Cuba`s recovery from a 1990s` economic crisis faltered in 2002, with the economy growing by just 1.1 per cent in 2002, down from 3 per cent in 2001 and more than 6 per cent in 2000. The country`s main foreign exchange earners - tourism, family remittances and sugar - all suffered last year, leaving the government short of cash to meet debt payments and buy imported oil. A decline in foreign investment and credits has made matters worse.

The economy averaged 4 per cent growth annually between 1997 and 2002 while tourism averaged 13 per cent growth. However, tourism declined 5 per cent in 2002, after stagnating in 2001.

Import-dependent Cuba has increasingly relied on tourism for hard currency since the collapse of former benefactor, the Soviet Union, plunged it into crisis more than a decade ago. Tourism accounted for close to 50 per cent of Cuba`s foreign exchange earnings in 2001, compared with around 10 per cent in 1991.

Arrivals increased at an annual rate of 19 per cent in the 1990s fuelling the economy`s recovery, and despite the US government ban on most of its citizens visiting the Caribbean island. The USA is the main tourism provider for the area.

Arrivals stagnated in 2001 and tourism industry revenues declined 5.2 per cent to US$1.85 billion, reducing economic growth to 3 percent, from more than 6 per cent the previous two years. Preliminary estimates point to a 7% decline in tourist arrivals in 2002, and an even sharper decline in terms of foreign exchange.

However, things could be looking up. The ministry says that 107,299 tourists came to the Caribbean island in October 2002, compared with 97,773 in October 2001. The 10 per cent increase was the first monthly upturn reported since 11 September 2001.