Cuba says economic crisis slows output, closes factories

News from Cuba | Sunday, 14 June 2009

Cuban factories are closing down and production is being cut at other workplaces as the international financial crisis weighs on the import-dependent Caribbean island, the official media said on Sunday.

A growing shortage of foreign exchange has forced the Communist-run country to drastically cut imports and local budgets, impose power quotas on state-run companies, restructure debt and put off payments to foreign suppliers.

The state-run Juventud Rebelde newspaper, the only national Sunday publication, said a tire factory had shut down since February due to a lack of rubber imports while an aluminum packaging plant cut output for similar reasons.

The newspaper said the plants were examples of a wider problem "in other sectors of the Cuban state company sector," which encompasses 90 percent of economic activity.

Other workplaces were having difficulty obtaining spare parts, the newspaper said, and still others were being forced to scale back output after a recent government measure mandating a 12 percent reduction in power consumption.

Cuba, like other Caribbean countries, has been hit hard by the global financial crisis, which has slashed revenue from key exports, dried up credit and reduced foreign investment.

It is under longstanding U.S. economic sanctions and is recovering from three hurricanes that struck last year, causing an estimated $10 billion in damages.

Workers at lobster processing plants, cigar rolling factories and other establishments have reported layoffs for months, but Sunday's Juventud Rebelde report was the first official admission of growing problems in the productive sector.

"The waves of the present international financial and economic crisis are slowly gaining force and the rough waters are reaching the pockets of companies and workers around the world," the newspaper said.

"We can't harbor the illusion that we can escape just because our country has a social system that defends justice for all," it said.

Economy and Planning Minister Marino Murillo recently said Cuba's growth forecast for 2009 was reduced from 6 percent to less than 2.5 percent.

Some local economists believe this year's growth will be 1 percent or less, similar to forecasts for the region overall.

(Reporting by Marc Frank; Editing by Maureen Bavdek)

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