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Special report on the Cuban economy in 2001.

Cuba's leaders claim that the economic growth for 2001 of 3.0 percent, below the original 5 percent target, attained in spite of the slowdown of the world economy and soft prices for the island main export commodities and the blow to the economy of hurricane Michelle (see CubaNews December 2001) is a remarkable success, but they seem more cautious as they give the prospects for 2002.

TOURISM

Tourism stalled nearly at the same level of 2000--well below the 13 percent growth expected--as result of a dramatic drop in foreign arrivals after the September 11 terrorists attacks on the United States.. By the end of 2001 some 1.79 million visitors arrived to the island, missing the original target by 210,000 approximately, what in terms of income would represent roughly $220 millions.

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Total revenues from tourism have not been disclosed, but seemingly the contraction is here even more significant.

SUGAR SECTOR

The sugar industry suffered a dramatic setback. Total sugar output totaled 3.52 million tons for a 13 percent drop in the first semester and seemingly efficiency suffered from the ministry's decision to extend the harvest into the rainy season. The failure was bitter, as it showed the inability of the ministry to recover the agricultural sugarcane yields--largely the main reason of the shortage--after five years of costly massive replanting crusades searching to renew one fourth to one third of the plantations every time. Also the sacrifice made in 1998 when a deliberately shorter harvest was made in order to spare more mature cane for future harvests seems futile from distance. It also revealed that the industry is still in very bad shape to carry the harvest, as sugar mills performed below 76 percent of their nominal capacity, even as inefficient mills were shut down.

The good news is that better prices improved revenues from sugar exports in spite of a shorter harvest. The Foreign Ministry preliminary figures show sugar exports totaled $561.7 millions in 2001 compared to $459.2 in 2000 when a biggest harvest was achieved.

The forecast for the ongoing harvest is not clear. While Castro himself said that hurricane Michelle would cost 400,000 tons in sugar exports, (Michelle produced $1.86 billions in damages to the economy) the ministry officials insist that the 4 million tons original goal is reachable, while others believe a modest growth over the past season is possible. On the better side, helped by good weather the industry had the best harvest start in a decade making over 100,000 tons by late December.

NICKEL OUTLOOK

Nickel experienced an 4.9 percent growth to a record 76,600 tons over the 73,000 tons of 2001 and 66,500 tons in 1999. The government says multi-million dollars investments in the industry allowed to cut the oil consumption in a half compared to 1995 in the largest Che Guevara plant of Moa (30,000 tons capacity), the Achilles Heel of the industry.

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Joy in the government in the face of the recovery of the nickel industry could not overcome the huge hike in oil prices and the relative softness of nickel prices in the second half of the year. Sherritt International, which operates the Pedro Soto Alba plant in a 50/50 joint venture with the Cuban government, had made frequent references to the impact of the soft prices as one of the leading causes of the corporation's paltry earnings. In the first three quarters 2001, Sherritt's earnings were $60.8 million compared to $96.1 million in the same period of 2000. Any additional reduction in oil prices would benefit the nickel industry, but by the same token, if nickel prices remain soft, as many analysts fear, the revenues would remain limited. Earnings from nickel exports in 2001 totaled $428.8 millions compared to $573.6 millions a year earlier in spite of the production growth.

TRADE

Trade is one of the sectors of the economy that clearly continued to be in trouble in 2001. The original economic plan for 2001 had foreseen an increase in exports of above 20 percent and an increase in imports of just 4 percent. The idea was to cut in 4.4 percent, the $3.175 billion trade deficit recorded in 2000 (which in turn had widened from $2.995 billion in 1999 and $2.377 in 1998 according to Foreign Ministry figures). But the reality turned out to be quite different.

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Exports grew just 0.8% in 2001, while imports overshot the original target growing by 1.8 percent.

The trade deficit for 2001 stand at $3.25 billions, a widening of $73 millions over the past reference year, around $212 millions more than the government had anticipated originally.

The trade deficit was equivalent to an astonishing 49.2 percent of the total trade of goods and merchandises, a ratio that remains stable for most of the last decade.
Sugar Export Revenues (Million US Dollars)

1996 998.2
1997 872.9
1998 601.4
1999 462.5
2000 459.2
2001 561.7

Note: Table made from bar graph.

Nickel Export Revenues (Million US Dollars)

1996 416.8
1997 415.3
1998 321.2
1999 394.2
2000 573.6
2001 428.8

Note: Table made from bar graph.
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Publication:CubaNews
Geographic Code:5CUBA
Date:Jan 1, 2002
Words:884
Previous Article:After attacks, Castro tones down rhetoric toward Washington.
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