Cuba: Economic and Political Overview
In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline
The Cuban economy is still heavily hindered by the effects of 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. Upon returning to office in January 2025, President Trump promptly rescinded executive actions by the previous administration aimed at easing sanctions on Cuba. He also reactivated Title III of the Helms-Burton Act, enabling U.S. citizens to file lawsuits against foreign companies profiting from properties expropriated by the Cuban government. Cuba's economy suffered severe setbacks in 2024 as important industries like construction and agriculture fell short of expectations. Timber production stalled at 17.6%, cement production only achieved 43.2% of its target, and steel production was null. With shortages in tubers, meat, and vegetables, agricultural output was unable to keep up with demand. Additionally, the country lost a vital export as the sugar harvest was at its lowest historical level. The situation was exacerbated by fuel shortages and weak power generation. According to the Cuban government, the country's economy will grow by 1% in 2025 as a result of increased export earnings, a rebound in tourism, industrial activity, and the stabilisation of the energy system. Recent economic data, however, raise questions about the feasibility of the forecast.
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 (Cuba ended 2024 with an official year-on-year inflation rate of 24.88%, with prices tripling compared to 2020). The Cuban government anticipates another large budget deficit for 2025, similar to the previous three years. Prime Minister Manuel Marrero reported that the projected deficit stands at CUP 88.5 billion (USD 3.7 billion, at the official exchange rate for legal entities). 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.
Despite a low unemployment rate (1.7% in 2023 – 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 a brain drain.
Cuba depends heavily on its natural resources to run its economy. Nickel is highly important for the country, and cobalt is also abundant on the island, making Cuba one of the highest producers and exporters of both nickel and cobalt in the world. Cuba also has offshore oil and natural gas reserves, mainly in the northern part of the island. Agriculture represents 0.8% of GDP and employs 17% of the population. Its main crops are still sugar and sugarcane, which take up a third of the cultivated land. However, in the last years alone, sugar production has fallen from more than 1.5 million tonnes a year to less than half a million tonnes (total output is expected to drop to 300,000 metric tons in 2025). Tobacco is the country’s second-largest export crop. Other agricultural products include citrus, coffee, corn, rice, potatoes, beans, bananas, soy, cotton, and livestock. According to the FAO, cereal imports for the 2024/25 marketing year (July–June) are projected at 1.3 million tonnes, around 15% below average, due to reduced demand from the feed industry and lower food consumption linked to a smaller population. However, rice imports—typically the largest share—are expected to exceed average levels at 482,000 tonnes to offset hurricane-related crop losses. In 2023/24, cereal imports were also about 16% below average, constrained by limited foreign exchange reserves.
Industry represents 23.8% of GDP and employs 16% of the population. It focuses on agrifood, the production of cement, textiles, tobacco, and agricultural machinery. Cuba also has significant mineral resources (particularly nickel, cobalt, gold, and copper) and is currently conducting hydrocarbon exploration. The cigar industry is one of the leading industries in the country, and it is highly dependent on tourism, as tourists are the leading customers of the product. Overall, the manufacturing sector is estimated to account for 11% of the country’s value added.
The main economic activity in Cuba is the services sector, which represents 74.6% of GDP and employs 67% of the active population. Its significance is strongly related to the development of tourism, which leads the service sector alongside retail. For a long time, tourism has been pivotal in preventing the economy from total collapse: although the tourism industry was hit the hardest during the COVID-19 pandemic, tourism rates have been significantly increasing, which positively impacts the economy as a whole. Nevertheless, Cuban officials reported that 2.2 million tourists visited the island in 2024, approximately 1 million fewer visitors than the projected 3.2 million. The education sector is highly valued, with a focus on universal access to education and a strong emphasis on academic achievement.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 17.1 | 16.0 | 66.9 |
| Value Added (in % of GDP) | 1.2 | 23.8 | 73.4 |
| Value Added (Annual % Change) | -20.5 | -3.0 | -0.1 |
Source: World Bank - Latest available data.
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| Monetary Indicators |
|---|
| Cuban Peso (CUP) - Average Annual Exchange Rate For 1 MUR |
Source: World Bank - Latest available data.
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The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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According to the World Bank, Cuba is not only a country that is open to foreign trade, but it is also highly dependent on it, as trade represents 89% of the GDP. The country has been a member of WTO since 20 April 1995 and a member of GATT since 1 January 1948. According to the latest available data from OEC, in 2023, Cuba’s main exports were rolled tobacco (34.7%), nickel mattes (13.2%), hard liquor (10.1%), zinc ore (10.0%), and precious metal ore (6.0%); whereas imports were led by beer (8.4%), poultry meat (8.3%), rice (4.5%), soybean oil (2.1%), and wheat (1.8%).
In 2023, Cuba's main export partners were China (34.1%), Spain (12.3%), Germany (6.5%), Switzerland (4.6%), and Hong Kong (4.2%). As per imports, they came chiefly from Spain (23.6%), China (12.7%), the Netherlands (9.8%), the United States (9.2%), and Canada (5.5% - data OEC). The embargo imposed by the United States has long been an obstacle to Cuba's foreign trade. It prohibits most trade and financial transactions between American companies and Cuban entities, aiming to isolate Cuba politically and economically. Located at the crossroads between Latin America and the United States, Cuba is the largest island in the Caribbean and maintains strong economic and financial relations with Venezuela - its energy partner. Relations with China, Cuba's most important trade partner, have been intensifying for the past decade. Furthermore, Beijing purchases much of the Cuban nickel, which has overtaken sugar as the country's leading export commodity.
Cuba's lack of transparency remains an obstacle towards accurately accounting its trade balance. According to figures from the Central Bank of Cuba, the value of goods and services exports in 2023 was USD 9 billion, a figure approximately 770 million lower than planned. This included around 2.15 billion in goods and 6.91 billion in services, resulting in export levels lower than those achieved in 2022. In the exports chapter, there was a 15% decrease in the price of nickel per ton, with production remaining at 41,000 tons for the year. Meanwhile, the price of sugar increased by 28%, although national production fell 25% below the planned level. Additionally, there was an expenditure higher than planned on goods imports, due to price increases, resulting in an additional outlay of USD 718 million compared to 2019.
| Foreign Trade Indicators | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 7,230 | 8,431 | 9,833 | 8,973 | 8,784 |
| Exports of Goods (million USD) | 1,703 | 1,966 | 2,170 | 1,583 | 1,788 |
| Imports of Services (million USD) | 1,496 | 1,645 | 2,077 | 3,338 | n/a |
| Exports of Services (million USD) | 6,919 | 5,822 | 6,951 | 6,725 | n/a |
| Imports of Goods and Services (Annual % Change) | -7.6 | -4.6 | -9.2 | -2.1 | -1.3 |
| Exports of Goods and Services (Annual % Change) | -20.5 | -9.1 | -2.4 | -6.6 | -0.2 |
| Imports of Goods and Services (in % of GDP) | 7.5 | 45.1 | 53.4 | 74.9 | 82.4 |
| Exports of Goods and Services (in % of GDP) | 8.2 | 34.9 | 40.5 | 45.6 | 42.5 |
| Foreign Trade (in % of GDP) | 15.7 | 80.0 | 93.9 | 120.5 | 124.9 |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
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The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
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Latest Update: March 2026
