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Hurricane Irma batters already struggling Cuban economy

The strongest storm to strike Cuba in more than 80 years ravaged infrastructure throughout the country, collapsing the power grid and damaging crops after it slammed ashore late Friday. In the keys along the northern coast, it battered beach resorts popular with foreign tourists and knocked out the airport they use.

A tourism boom in Cuba over the past few years sparked by warming relations with the West has helped sustain the economy. Cuba is still labouring under a 57-year U.S. trade embargo and suffering from a steep decline in subsidized oil from its crisis-stricken Socialist ally Venezuela.

Official data – which gives heavy weighting to Cuba’s universal free healthcare and education – shows hotels and restaurants account for just 4.4 percent of the roughly $90 billion-a-year economy, but they are a vital earner of hard currency.

A 23 percent rise in foreign visitors to Cuba helped the economy return to growth in the first half of 2017, the government said, after it tipped into recession in 2016.

The outlook has darkened in the second half of the year.

First U.S. President Donald Trump said he was tightening restrictions on Americans travelling to Cuba. Then the Cuban government said last month it would not hand out new licenses for much of the private sector until it had “perfected” its functioning.

Then Irma arrived, grazing along the island’s coast from east to west. Packing sustained winds of more than 157 miles (253 km) per hour, it pummelled the northern keys, though it left the biggest beach resort area of Varadero mostly intact.

The keys – whose pristine beaches are home to around a quarter of Cuba’s four- and five-star hotels – are now littered with felled trees and lamp posts, animal corpses and shredded furniture, according to state-run media.

Damage in the agricultural sector will both weigh on state finances as well as tighten food supply in the short term. Fuller reservoirs due to Irma’s torrential rains could in the long run prove advantageous after a severe drought.

Some 300,000 hectares (740,000 acres) of sugarcane – an area roughly twice the size of Houston – were affected to different degrees, the state sugar monopoly said.

Forty percent of mills were damaged in the industry that remains one of Cuba’s most important in terms of employment and export earnings.

Even though Cuba had rushed to harvest what it could before Irma hit, other crops such as platano and rice had also reportedly been affected, said Laura Melo, the Cuba representative for the United Nations’ World Food Programme.

“Some of these areas were already seriously affected by drought so this is an accumulation of shocks to Cuba’s capacity to produce food, both in terms of income and availability of food,” said Melo.

Looking ahead, Cuba will need to repair tens of thousands of houses as well as roads, bridges, public buildings and the power grid. Irma also damaged a thermoelectric plant that provides a fifth of the country’s electricity.

“If this year, the budget deficit was estimated at around 12 percent,” said Cuban economist Omar Everleny. “That will undoubtedly have increased with these enormous losses.”

Reporting by Marc Frank, Sarah Marsh and Nelson Acosta; Editing by Daniel Flynn and Andrew Hay
Our Standards:The Thomson Reuters Trust Principles.

– Ken McCarthy
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