Gloomier economic predictions

The Center for the Study of the Cuban Economy predicted this week that Cuba’s economy would grow only slightly or shrink in 2009. Center economists predict 1% growth, but accept a possible range of -0.5 to 2.5%—much more realistic expectations, given current circumstances, than the 6% growth projected by the government. In fact, in the past few years the Center’s growth predictions have been much closer to the mark than those of the state.

The think tank is connected to Havana University and therefore not directly dependent upon government ministries (unlike other think tanks in Cuba). Independently then, in a piece for the International Press Service, Center economist Pavel Vidal wrote on the reasons why after four years of strong growth in Cuba, the economy would now decline. He highlighted the effects of the global financial crisis and the economically damaging hurricanes of 2008, but also pointed to low productivity, poor diversification of exports, and the dramatic increase last year in the nation’s trade deficit, which rose 70% due to high prices for food (imported) and low prices for nickel (exported).