Cuba’s government cuts 2014 growth forecast

Last Updated on Monday, 1 December 2014, 22:58 by GxMedia

Havana, Dec 1 (EFE).- The government of Cuba estimates the country’s economy will grow 1.3 percent this year, almost a full percentage point below previous projections, but expects gross domestic product to expand by more than 4 percent in 2015, official media said Monday.

“In 2015, GDP is expected to expand a notch above 4 percent thus reverting modest growth rates and a slowing trend in recent years,” Economy Minister Marino Murillo said during last Friday’s Cabinet meeting chaired by President Raul Castro.

Murillo, who is also one of Cuba’s vice presidents, said better performance will be seen next year in manufacturing, construction, commerce, agriculture, ranching and forest products.

Cuba’s GDP will end the year with a 1.3 percent growth, far from the 2.2 percent projected one year ago and even below the 1.4 percent revised estimate issued in mid-2014.

The government pointed to manufacturing and the sugar industry as major laggards this year.

The Cabinet discussed the economic plan for 2015, which is aimed at enhance efficiency, revitalizing manufacturing, increasing investment, bolstering production and infrastructure while maintaining basic social services.

Ministers also pondered reforms aimed to “update” the island’s battered socialist economic model, identifying the most important task as “preparing conditions” to eliminate Cuba’s dual currency system.

The Cuban government announced in October 2013 the beginning of a gradual process to unify the two currencies that have circulated on the island for 20 years: the peso, worth less than 4 cents and the convertible peso, or CUC, which trades at parity with the dollar.

The transition began this year, with previously CUC-only shops accepting payment in ordinary pesos.

The CUC will disappear eventually, but the government has not set a date, nor has it indicated how the exchange rate will be set.

Murillo said that, by the end of 2014, the employment rate will be 2 percent above the target, reflecting the growth of employment in the private sector.

Median pay has increased 9.1 percent this year to $20 a month, according to the government, as a result of pay hikes in health and sports and the impact of foreign investment.