Cuba sees economy growing 3.1 pct in 2012, below forecast

* Increase of 3.1 pct in GDP falls short of plan

* Economic growth forecast at 3.7 percent for 2013

* Reforms' impact a bit below expectations

HAVANA, Dec 3 (Reuters) - Growth in the Cuban economy will

come in at 3.1 percent this year, slightly less than the

government's forecast of 3.4 percent as market-oriented reforms

aimed at stimulating the state-dominated economy continue to

perform below expectations.

A summary of a Council of Ministers meeting on Friday, and

published Monday by the Communist Party daily, Granma, blamed a

poor performance by the construction sector for the economy's

failure to meet the government's growth target.

"The growth expected will not be reached fundamentally due

to construction, which did not meet its plan," Economy Minister

Adel Yzquierdo was quoted as saying at the meeting.

The article said agriculture had also underperformed.

However, austerity measures and their impact on social

services also appeared partly to blame.

President Raul Castro began to reform the Soviet-style

economy after taking over for his ailing brother, Fidel, in

2008. He has slashed imports by 37.5 percent as his government

has struggled to pay its bills while trying to spur economic


Cuba is reducing the state's administration of the retail

sector in favor of small businesses and cooperatives, and is

leasing vast tracks of fallow land to would-be farmers.

The government wants to cut 20 percent of the 5 million

strong state labor force, which accounts for around 85 percent

of all workers, and move them into "non-state" jobs in retail

services and food production.

The country registered $2 billion surpluses for each of 2009

and 2010 in its current account, which measures the inflow and

outflow of foreign exchange, reversing a $500 million deficit in


No information was available for 2011, but local economists

said the positive trend continued even as official statistics

revealed steep cuts in social services.

Cuba's unique formula for calculating economic growth

includes estimates of the worth of free health and education.

Granma said social services remained at 2011 levels, but

then quoted Izquierdo as stating, "the rest of the economy grew

4.5 percent, which is in line with our policy of increasing

material production and guaranteeing social services with

greater efficiency."

Growth was 2.7 percent in 2011, compared with the

government's 3 percent forecast, while plans call for the

economy to grow 3.7 percent in 2013, Granma reported.

The government had hoped that by 2013 the economy would be

growing by at least 5 percent as market-oriented reforms kicked

in, Communist Party sources said.

Local economists say the economy must grow by more than 5

percent to overcome the damage wrought by the years of crisis

that followed the demise of Cuba's former benefactor, the Soviet


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