Sun | Sep 24, 2017

Cuba sees economic slump despite US detente

Published:Wednesday | December 28, 2016 | 12:00 AM
The Miramar area of Havana, Cuba.

Cuban officials announced on Tuesday that the island's economy shrank this year despite an increased opening with the United States.

Economy Minister Ricardo Cabrisas told Parliament that the island's gross domestic product (GDP) fell nearly 1 per cent after seeing a growth rate of nearly 3 per cent from 2011-2015, according to Cubadebate, the country's main news website. He blamed the slump on shrinking exports and financial troubles in ally 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, with exports dropping 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. A large number of Cuban doctors have long travelled to Venezuela, with their salaries going directly to the Cuban government.

Cabrisas 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 ever since US President Barack Obama ordered the restoration of diplomatic relations between Washington and Havana two years ago. Overall, visitor numbers spiked more than 15 per cent in 2015 and again this year.

Cabrisas said he expected the island's gross domestic product to grow by 2 per cent next year if the government cuts costs, increases exports and finds alternatives for certain imports.

- AP