Cuba lowers growth forecast

Communist - run Cuba’s economic growth will come in at around 1 per cent this year, compared with the 2pc previously forecast, due to a fall in exports and tourism revenue, state-run media reported over the weekend. The Caribbean island’s gross domestic product grew 1.8pc last year and 0.5pc in 2016.

Economy and Planning Minister Alejandro Gil Fernandez reportedly told a council of ministers meeting that the lowered GDP growth forecast for this year was due to “less than expected revenues from activities such as tourism, the harvest (sugar) and mining (nickel),” three key revenue sources for Cuba. Gil said austerity measures, which began in 2016, would continue into 2019.

They include cuts in energy and fuel to state companies and reduced imports of consumer goods and inputs for the economy. The Trump administration is also tightening sanctions on Cuba that have been in place for more than a half a century and which were loosened a bit under former US President Barack Obama. Some economists have estimated that Cuba’s import dependence is as much as 17 cents for every dollar of product produced.

Cuba’s GDP fell 35pc in the 1990s after the fall of the Soviet Union, which supported the country financially during the Cold War. The rise of Hugo Chavez and his Venezuelan socialist revolution led to a partial revival of the Cuban economy as Venezuelan oil was sold to Havana at favourable terms and Cuba sent doctors and other goods to its ally.

But the trade relationship has deteriorated due to Venezuela’s economic crisis and declining oil exports. Cuba’s export revenues have declined every year since 2014, even as debt payments mounted, offset somewhat by increased revenues from telecommunications and remittances, though those earnings are treated as state secrets.