While Tourism Soars, Cuba’s Economy Struggles

Cuban-Travel-New-Rules-300x200Tourism has reportedly been a bright spot for the Cuban economy during the first half of 2017, pulling in 23 percent more tourists than the same period last year. But other areas of the island nation’s economy have foundered and failed to meet projected targets, Cuban officials have revealed.

The Cuban economy experienced a 1.1 percent growth during the first half of the year thanks to the tourism, agriculture, and construction sectors. Other economic sectors have reportedly performed poorly as the island bounced back from a recession and faced difficulties securing trade credits.

Cuba’s Economy Minister Ricardo Cabrisas revealed the state of the nation’s economy in a report to the National Assembly earlier this month. According to Cabrisas, the Cuban economy had dipped by .9 percent, so even a small increase showed progress. The island slipped into a recession as it dealt with declining oil shipments from key ally Venezuela and a big drop in exports and imports.

“Since the plan and budget for the current year were being prepared, we have warned of persistent financial tensions and challenges that could complicate the national economy’s performance,” said Cuban President Raúl Castro in his speech to the National Assembly on July 14. “We likewise foresaw periodic difficulties in the delivery of fuel from Venezuela . . . amidst these difficult circumstances, encouraging, modest results have been achieved.”

Even so, the 1.1 percent growth reportedly surprised some Cuban officials. It is less than the 2 percent government forecast for 2017, but is in line with the United Nations estimate of 1 percent, which is the average expansion projected throughout the Caribbean. Cuba’s sources of economic growth likely won’t be enough to compensate the decline in other sectors for second half of 2017.

“That was a surprise, but essentially they’re still talking stagnation,” University of California professor Richard Feinberg told The Miami Herald. “The theme of Raúl’s speech and the others [in Cuba’s parliament] was one of austerity, continued cutbacks on imports and harder times for the average Cuban.”

Even the booming tourism industry might not be safe as U.S. President Donald Trump’s partial rollback of U.S.-Cuba relations comes into effect. Trump announced tighter restrictions on Americans traveling to the island and that might cast a shadow on the Cuban tourism industry.

Tourism Minister Manuel Marrero noted this fact in his speech to the National Assembly. He said the number of visitors from the U.S. was up 150 percent this year but Trump’s pending restrictions could slow the flow for the rest of the year.

Trump announced regulations that would prohibit Americans traveling to the island individually under the people-to-people category and also said U.S. travelers will be more strictly audited to make sure they’re not going to the island for tourism.

Still, Marrero expects Cuba will receive 2 million international visitors during the remainder of the year for a total of 4.7 million visitors for 2017, which is 500,000 more than was anticipated. He hopes the island nation will receive 5 million tourists next year.

Source: 7.24.17 While Tourism Soars, Rest of Cuba’s Economy Struggles.pdf