Country Forecast Cuba September 2014 Updater

Country Forecast Cuba September 2014 Updater



  • The priority for the 83-year-old president, Raúl Castro, will be to ensure a smooth succession to a younger generation of political leaders by 2018, when his term will end. The Economist Intelligence Unit expects a certain amount of adjustment in the power structure, with decentralisation of authority as the old guard is replaced by a new generation of leaders. However, we do not anticipate any sudden, radical transformation of the political system.
  • After some improvement since 2009, we expect US-Cuban relations to remain relatively constructive in 2014-18, but our forecast remains based on the assumption that normalisation will not be achieved. Despite a shift in US public opinion in favour of rapprochement, major obstacles remain, such as Cuba's rejection of US conditions for the removal of its sanctions and the continued effectiveness of a US-based anti-Castro lobby.
  • Cuba's population will decline slightly and age rapidly, owing to low birth and death rates and a rise in net emigration. The unemployment rate has begun to rise, with many public-sector jobs being shed, and this trend is expected to continue during the forecast period.
  • There is huge scope for catch-up in terms of economic efficiency and development of new private-sector activities, particularly in the services sector. However, we do not expect a sustained rise in growth rates until 2015-18, as the positive impact of economic reforms will take time to materialise.
  • A more substantial rise in productivity, trade and growth requires the elimination of the dual exchange-rate system. The authorities are planning such a reform, but have given no date. Our forecast assumes that, with official instructions for pricing after the change having been given, adjustment will begin within the next six months. This will initially raise the risk of disruption and price instability, although its medium-term impact will be positive.
  • Economic prospects remain vulnerable to commodity-price shocks, owing to Cuba's reliance on imports of food and fuel, and exports of nickel and sugar. The economy's heavy dependence on imports of Venezuelan oil on favourable terms will leave it highly exposed to events in that country. This vulnerability will remain a significant downside risk to the forecast.
  • The greatest uncertainty in the long term concerns the future of the one-party political system. Our central forecast assumes that the government will muster enough support and introduce sufficient reforms to avert overthrow or collapse. This will allow growing opportunities for international businesses, despite the constraints arising from state controls and US sanctions.


Country Forecast Cuba September 2014 Updater
Country forecast overview: Highlights
Country forecast overview: Key indicators
Country forecast overview: Business environment rankings
Country forecast overview: Cuba's business environment at a glance
Fact sheet
Outlook for 2014-18: Political stability
Outlook for 2014-18: Election watch
Outlook for 2014-18: International relations
Outlook for 2014-18: Policy trends
Outlook for 2014-18: Fiscal policy
Outlook for 2014-18: Monetary policy
Outlook for 2014-18: Economic growth
Outlook for 2014-18: Inflation
Outlook for 2014-18: Exchange rates
Outlook for 2014-18: External sector
Data summary: Global outlook
Data summary: Gross domestic product, current market prices
Data summary: Gross domestic product, at constant prices
Data summary: Gross domestic product by sector of origin
Data summary: Growth and productivity
Data summary: Economic structure, income and market size
Data summary: Fiscal indicators
Data summary: Monetary indicators
Data summary: Employment, wages and prices
Data summary: Current account and terms of trade
Data summary: Foreign direct investment
Data summary: External debt
Data sources and definitions