of 2% for 2016, a target that was lowered midyear to 1% due to “short-term financial difficulties.”
The current crisis in Venezuela caused that country to reduce its shipment of subsidized oil to the island in the first half of 2016, forcing the Government of Havana to contact allies such as Russia, Algeria and Angola in search of new business partners.
Given this situation, economic analysts have predicted a probable economic recession in the country, which could delay the progress of Raul Castro’s reforms.
However, the Economic Commission for Latin America and the Caribbean (ECLAC) predicts that in 2017 Cuba’s economic growth will gradually accelerate due to the regularization of fuel shipments from Venezuela and improvements in telecommunications, tourism, construction and farming.