CU econ 2001
14 Dec 2001

Reuters - HAVANA - Still trying to recover from the collapse a decade ago of its benefactor the Soviet Union, Cuba is struggling to avoid recession in 2002, government sources said. Pummeled by the world slowdown, a drop in tourism after the Sept. 11 attacks on the United States, and the worst hurricane to hit the island in 50 years, economic growth has all but ground to a halt in recent months, the sources said. Growth has averaged 4.7 percent annually since 1996. President Fidel Castro's government will announce later this month the gross domestic product increased no more than 2-3 percent this year, compared with 5.6 percent in 2000. Prospects for 2002 are even gloomier, they said.``To be honest, given all the uncertainties in the world today, it is impossible to predict what will happen next year, but it certainly will be worse than this year,'' a mid-level government official told Reuters. Another mid-level official said the government would also announce it had frozen most investments for 2002, slashed budgets and adopted other austerity measures due to a mounting shortage of hard currency needed to purchase such basics as food, fuel, and raw materials for the import-dependent country. Even before Hurricane Michelle tore across central Cuba in early November, killing five people and causing widespread damage, Castro warned the country it faced a cash and credit crunch in 2002 and more economic hard times. Castro, during a three-hour nationally broadcast appearance Nov. 2, said the world economic slowdown and aftermath of the Sept. 11 attacks had hurt the island's main exports of sugar, nickel, and other products, as well as its key hard currency earner, tourism. ``No sacrifice intimidates us. ... We have endured all manners of sacrifices for many years,'' he said. Since then government officials and the state-run media have taken to warning the population almost daily they will have to tighten their belts again in 2002. ``Maintaining the levels of activity and life that have been reached in these years in areas such as food, health, and power generation, and recovering from the damage caused by Hurricane Michelle are the main goals for 2002,'' the Communist party daily, Granma, said Wednesday, reporting on a recent national meeting of government officials. Granma quoted Vice President Carlos Lage, in charge of the economy, as saying the activity of some sectors would decline in 2002, but the government would work to avoid increased unemployment, inflation, and further deterioration of the local currency, which has fallen some 23 percent in recent weeks against the dollar. Since 1994, Cuba has been recovering from the crippling 35 percent decline in its gross domestic product in the 1989-1993 period following the collapse of communism in Europe. The Soviet Union was communist-run Cuba's main economic benefactor and partner. The crisis lead to widespread power outages and food, transportation, and other shortages, which the country is still struggling to overcome. Gross domestic product was reported at 85 percent of its 1989 level when the year began. Cuba has little access to credit due to U.S. sanctions on the island and chronic debt payment problems. As a result, this year's loss of dollar revenues needed to import essentials will be hard to replace.