Cuba's economy shrank 0.9 percent this year, economy minister says

© Reuters. Containers are seen at the Mariel port in Artemisa province, Cuba© Reuters. Containers are seen at the Mariel port in Artemisa province, Cuba

HAVANA (Reuters) – Cuba’s economy shrank 0.9 percent this year due to a fall in exports to its oil-producing allies as they struggled with the long slump in global fuel prices, its economy minister told the National Assembly on Tuesday in a closed-door speech.

The figure suggests the centrally planned economy contracted sharply in the second half of the year after drastically cutting imports, investment and fuel use due to a cash crunch. The government had reported 1 percent growth for the first half.

In excerpts published by official media, Economy Minister Ricardo Cabrisas told the National Assembly that the economic outlook was brighter, forecasting strong growth next year for the sugar industry and tourism.

“For 2017, we expect growth of 2 percent in gross domestic product following a contraction of 0.9 percent in 2016,” Cabrisas was quoted as saying by official media. The economy grew 4 percent in 2015, according to the government.

Given a global drop in commodity prices, Cuba is struggling with a fall in exports of nickel, refined oil products and sugar, as well as a decline in revenue from the sale of medical services to oil-producing allies like Venezuela and Angola.

In a further blow to the Cuban economy, crisis-stricken Venezuela slashed its exports of cheap oil to Cuba this year.

In one bright spot, Cuba’s detente with the United States has fueled a boom in the tourism sector and supported private sector growth through increased remittances.

But some experts fear growth from thawing relations with the United States may be at risk since Republican Donald Trump’s victory in the U.S. presidential election. Trump, who takes office Jan. 20, has vowed to “terminate” Obama’s engagement with Cuba unless Havana gives the United States what he calls a “better deal.”

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