CUBAN ECONOMIC DEVELOPMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000600070005-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 16, 2016
• Document Release Date: December 8, 2004
• Sequence Number: 5
• Publication Date: February 6, 1975
• Content Type: MFR

 Approved For Release 2005/0f%10~:JCIA-RDP86TOO608R000600070005-5
. 1
I'chrucary 1975
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SUBJECT: Cuban r nog io_:? _evelo2rnentA
At his r es.., the Atracnea z.:Ti c u
Cuban economic c1ovi71ormer.ts was LDXecW to t;r. Stove Lowe,
National Security Council, on 5 February 1975.
office of Tconomic I 3c'arch
Attachment:
As stated
Distribution: (S-0360G)
1 - D/OER
(6 February 1975)
25X1
25X1
25X1
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 Approved For Release 2005/01/10 : CIA-RDP86T00608R000600070005-5
Cuban Economic Developments
Cuba's economic situation brightened greatly in 1974,
putting the economy on its soundest footing since the Castro
takeover in 1959. Real economic growth most likely exceeded
considerably the 2% long-term annual average, chiefly as a
result of the large improvement in the terms of trade.
Domestic Performance
Paced by a 10% increase in sugar production to nearly
6 million tons, domestic economic activity registered a
modest improvement in 1974. Despite some gains, non-sugar
agricultural output was hampered by inadequate rainfall
throughout most of the year. Non-sugar industrial production
apparently also rose modestly as stagnating nickel and
cement production and food processing part3y offset gains
in petroleum refining and electric power and steel production.
Bolstered by ongoing rural development, road building, and
housing construction, the value of construction activity
increased jabout 10% over 1973.
The improving domestic performance in part stems from
improved economic management and organization undertaken
under Soviet prodding following the unsuccessful and dis-
ruptive 1969-1970 sugar drive. In addition, better
management and an increasing reliance on material incentives
have tended to increase worker productivity and reduce
absenteeism.
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Foreign Trade
Cuba's foreign trade picture improved dramatically
in 1974 reflecting the improved sugar harvest and record
sugar prices in the world and Communist markets. Export
earnings soared to ca estimated $2.8 billion, more than
double the 1973 level. Hard currency earnings alone nearly
tripled to about $1.2 billion. Reflecting the sharp export
increase and growing free world credits, imports jumped
some 55% to at least $2.3 billion. Despite the gain in
imports, Cuba apparently is enjoying its first trade surplus
since the Castro takeover. Non-Communist countries will
account for about 40% of total Cuban trade in 1974 compared
with a 30% average in recent years.
implications
The gains provided a much needed boost for Cuba's
diabetic economy. Increased import capacity is bolstering
Havana's ability to carry out lagging investment programs
while increased commercial ties with the West provides a
greater access to materials and technology previously
restricted because of foreign exchange constraints. The
upswing has undoubtedly led to an increased availability
of some consumer goods, but most basic items are still
strictly rationed while others -- mainly luxury items --
are available-ofly at extremely high prices.
.EC 91 E. T
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 Prospects for 1975
The Cuban economy should remain fundamentally sound in
1975 but the prospects for growth remain modest. Inadequate
rainfall during the 1974 growing season will restrict sugar
output to no more than last year's level. The prospects
for non-sugar agriculture are uncertain, but output could
deteriorate if present drought conditions persist. In-
dustrial output is unlikely to gain much. The level of
construction activity could increase considerably as
Havana uses its enhanced import capacity to accelerate
development of infrastructure and industry.
Despite the expected stagnation of sugar production,
export earnings should approach the 1974 level and could
register further increases if Communist countries raise
the price they pay for Cuban sugar above the current 20
cents per pound level. Imports will probably exceed last
year's level reflecting the continued st~-ong export per-
formance and the expected large inflow ref free world
credits. In addition to the ongoing AY,entine line of
credit of about $200 million annually, Cuba evidently has
recently received large credit extentions from Spain and
France.
Longer-term Prospects
In 1976 Cuba will begin its first Five Year Plan. The
details. of the Plan are not available but the general goals
SECT.
yr
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apparently are for the continued development of Cuba's
economic base with investment still taking priority over
consumption. In carrying out the plan, economic growth
should benefit substantially fro= increased supplies of
capital goods made possible by recent high sugar prices.
Projected growth over this period has been placed at
about 6% by several Cuban cover:.-:ent officials. Because
world sugar prices are likely to decline substantially
after 1975, however, Cuba will have to rely heavily on
foreign trade credits from both Co-:unist and non-Communist
trading partners to meet growing import requirements.
Despite growing co=ercial ties with the West, Cuba will
probably remain closely tied to the USSR and CEMA.
OER/CIA
6 February 1975
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