Castro prepares Cuba for tough year despite U.S. opening

HAVANA -- President Raul Castro warned Cubans on Tuesday to prepare for tough economic conditions in 2016 despite warmer relations with the United States.

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Castro said that while tourism is booming, low oil prices have damaged the outlook of an economy that depends on billions of dollars of subsidized oil and cash from Venezuela.

According to state-controlled media, Cuba's president told the National Assembly to expect 2 per cent growth in gross domestic product next year, half the rate his government reported in 2015. Foreign media are barred from the twice-annual meetings of the National Assembly.

Despite the government's assertion that the GDP grew 4 per cent this year, there is widespread dissatisfaction among Cubans over the widening gap between low salaries and the high price of essential goods, most particularly food.

Castro appeared to be preparing Cubans for harder times ahead, saying that "we must cut any unnecessary spending and make use of the resources that we have with more rationality and with the goal of developing the country."

He dedicated a lengthy section of his speech to Venezuela, where the opposition to Cuba-backed socialist President Nicolas Maduro recently took control of parliament amid widespread shortages and spiraling violence.

Cheap oil "has affected our relationship of mutual aid with various countries, particularly the Bolivarian Republic of Venezuela, the target of an economic war aimed at undermining popular support for its revolution," Castro said.

He urged Cubans to avoid what he labeled "defeatism" in the face of a drop in Venezuelan aid, saying "the history of our revolution is full of glorious pages despite difficulties, risks and threats."

More than 3 million tourists visited in 2015, an increase of nearly 20 per cent in the wake of President Barack Obama's declaration of detente with Cuba. The surge in visitors pumped cash into the state-controlled tourist economy and the growing sector of private bed-and-breakfasts and restaurants, but it also drove up household inflation. In the absence of a wholesale market for private businesses in Cuba's state-controlled economy, entrepreneurs have been forced to compete with cash-strapped consumers, driving up prices by driving off with cartloads of basic foodstuffs like eggs and flour.

Salaries for state employees, who make up most of Cuba's workforce, remain stuck at around $25 a month, leaving hundreds of thousands of Cubans struggling to feed their families.

Falling oil prices have lowered the cost of the imported goods that Cuba depends on but have hurt the island's economic relationship with Venezuela in 2015, Castro said. Cuba has sent thousands of doctors to Venezuela in recent years in exchange for oil and cash payments at highly beneficial rates.

Cuba does not regularly release reliable economic statistics that conform to international standard but its top earners of hard currency in recent years have been tourism, nickel mining and the export of government-employed professionals like the doctors sent to Venezuela and other allied countries. Castro said lower nickel prices also hurt the country's 2016 outlook.



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