Economic Survey of Latin America and the Caribbean 1988

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In 1988, the economic crisis of Latin America and the Caribbean took a dramatic turn. For the first time since the 1981-1983 recession, the per capita product declined to a level equivalent to that of 1978; inflation almost quadrupled to an unprecedented average of 760%, and real incomes declined in most of the countries.




After the severe recession of the previous year, the Cuban economy rallied by 2% in 1988, but the levels of the social and per capita product continued to be lower than those of the 1985-1986 period. The shortage of freely convertible foreign currency became still more severe, mainly as a result of the contraction in the flow of credits, and this made it necessary to enter into arrears in external debt servicing. This situation was compounded by the growing problems arising in the trade with socialist countries, largely because of the economic restructuring undertaken in some of the latter. Furthermore, the deficit in the State finances nearly doubled.


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