Tuesday, November 27, 2007

Cuba says economy still hot with growth at 10 pct

Guardian Unlimited

Tuesday November 27 2007

Marc Frank

HAVANA, (Reuters) - Cuba's economy is expected to grow about 10 percent in 2007, fueled by a jump in factory and farm output, in the country's third straight year of double-digit growth, the official media reported on Tuesday.

"This year's plan is 10 percent and we are going to come in around that figure," Economy and Planning Minister Jose Luis Rodriguez said at a meeting of economists on Monday, parts of his speech broadcast on state-run radio on Tuesday.

Rodriguez gave few details, simply stating "there is an important jump in industrial and agricultural production."

A local economist said above normal rainfall since late 2006 has boosted agricultural production after a severe drought in 2004 and 2005 caused a 30 percent decline in output.

The economist, who asked not to be named, said massive investment in the energy grid had put an end to power outages that seriously interrupted industrial production in the past.

Tourism, the driving force behind the economy and main foreign exchange earner until service exports overtook it in 2005, declined by 9 percent through August, an industry source said. There was no growth in sugar output in 2007, though the crop has long since become secondary to the economy.

Cuba reported gross domestic product growth of 12.5 percent in 2006 and 11.8 percent in 2005, based on a locally devised formula that estimates the market value of free social services and subsidized goods and services. It also includes massive medical and other services exported mainly to Venezuela.

The U.N. Economic Commission for Latin America and the CIA estimate that this formula overstates Cuba's gross domestic product by between three and four percentage points.

Cuba's GDP contracted 35 percent when the Soviet Union collapsed, depriving it of massive subsidies and resulting in shortages of food, energy, transportation and capital.

Over the last four years communist-run Cuba has spent billions of dollars to improve its crumbling energy grid and other infrastructure and recover from years of crisis despite stepped up U.S. economic sanctions.

Cuban imports have doubled since 2003 as foreign exchange earnings jumped, due mainly to payment for medical services exported to Venezuela, soft credits from China, and increased revenues from nickel and pharmaceutical exports.

Foreign trade totaled $12.18 billion in 2006, with exports of $2.76 billion and imports of $9.42 billion, the government reported. The trade deficit was offset by more than $6 billion in revenues from services. For more statistical details on the Cuban economy through 2006, go to www.one.cu, the Web site of the Cuba's statistics agency.

(Edited by Anthony Boadle and Walker Simon)

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