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Cuba reports slowdown in economy

A Cuban walks over debris from destroyed houses, on August 30, 2008 in Los Palacios city in Pinar del Rio province -100 km west of Havana.
Hurricane Gustav and other huge storms caused havoc on the island

Cuba says it has suffered one of the most difficult financial years since the collapse of the Soviet Union.

Economy minister Jose Luis Rodriguez said the Cuban economy had grown by 4.3% in the past year, falling short of the 8% forecast by the government.

President Raul Castro called for austerity measures including cutbacks in official travel and bonuses.

Cuba was hit by hurricanes Gustav, Ike and Paloma this year, with estimated losses of nearly $10bn (£6.7bn).

The cost of food imports has also risen by more than $8bn on the previous year.

As Cubans prepare to celebrate the 50th anniversary of the revolution, the authorities had hoped that the centrally-controlled state run economy would escape the worst of the global financial crisis, says the BBC's Michael Voss in Havana.

Mr Rodriguez said the past year had been one of the most difficult since the so-called "special period" began - the term used for the economic crisis caused by the 1991 collapse of the Soviet Union, which heavily subsidised Cuba.

The president of the Cuban parliament's economic commission, Osvaldo Martinez, blamed the lower growth rate on factors outside the country's control.

"Economic growth of 4.3% is less than the 8% foreseen in the plan, and this is explicable, given the profound devastation caused by the hurricanes, the economic war waged against us and the noticeable increase in the price of food and fuel during most of the year," he said.

Cuba calculates its Gross Domestic Product by including state spending on health care, education and food rationing, our correspondent says.

This means the figure reflects public spending, not just economic activity, as it does elsewhere in the world.

Trips curbed

Mr Rodriguez predicted that the Cuban economy would grow by 6% in 2009.

President Raul Castro, who took over from his brother Fidel in February, told the National Assembly "the accounts don't square up".

"We have to be realistic and adjust our dreams to real possibilities," he said.

"That means complying with the socialist principle each receives according to his work."

Mr Castro said the government would cut government trips abroad by 50% and end programs that rewarded workers, business leaders and officials with free holidays at a cost to the government of $60m a year.

Latin American leaders recently urged US President-elect Barack Obama to end the 46-year trade embargo on Cuba.

Mr Obama has said that he would lift restrictions on family travel and remittances to Cuba, but maintain the US trade embargo to press for changes in the Communist-run country.



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