Tuesday, December 30, 2008

Cuba growth slows on food costs, storms

Cuba growth slows on food costs, storms
By The Associated Press

HAVANA - Cuba is ending one of its toughest economic years since the
collapse of the Soviet Union, as costly food imports and three
devastating hurricanes held annual growth to 4.3 per cent, barely
one-half the government forecast, top officials said Saturday.

Economy Minister Jose Luis Rodriguez, who had predicted an
eight-per-cent expansion, promised to cut "indiscriminate subsidies,"
wage "deformities" and other state spending, even while forecasting
six-per-cent growth in 2009.

Rodriguez said a seven-per-cent increase in exports and 6.6-per-cent
gains in state infrastructure spending helped growth outpace that of
most countries, even amid global financial turmoil.

Cuba's expansion "is still highly significant in a world where the
principal capitalist powers not only can't stop the tremendous falls in
their economies but also have no idea when the crisis will end,"
Rodriguez said.

One of the world's few remaining socialist countries, Cuba has been
relatively isolated from the global credit crunch.

It has few international debts, with most loans coming from allies
including China and Russia, which allowed late payments.

What's more, the government includes state spending on health care,
education, transportation and food rations when calculating gross
domestic product - meaning the figure reflects public spending, not just
economic activity, as it does elsewhere in the world.

Still, hurricanes Gustav, Ike and Paloma caused Cuba at least US$10
billion in damage this year, leaving tens of thousands homeless,
flooding farmland, destroying factories and requiring the government to
boost costly imports of food and fuel.

As a result, Rodriguez said, 2008 has been "without a doubt one of the
most difficult" years since 1992, when the collapse of the Soviet Union
- Cuba's chief ally, trade partner, and donor - isolated the island's
economy and sent it into a tailspin.

Aided by large loans from China and cheap oil from Venezuela, Cuba has
recovered, posting 7.5 per cent growth last year and 12.5 per cent in
2006, official data show.

But this year, soaring food and fuel prices pushed imports up by about
44 per cent, Foreign Trade Minister Raul de la Nuez said this week,
while exports grew seven per cent.

Sales of Cuba's top export, nickel, fell by $250 million in 2008,
Rodriguez said, while prices for sugar and tobacco, two other key
products, also dropped.

China, Canada and the Netherlands are among Cuba's top trade partners,
while a 46-year-old embargo prevents the United States from doing
business with the island.

The government does not report its trade deficit.

Cuba's tourism industry, meanwhile, recovered from a two-year slump and
was set to host a record 2.35 million foreign visitors in 2008, Tourism
Minister Manuel Marrero said. Many tourists buy relatively cheap,
all-inclusive packages that have continued to sell, despite the world
economic slowdown.

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