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    Cuba sees economy shrink 1 percent despite detente with US

    Cuba sees economy shrink 1 percent despite detente with US
    ANDREA RODRIGUEZ
    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
    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 U.S. 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.

    ___

    Andrea Rodriguez on Twitter: https://twitter.com/ARodriguezAP

    Source: Cuba sees economy shrink 1 percent despite detente with US –
    www.yahoo.com/news/cuba-sees-economic-slump-despite-174937326.html