2024 was not a good year for Cuba. This is recognized by the Government and is reflected in practically all the macroeconomic statistics of the country, mired in a deep crisis, and which An uncertain 2025 awaits, with the possible repercussions of a second term for Donald Trump.
The year that is about to end was originally thought by the authorities as the one that would reflect the first results of an extensive and severe package of anti-crisis measures, announced in the last days of 2023 and that sought, according to the Executive, to “correct distortions” in the economy.
The package brought together strong cuts in public spending, the reduction or elimination of subsidies and significant increases, such as in gasoline, with a 400% increase, and the price cap on some essential products.
However, the results have been, at best, “discreet”, according to the Government itself.
Cuba, at the moment, lives “practically day to day” in a “war economy”, as the president, Miguel Díaz-Canel, described this week before the National Assembly of People’s Power (ANPP, unicameral legislature). With hardly any foreign currency to import from fuel to face the energy crisis –with long daily blackouts– to basic products, such as food and medicine.
Internal errors
Although the authorities have pointed to the consequences of the United States sanctions, they have also pointed out that their own errors in economic policy have contributed to the situation.
The force of nature was added to this panorama. The island suffered the passage of two hurricanes and two large earthquakes. In addition to three total collapses of its electrical system.
This string of events, added to the poor performance that the country was already experiencing in the first months, have led the Ministry of Economy to the conclusion that Cuba, for the second consecutive year, will close with a contraction of its gross domestic product (GDP), after having projected a growth of 2%.
However, the Executive predicts that the island will grow 1% next year, and is subject to tourism, once the engine of the economy, improving its numbers to boost GDP growth.
But this year it has not met the expectations of the Ministry of Tourism either. The country expects to close 2024 with 2.2 million foreign visitors, far from the 2.7 million that had been proposed, after revising the original objective downwards, of 3.2 million.
The 2025 goal is 2.6 million, 100,000 travelers less than this year’s lowered goal. The figures from 2019 (4.2 million) and 2018 (4.6) are far away.
Discreet results
The austerity measures for this year, however, have yielded certain favorable results, according to the Government.
Díaz-Canel highlighted that the fiscal deficit for this year will be 53% of what was initially planned. In addition to achieving a current account surplus, the first in 10 years.
In this regard, independent Cuban economists, such as Pedro Monreal, have qualified the figure.
Monreal highlighted that this reduction is compared to the projection at the beginning of the year, which was 18.5% of GDP, and that the real rate, after the cut, will be between 10% and 12%, in line with that of the last three years and one of the largest in the world.
The island Executive has also highlighted the slowdown in inflation, which it expects to be between 25% and 30% by 2025.
The figure represents, in any case, a slight decrease compared to the end of this year and the trend, which indicates that prices have tripled since 2021 in the formal market. The informal – more extensive and varied – according to the experience of Cubans and the estimates of independent experts, has suffered greater price increases.
The medium-term result of the anti-crisis measures will still be seen for the coming year with a different context than 2024: with Trump in the US presidency and with the Cuban-American Marco Rubio in the Secretary of State.
In this regard, the Cuban Government has acknowledged that it is “concerned” about the economic effect that a second term for the Republican may have, despite ensuring that it is “prepared.”
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