Official estimates of Cuban economic performance showed a decline of 0.9% in 2016. This drop occurs after average annual growth rates of nearly 3 per cent were seen from 2011 to 2015. The 0.9% GDP of last year was announced at the year-end session of the National Assembly by Economy and Planning Minister Ricardo Cabrisas. The decline is largely a response to the economic woes of Venezuela and shrinking commodity prices.
The problems stemming from the economic disaster in Venezuela include a reduction in the shipments of subsidized crude oil from 115,000 barrels per day (BPD) in 2008 to a mere 40,000 BPD over the last few months.
The Minister also said there was a decline in the number of contracts for medical services delivered by Cuban staff to Venezuela and that some payments have not been made. Cuba’s medical internationalism program is a large contributor to the Cuban economy.
The Cuban economy is predicted to recover somewhat in 2017 and grow by just two percent.
Cuba’s lack of hard currency, low fuel supply, the US embargo against Cuba (which cost the economy $4.6 billion last year), and low incomes based on exports are responsible for the shrinking of the numbers for 2016.
There is no quick fix for the decline in economic numbers Cabrisas said. Economic growth is predicted to come from hotels and restaurants (tourism is thriving), the sugar industry, and also from the industry sectors of transportation, communications, power, gas and water supply, construction, agriculture, trade, manufacturing.
The Minister spoke also of the four percent decline in Cuban energy production (oil and gas) and the decrease in revenue from Cuba’s few exports which include sugar, refined gasoline and nickel which have experienced a price drop in recent years.
Foreign investment is still low and not a chief contributor to the Cuban economy. A mere 6.5 percent of projects to date have the participation of foreign capital.
Cabrisas emphasized the importance of moving ahead with investment projects linked to developing the Cuban economy, increasing foreign investment, and better use of energy resources.
President Raul Castro said “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,” Future economic plans will include the protection of healthcare, education and other basic services.
Cabrisas said he expects the island’s GDP to grow two per cent next year if the government cuts costs, increases exports and finds alternatives for certain imports.