December 26, 2016

COME TO UNCLE:

Cuban President Raul Castro faces deep problems in 2017 (ANDREA RODRIGUEZ, 12/26/16, Associated Press)

Cuba publishes few credible economic statistics, but experts expect the country to end this year with gross domestic product growth of 1 percent or less. It maintained a rate close to 3 percent from 2011-2015.

One bright spot is tourism, booming since Obama and Castro's Dec. 17, 2014, detente announcement set off a surge in overall visitor numbers, up more than 15 percent in 2015 and again this year.

"I've never seen as many tourists as I have this year," said Magalys Pupo, a street-corner pastry vendor in Old Havana. "They're everywhere and they're the income that we need in this country."

The slowness of macroeconomic growth despite a surge of interest in foreign investment and the greatest tourism boom in decades attests to both long-term mismanagement of the Cuban economy and the depth of the crisis in other sectors, particularly aid from Venezuelan in the form of deeply subsidized oil.

Analysts believe that as Venezuela's Cuba-inspired socialist economy has disintegrated, exports to Cuba has dropped from 115,000 barrels daily in 2008 to 90,000 in recent years to 40,000 a day over the last few months.

Venezuela was the prime destination alongside Brazil for Cuban doctors and other professionals whose salaries go directly to the Cuban government, providing another vital source of hard currency believed to be slackening in recent years. Nickel, another of Cuba's main exports, has seen a sharp price drop this year.

The revenue drop may be creating a vicious cycle for Cuba's state-run industries. Experts say cutbacks in imported industrial inputs this year will lead to lower productivity in Cuba's few domestic industries in 2017 and make zero growth or recession highly likely.

"Raul Castro's government has a year left and it should be planning what needs to be done," said Pavel Vidal, a Cuban economist at the Universidad Javeriana in Cali, Colombia. "Above all, it will be managing a crisis."

The government cut back summer working hours and gas rations for state-owned vehicles and has so far avoided any sustained power outages. But a crackdown on black-market gasoline sales to taxi drivers led them to increase prices, causing drivers to raise their prices, squeezing many Cubans already struggling to get by on state salaries of about $30 a month. Many Cubans say, however, that worsening conditions could drive them to rally around the government rather than against it.

"It's going to be a tough year," said Antenor Stevens, a 66-year-old retired public water specialist. "We're a people who've suffered a lot. We've felt a lot of need, but there's still a revolutionary consciousness."

One cushion will be remittances from Cuban expatriates in the United States and other countries, estimated by some experts to be in excess of $3 billion a year and rising as Cubans flood to the United States in fear that they may soon lose special immigration privileges.

Another bright spot is Cuba's growing private sector, particularly businesses boosted by increased demand from tourists.

Posted by at December 26, 2016 3:46 PM

  

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