Cuba's economy recovering but inflation slows

Cuba's economy recovering but inflation slows

Cranes dot the skyline as luxury hotels and the renovation of historic buildings are underway in Havana.

HAVANA Reuters -- Cuba s ailing economy has started to recover after two years of Pandemic-induced contraction but soaring global prices for food and fuel needs bold measures to tame inflation, economy minister Alejandro Gil told Cuban lawmakers on Saturday.

Gil said that Cuba saw a 38% increase in exports in the first quarter, boosted by the rising price of nickel, a top mineral export. The inflation had slowed despite upward pressure on the price of imports, he said.

Gil said that we are beginning to see a clear and gradual recovery.

In the first quarter, the price of Cuba paid for imported goods jumped by nearly $700 million, outpacing the country's modest gains in exports, a predicament Gil attributed to imported inflation driven by fast-rising prices for such products as fuel, corn for feeding livestock and wheat.

U.S. sanctions and soaring fuel prices have put Cuba's tepid recovery at risk and threaten to worsen the shortages that are already forcing people to line up for food, medicine and other basic goods due to the Russian invasion of Ukraine. nL 2 N 2 W 20 F 1 Tourism, which is a top source of foreign exchange necessary to pay for pricier imports, has lagged behind government targets, complicating recovery.

Gil did not give figures for gross domestic product nor did he address how first-quarter results contributed to meeting the government's target of 4% growth in 2022.

A major sticking point, Gil said, is the Cuba's unofficial exchange rate, which has ballooned to five times the government rate of 24 -- 1 in recent months, slashing buying power for the average Cuban.

Gil said Cuba will begin selling foreign currency at a rate between the official and black market rates, but will limit the deals to certain state-owned and private businesses in order to boost output of high-demand products.

The economy minister said that the more favorable exchange would be underpin production that will later be sold to the population in national currency. Gil said that citizens seeking to trade pesos for dollars would not be able to take part in the new exchange program, but that the cash-strapped government was working toward that goal.

These are bold, innovative measures. Gil said there are no magic solutions that can solve all the problems at once.