Economic Outline

Economic Indicators

The Cuban economy is still affected by the embargo imposed by the United States. While Washington was expected to loosen its sanctions under President Joe Biden, his approach towards Cuba has been tougher than former administrations, as he further tightened the trade and travel restrictions that were put in place by Donald Trump. In 2023, the Cuban economy recorded an estimated GDP contraction of between 1-2% according to the Central Bank. According to the Economic Commission for Latin America and the Caribbean (ECLAC), the projected GDP growth for Cuba will be 1.7% in 2024.

Cuba is not transparent with its public accounts. At the beginning of 2021, the Cuban government implemented a currency and exchange rate unification, which should yield positive results in the long term. In the short term, though, the policy aggravated some economic issues in the country, most notably causing a huge increase in inflation (The year-on-year inflation rate in June 2023 was 45% - CEPAL). The Cuban government increased the projected fiscal deficit for 2023 by 44.4% compared to the first projections, now amounting to approximately EUR 3.8 billion. The increase in the deficit impacted the public debt incurred for the year, which amounted to EUR 5.8 billion. Since monetary unification, the debt ratio has surged, triggered by a downward revaluation of GDP. Despite a debt restructuring accord inked in 2015, the country defaulted in 2020. Subsequently, a second agreement was brokered with the Paris Club in 2021, enabling Cuba to settle its 1986 sovereign default by 2015. This initiative cleared USD 8.5 billion of the USD 11.1 billion debt, while the remaining portion was allocated to investment projects and spread out until 2033.

Despite a low unemployment rate (1.3% in 2022 – World Bank), the living standards of the Cuban population remain very low. It should be noted that while official unemployment rates are low, unofficial estimates are about double the official rate. Additionally, Cuba remains heavily dependent on food and energy imports, as it imports 80% of its food consumption. The country's situation is uncertain, as reforms are giving an increasingly significant role to private companies. This has led to pilfering, a robust black market, and brain drain.

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