Country Report Cuba November 2009

Outlook for 2010-11

• The focus for the president, Raul Castro, will be on responding to the economic slowdown and managing Cuba's shifting relations with the US.
• The initiation of talks between Cuba and the US marks an important step, but many obstacles remain on the path towards normalisation of bilateral relations. Our forecast assumes that progress will be slow.
• The launch of a national debate on economic policy in September 2009 will form the foundations for discussions on reform measures at the Partido Comunista de Cuba (PCC) Congress, which is likely to take place in late 2010.
• We estimate that real GDP will grow by just 0.9% in 2009, but expect some improvement in 2010-11, reflecting less unfavourable external conditions and stronger private consumption growth.
• Price distortions will delay the start of the convergence of the dual exchange rate. A rebound in 2010 should help create the conditions necessary for revaluation of the unofficial rate to begin in early 2011.
• The current-account deficit is expected to narrow from an estimated 2.1% of GDP in 2009 to 1.6% by 2011, reflecting an increase in current transfers. The capital-account surplus will cover the deficit, keeping reserves stable.

Monthly review

• Discussions about the future of the ration amid an economic slowdown and an official drive for ever-more “discipline” have raised anxieties.
• The trial of two men associated with the ousted ministers Carlos Lage and Felipe Perez Roque has been announced, but few details released.
• Spain has led efforts to improve EU-Cuban relations, but in spite of the release of two dissidents following a visit by the foreign minister, some other EU members have expressed concerns about a shift in the official EU stance.
• Economic policy has remained focused on efforts to boost food production and reduce corruption.
• New rules on home improvements have been announced; these aim to curtail the extensive black market.
• There have been no further data releases, but modest growth has been reported in the tourism and agriculture sectors. However, tourism earnings have fallen and lower prices have eroded earnings in farmers' markets.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;89;37;49;1;15;70
NAICS Code: 52;81;336;22;11;23;72