The Miami Herald
Tue, Jan. 18, 2005
Cuba decides to disregard GDP rankings

Foreign experts say the change may suggest that the island's economy isn't faring well.

Financial Times

After 46 years in power, Fidel Castro, Cuba's president, is known to play only by his own rules. Even so, his recent move to disregard the standard formula for gross domestic product -- the world's standard measurement of an economy's growth -- has confounded both economists and ordinary Cubans.

The move to declare GDP, which is called gross socialist product in Cuba, a capitalist instrument has been brewing for the past year, after José Luis Rodríguez, the economy and planning minister, called GDP a tool designed to measure growth in market economies and useless as far as Cuba was concerned.

He reiterated the point in his year-end economic report to the national assembly. ''Health and education are included if they come with a price, but not if they are provided free,'' he said.

According to Rodríguez, Cuba's 2.6 percent annual growth in 2003 was actually 3.8 percent when taking into account Cuba's free healthcare and education.

This year Rodríguez simply declared that growth was up 5 percent, based on the adjusted method.

Economy ministry sources said that with the conventional GDP formula, growth was actually 2.8 percent to 3 percent. Experts have found Cuba's economy increasingly difficult to decipher. Since 2001, a drop in tourism and five hurricanes slowed Cuba's recovery from a 1990s post-Soviet economic crisis.

The government acknowledges a worsening foreign exchange shortage, due to shrinking credit and investment, a hostile U.S. administration, high oil and shipping costs, hurricanes and drought.

Cuba is dependent on fuel and food imports. Its current account has operated in the red since the 1991 collapse of the Soviet Union, its chief benefactor.

The country, considered one of the world's worst credit risks, is not a member of any international lending organization.

The new growth measurement formula could further hurt Cuba's credibility and increase suspicion the economy is not doing well.

''GDP percentages are meant to compare performance, so if you start using other formulas, and don't give the calculations, you make the comparison impossible,'' a European diplomat said, ``which means they most likely have something awful to hide.''