ECONOMY-CUBA: Government Upbeat on Six Percent GDP Growth

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Dec 20 1999 (IPS) - The Cuban government is waxing optimistic over this year’s growth of Gross Domestic Product (GDP). But economists warn that more than a decade of steady growth will be needed to return to the conditions enjoyed prior to 10 years of crisis.

“It’s good news, but we haven’t noticed it on my table,” said Ana Morgado, a 40-year-old high school teacher, divorced and with two children, commenting on the government’s news that Cuba would end the year with a 6.2 percent rise in GDP.

Economist Osvaldo Martínez, president of the Economic Commission of the National Assembly (the Cuban parliament), contrasted that figure with the results seen this year in the rest of the region, which is seeing out 1999 with zero growth, the poorest performance this decade, and a 2.5 percent average for the past five years.

The annual report released last week by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) put growth in Cuba at 6.0 percent, the same level registered in Nicaragua, and outstripped in the region only by Costa Rica (7.5 percent) and the Dominican Republic and Trinidad and Tobago (7.0 percent).

Martínez pointed out that this year’s results in Cuba capped several years of recovery.

But unlike in the past several years, the recovery seen in 1999 encompassed all sectors, including sugar.

Nevertheless, the low international prices of sugar continued to take their toll, and revenues brought in by the commodity fell despite a 500,000-ton – or 21 percent – rise in exports on last year, according to Minister of Finances and Prices Manuel Millares.

Since the 34.8 percent plunge in GDP from 1990 to 1993, experts warn that it will take more than 10 years for the Cuban economy to return to pre-crisis levels, when it grew under the sheltering umbrella of the now defunct Soviet Union and east European socialist bloc.

The break-up of the socialist bloc left Cuba without the privileged trade relations that allowed its economy to grow and develop for three decades, despite the US economic blockade imposed in 1962.

Cuba’s GDP rallied slightly – 0.7 percent – in 1994 and 2.5 percent the following year. But after a 7.8 percent rise in 1996, growth slowed down once again, to 2.5 percent in 1997 and 1.2 percent in 1998.

While Cubans enjoy health services and education free of cost, the generalised complaint these days is that wages simply do not stretch far enough to put balanced meals on the table.

The basic basket of goods subsidised by the State costs just over 60 pesos (sold at 22 to the dollar at government exchange bureaux). But it does not cover all the dietary needs of a family, which must supplement it with food purchased in farmers’ markets where prices are set by the laws of supply and demand.

A vast network of stores where goods can be purchased only in dollars, which opened up in 1993 after possession of dollars was legalised in Cuba, completes the gama of shopping opportunities.

But Morgado said a litre of cooking oil in the “mercadito” or little store near her house cost her 2.40 dollars.

“This year there has been more money, more demand and more products,” says Millares in an article published in the State- monopolised press – one of the reasons, he maintains, that many people feel their wages do not stretch as far anymore.

The minister also pointed out that given the peculiarities of the Cuban economy, the market of products sold in hard currency was accessible to a very limited sector of the population, and “in no way expresses a general relationship of real value between the Cuban peso and the dollar.”

The controlled and subsidised prices of a range of basic foodstuffs and essential services like power, water and transportation, as well as free health and education, “mark a philosophy of equity,” he said.

That means “the average Cuban has a real buying power that would have to be added to his or her nominal salary” in order to make realistic and fair comparisons, said Millares.

Vice-President Carlos Lage, considered the architect of the economic reforms implemented in Cuba this decade, such as the farmers’ markets and broader margins for self-employment activities, denied that the recovery of the economy had only taken place on paper.

“The living conditions of the population have improved,” with less blackouts, improved availability of foodstuffs, and a rise in the average wage, he said.