Photo by Jeremy Bezanger
Cuba’s economy is expected to grow by 2.2% this year, initiating what Deputy Prime Minister Alejandro Gil, the Minister of Economy and Planning, has said will be a gradual economic recovery.
Speaking to the media, Gil noted that despite an 11% fall in GDP in 2020, the country was likely to see a more favourable economic picture in 2022 because of the “diversification in the country’s productive fabric and the recovery of state and non-state enterprises”.
Gil said that although it was important not to create false expectations: “The conditions have been created to begin a gradual process of recovery of economic activity”. Noting the continuing complexities facing the Cuban economy because of the tightening of the US embargo and the global impact of the pandemic, he forecast that “little by little [Cuba] will recover the activity levels lost since 2019, as well as the level of supply to the population of certain products that have been in short supply since mid-2019”.
He noted that although Cuba would not achieve the 6% growth originally hoped for in 2021, the economy would now begin to recover due to the opening of services and tourism. This would be helped, he said, by the implementation of measures that aim to change the way in which both state and non-state enterprises can operate, in self-employment, and through the constitution of independent micro, small and medium-sized enterprises (MSMEs), and the expansion of non-agricultural cooperatives.
Speaking about tourism recovery, the minister noted that although the pandemic had caused delays to reopening, Cuba now hoped to receive 0.2mn visitors in the remainder of the year, compared to the 2.2mn international visitors it had originally forecast for 2021. Despite this, he said, tourism would provide an important contribution to the recovery of the economy.
Gil said that, as MSMEs came to play a complementary and greater role in the economy, many more new jobs would be created. He emphasised that there would be no restrictions or limits on the number of microenterprises that can be created. He said that some 0.2mn jobs had been created since the introduction of “monetary reordering” earlier this year and following government’s decision to allow the state business sector to pay varying wage scales.
He stressed that a fundamental priority now for the government was to confront price inflation, which he described as “the most controversial issue” for many Cubans, “and one that monopolises the largest number of complaints from the population”. He noted that the recovery of the economy would help contain inflation through production by increasing supply “since there will be more space to apply certain decisions that allow [us] to face the phenomenon more resolutely”.
“If there is no level of supply, it is very difficult to establish effective controls with administrative measures,” he said, while calling for social responsibility and ethics on the part of all economic actors.
Gil observed that one way to control inflation and combat Cuba’s burgeoning black market would have been to sell dollars in banks and Cadecas. However, he said, the need to preserve scarce foreign exchange for the import of food and fuel meant that this was not possible. Speaking about excess liquidity, Gil suggested that one way to address this might be to encourage the participation of individuals in the public debt market.
He also focussed on the impact that breakdowns in the national electricity system are having and government’s decision to halt some high-impact economic activities to minimise the negative energy effect on the population. He however offered no immediate solution to address rapidly rising energy prices and the need to purchase, he said, 60,000 to 66,000 tons of diesel a month for power generation.
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