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Cuba: The Economic Crisis of the 1990s
Country Study > Chapter 3 > The Economy > Performance of the Economy > The Economic Crisis ofthe 1990s

THE ECONOMIC CRISIS OF THE 1990S


Official information on the performance of the Cuban economy during the 1990s remains scanty. The official statistical yearbook, Anuario estadistico, which was published annually during the 1970s and 1980s, ceased publication with the issue for 1989 and did not appear again until the issue for 1996, under the auspices of the newly formed National Statistical Office (Oficina Nacional de Estadisticas-ONE). Beginning in August 1995, the Cuban National Bank (Banco Nacional de Cuba-BNC) and its successor, the Cuban Central Bank (Banco Central de Cuba-BCC), have published annual reports on the performance of the Cuban economy that include some statistical information. The national product statistics in the BNC, BCC, and ONE reports follow the System of National Accounts (SNA-see Glossary), a different methodology than was used by socialist Cuba through the early 1990s, thereby making long-term comparisons impossible.

In mid-1997, the Economic Commission for Latin America and the Caribbean (ECLAC-see Glossary) of the United Nations released a comprehensive study of the Cuban economy prepared with the cooperation of the Cuban government. A statistical annex to this report-reportedly based on information provided by Cuban government statistical agencies-provides economic data not published directly by the Cuban authorities. Using information contained in the BNC, BCC, ONE, and ECLAC reports, analysts may be able to gauge the depth and breadth of the economic crisis of the 1990s.

National Product

After falling freely since 1989-by 3 percent in 1990, 11 percent in 1991, 12 percent in 1992, and 15 percent in 1993-the Cuban economy apparently hit bottom around mid-1994. The gross domestic product (GDP-see Glossary) at constant prices of 1981 was about 12.8 billion pesos in 1993, 35 percent lower than in 1989 (see Table 5, Appendix).

According to official statistics, the GDP grew by 0.7 percent in 1994,2.5 percent in 1995,7.8 percent in 1996, 2.5 percent in 1997, and 1.2 percent in 1998. As had been the practice in the 1990s, Cuba has not provided detailed statistics to support reported growth rates. Experts on the Cuban economy have raised fundamental questions about the reliability of Cuban economic statistics for 1996 and, by extension, about those for other years and more broadly about the Cuban system of national accounts. If the official statistics are taken at face value, the cumulative CDP growth rate over the 1993-98 period is about 16 percent, compared with a contraction of 35 percent between 1989 and 1993.

Foreign Trade

Cuban merchandise exports in 1993 amounted to less than l.2 billion pesos, 79 percent lower than the nearly 5.4 billion pesos recorded in 1989 (see Foreign Economic Relations, this ch.; table 6, Appendix). Over the same period, merchandise imports fell from 8.1 billion pesos to slightly more than 2.0 billion pesos, or by 75 percent. Exports began to recover in 1994, rising to about l.3 billion pesos in 1994, l.5 billion pesos in 1995, and l.9 billion pesos in 1996, then falling to l.8 billion pesos in 1997 and 1.4 billion pesos in 1998. Meanwhile, imports were 2.0 billion pesos in 1994, 2.9 billion pesos in 1995,3.6 billion pesos in 1996, 4.0 billion pesos in 1997, and 4.2 billion pesos in 1998. In 1998 exports and imports were still substantially lower than in 1989, by 73 percent and 49 percent, respectively.

State Budget

During the crisis, the nation's budget deficit nearly tripled, deteriorating from 1.4 billion pesos in 1989 to nearly 5.1 billion pesos in 1993 (see table 7, Appendix). In 1993 the budget deficit amounted to more than 30 percent of the CDP. Shortages of consumer products in the state distribution system, coupled with low (officially set) prices for basic consumption goods, the lack of a tax system, and government policies of continuing to pay a portion (60 percent) of salaries to idle workers, led to a sharp rise of monetary balances in the hands of the population. These balances grew from about 4 billion pesos in 1989 to 1l.4 billion pesos in 1993.

The government's budget deficit fell to the pre-crisis level of -l.6 billion pesos in 1994, -766 million pesos in 1995, -570 million pesos in 1996, -459 million pesos in 1997, and -560 million pesos in 1998. Meanwhile, monetary balances in the hands of the population declined to 9.9 billion pesos in 1994 and 9.3 billion pesos in 1995, but rose again in 1996 to 9.5 billion pesos and reached 9.7 billion pesos in 1998.

Performance of Economic Sectors

The economic crisis affected nearly all sectors of the economy. As discussed above, GDP fell by 35 percent during 198993, according to official statistics. However, the performance of several key sectors of the economy was significantly worse: output of the construction sector fell by 71.4 percent, agriculture by 51.9 percent, transportation by 45.8 percent, commerce by

43.0 percent, and manufacturing by 36.5 percent. The downturn of the construction industry was attributed to a sharp contraction in domestic investment and shortages of construction materials; nonsugar agriculture was adversely affected by the lack of imported inputs-for example, fertilizers, pesticides, and spare parts for machinery-and of manpower to cultivate the land and harvest crops. Sugar production, still the mainstay of the economy and the most significant source of export revenue in the early 1990s, fell from 7.3 million tons in 1989 to 4.1 million tons in 1993, or by 43.8 percent, contributing to the decline in the output of the manufacturing sector. Nickel production declined by 35.2 percent. By 1995, however, the manufacturing sector had increased its share of GDP by 2 percent, to 27 percent (see fig. 4).

Two bright spots for the Cuban economy during the gloomy 1989-93 period were the oil and tourism industries. Domestic oil production for the first time exceeded 1 million tons in 1993. Between 1989 and 1993, the number of international tourists visiting the island jumped from 300,000 to 546,000 persons, and gross income from tourism increased more than fourfold (from 166 to 720 million pesos).

Population consumption of food, consumer durables (see Glossary), and nondurables, such as vegetables, dropped sharply in the early 1990s, with rationing reinstated for a wide range of staple food, personal hygiene, and clothing items. Moreover, monthly rationing allowances were trimmed back so that the typical household could satisfy only about two weeks of its consumption needs through the rationing system. The cutbacks forced most consumers to turn to more expensive alternatives-especially the very active black market-and affected, in particular, consumption levels of pensioners. Electricity shortages and blackouts became commonplace, and public transportation was cut back sharply. The availability and quality of public health and education services, two of the most lauded accomplishments of Fidel Castro's government, also declined severely.




Last Updated: April 2001


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Cuba was first published in 2001. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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