CUBA-ECONOMY: Five More Years to Return to 1980’s

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Jan 12 1996 (IPS) - Cubans will have to wait at least five more years before they recover the standard of living they enjoyed in 1989, according to recent analyses.

Even a sustained 5 percent annual growth in the Gross Domestic Product (GDP) would take some years to bring the economy back to where it was in the late 1980’s, according to financial analysts.

An unpublished official report, described as a “simple mathematical exercise” obtained by IPS, forecast the consequences of GDP growth ranging from 2.5 percent in the worst case scenario to six percent in the best case.

In the best case, Cuban per capita income would reach the 1989 level of 1,860 pesos (at par with the dollar at the official exchange rate) in the year 2001, the report said. But it would take 18 years to reach this standard under the most “conservative” forecast of 2.5 percent annual growth.

“These are just estimates. What’s most probable is that growth will vary from year to year and a boom will be followed by slow growth of between two and three percent,” commented one economist.

Official sources acknowledge that per capita GDP fell from 1,861 to 1,777 pesos between 1989 and 1994.

The economy began to show weak signs of recovery in 1994 when it grew 0.7 percent over the previous year and it had further strengthened by the end of 1995, when it was announced that the economy had grown by 2.5 percent.

A National Bank of Cuba report given limited circulation last month estimated 1995 GDP at 13.190 billion pesos compared to 19.335 billion in 1989 and 10 billion in 1993.

Authorities hope to duplicate 1995’s performance this year and to maintain this level of growth in the future, but local experts warn that no matter how dynamic the recent takeoff, it was “too optimistic” to believe in a sustained 5 percent growth rate.

For this to occur, the sugar harvest would have to achieve the planned 4.5 million tons, some 1.2 million more than the 1994-95 harvest.

At Parliament’s final session on December 26 before beginning its recess, President Fidel Castro revealed that Cuba had prefinanced the 1995-96 harvest with 300 million dollars in foreign loans.

Local experts say that the high-interest, short-term loans put the island between a rock and a hard place and that any economic growth will depend on sugar production.

“We should postpone our dreams and (expectations of) substantial improvements,” said Economy and Planning Minister Jose Luis Rodriguez when he presented the 1996 economic plan to parliament. He predicted this year would be “tense and difficult.”

High government officials warned last December that the growth rates of different economic sectors were still “insufficient,” and that Cubans should not expect an immediate improvement in their standard of living.

Demographic experts say that Cuba has benefited from a low rate of population growth since the end of the 1970’s and that a population boom in the medium term is unlikely. Cuba’s population (currently 10.9 million) is aging, and the number of Cubans is expected to decline in the first decades of the 21st century.

“The low birth rate means that the gap between the rate of GDP growth and the rate of per capita GDP growth will not be very large,” an expert commented.