CUBA: Economic Growth Won’t Improve Quality of Life

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Jul 29 1997 (IPS) - The Cuban economy could grow by around four percent this year, but this timid recovery will not have any immediate effect on the quality of life of the population, local experts said.

Estimates from the Centre of Studies of the Cuban Economy stressed the national economy would have to grow at a sustained 10 percent per year for the people to feel the changes.

Merely surviving is the main concern of most Cubans in the seventh year of a crisis affecting all sectors of the life of the country, which caused a 34.8 percent reduction in Gross Domestic Product (GDP) between 1989 and 1993.

Local experts attribute the crisis to a combination of internal errors in economic management, the loss of trade partners in the former socialist bloc and the US blockade.

“The economy can grow, but the problem is the retroactive effect of the crisis,” said an economic researcher -who asked to not be named- stressing the local consumer has a sensation that “things are getting worse.”

Cuba showed the first signs of recovery in 1994 with a light improvement of 0.5 percent in GDP, which a year later grew to 2.5 and then shot up to 7.8 percent in 1996, an indicator which appeared to confirm the tendency toward recovery.

Economy and planning minister, Jose Luis Rodriguez, said the growth was fundamentally fired by the lift off in the sugar sector, which went from 3.3 million tons in 1995 to 4.4 million last year.

But sugar took a new step backwards this year by closing at only 4.2 million tonnes, when the government had predicted harvests of 4.5 million.

Experts predict that had the sugar harvest worked the economy could have grown by two percent in the first six months, and that without this it was unlikely four percent growth in GDP will be reached by the year’s end.

The indicators started to register a recovery at the end of the first quarter, a period in which activity grew 1.5 percent, compared with eight percent in the same period of 1996.

Growth expectations are based on the growth of tourism, nickel, tobacco, and productive sectors of basic and light industry. At the same time, backsliding was seen in the food areas.

Cuba hopes to attract 1,197,000 tourists this year, export more than 65,000 tonnes of nickel and sell a million exclusive pure Havana cigars on the international market.

Cuban fortnightly, Bohemia, said this month the authorities are looking into formulas to make the legislation on foreign investments more flexible and attractive.

This measure would be a sort of “antidote” to the US Helms- Burton law, which since its approval in March 1996 managed to stop the flow of foreign capital needed to back the economic lift off.

The Ministry of Foreign Investment and Economic Collaboration confirmed there are 260 mixed ventures with foreign investors on the island, but the specialists predicted the number would be closer to 300 by the end of 1996.

The Helms-Burton bill toughened the 36-year-old economic blockade on the island and established sanctions against firms from third countries dealing with US property confiscated by the Cuban government in the sixties.

A new aspect of the problem appeared on July 23 when the US government decided to close investigations into the activity of the Italian Stet telecom company in Cuba after this firm reached an agreement with the US company ITT.

Stet committed itself to paying ITT compensation for the use of its former property on the island.

Independently of the advances made in some branches, experts and authorities appear to agree the growth is still insufficient compared with the fall suffered by the economy during the first four years of the decade.

Specialist calculations assure the population of the island, which number more than 11 million people, will have to wait some 10 years before they will be able to recover the standard of living they had at the end of the past decade.

“It is difficult for growth to remain at high percentages. What is most probable is that after the lift off is verified, the economy will keep growing but at low levels of around three, or at most four percent,” said an economist.