Vice-President Cabrisas forecasts 2pc growth for economy in 2018

2 January 2018

Cuba’s economy is expected to grow by 2% in 2018 following a year in which the country was able to record a 1.6% growth despite multiple setbacks.

Speaking to the Cuban National Assembly on December 21, Vice President Ricardo Cabrisas, the Minister of Economy and Planning, told delegates that in 2017 the Cuban economy had experienced modest growth. This was despite its failure to achieve the level of income forecast from the export of goods and services; a decline in the availability of fuel because of the situation in Venezuela; delays in implementing some national investment programs; and the problems caused by drought and then by Hurricane Irma.

Vice President Cabrisas said that the country’s GDP had grown at constant prices in 2017 by an estimated 1.6% largely because of tourism (up by 4.4%); transportation and communications (3%); agriculture (3%); and construction (2.8%).

He noted, however, that in relation to foreign trade, the failure to make payments on overdue letters of credit has negatively affected imports, as have difficulties in making use of available credits.

In his remarks he noted that the receipt of fuels, for a second consecutive year, has been very complex with deliveries (mainly from Venezuela) not made or not arriving in accordance with planned schedules. He said that at the same time, the production of oil equivalent (crude plus natural gas), was expected to fall short by 38,000 tons while generation from renewable energy sources was estimated to be meeting 4.25% of needs compared to a planned 4.65%, largely because of the inability of Azcuba to meet planned generating capacity.

Although in agriculture the tobacco, bean, root vegetables, beef and pork sectors had performed well, eggs and fresh milk production had not. Hurricane Irma, he said, had resulted in losses estimated at CUP4bn because of damage to sugar mills, poultry and pig sheds, as well as to sugarcane.

He also noted that although retail market distribution exceeded projections by 14.6% in both CUP and CUC – largely due to the increase in the participation of non-state economic activity – supply levels did not meet the growing demands of the population. Work on this, he said, is ongoing to advance toward this end.

In his report he said that it was estimated that around 90.8% of planned national investment had been met, there had been set backs by delays in the import of supplies, and non-compliance with work schedules.

Speaking about tourism, he said that an overall increase in visitors of 11.9% for 2017 was forecast, with arrivals likely to reach 4.7m in 2018 in total.

Vice President Cabrisas observed that despite the challenges faced, the government had been able to guarantee the sustainability of basic services, deliver the main activities contemplated in the national plan, and to undertake recovery from the damage caused by Hurricane Irma.

Speaking about 2018, he warned that growth would be affected by shortages of hard currency and fuel and a related fall in income from the export of goods and services, as well as falling commodity prices and weather-related events. Despite this, he forecast that Cuba expects growth of around 2% with construction activities up 12%, trade (6.7%) and tourism (4.2%).

He noted that there will remain in the short-term what he described as ‘a tense situation in the hard currency balance sheet’ but he said that Cuba will meet its obligations in agreements already signed with governments as a part of and agreed government to government debt restructuring processes.

Cuba, he said, “reiterates that it will fulfil such financial obligations in the future, recognising the understanding and support of the majority of its creditors”. Great efforts are being made toward this end, given the importance of this matter”.

He noted that in comparison with the 2017, a higher level of exports of goods and services is planned, driven by tourism, tobacco, and beverage production.

Forecasting a positive trade balance of US$54.8m in 2018 he said that food imports were projected to be US$1.7bn, US$66m more than the estimate for 2017.

Other highlights of his presentation include:

  • A forecast fall in raw sugar to 133,000 tons below 2017 estimates;
  • The total value of investments to reach CUP10.8bn mainly in relation to the tourism and energy sectors;
  • Foreign investment to have a 5.6% share of the total value of investments;
  • An extensive house building programme;
  • A 4.9% growth in the national consumption of crude oil and gas and a 6.1% increase in power generation;
  • Improvements to road and rail transport; and
  • Tourism to reach 5m visitors involving longer stays and a higher spend.

 

The full text of Vice President Cabrisas’ remarks, which include an outline of the country’s 2018 economic objectives and details of the sectors Cuba will prioritise, can be read in English at:

http://en.granma.cu/cuba/2017-12-28/with-the-effort-of-all-we-are-capable-of-ensuring-the-main-strategic-and-development-objectives-of-the-country

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