The Crisis of the Cuban Economy: Notes for an Evaluation
The difficulties currently affecting the Cuban economy are the result of various negative structural factors along with the complex economic situation through which Cuba is presently passing.
Crises continue to be an inherent feature of the evolution of the Caribbean island’s economy. As a result, the government has repeatedly had to devote extended stretches of time to deal with such breakdowns.
At the same time, the government generally has failed to utilize these crises as opportunities to correct specific weaknesses and deficiencies in the design of economic policies. In short, emergencies have become part of the mechanism that accompanies the Cuban economic process—aside from the political system in effect.
Nature and Main Characteristics of the Crisis
The Cuban economy is going through one of the worst crises it has faced in the past 65 years. The complexity of the current situation can only be compared to the conditions Cuba endured in the early 1990s—although, in terms of direct impact on the population, the current hardships have been even more severe.
As in the 1990s, the scale and complexity of today’s difficulties make it impossible to determine with any precision when the crisis might be overcome. A range of academic assessments and proposals are being made on how to gradually emerge from such adverse conditions.
Economists have put forward numerous proposals emphasizing the need for a comprehensive, systemic reform of the economy as the only viable way to correct the persistent shortcomings that have accompanied the reforms introduced during the “updating” of the economic model that began in 2011 (Carranza, 2024).
Other recommendations have focused on restructuring and strengthening the state enterprise system and adopting a different approach toward the role of micro, small, and medium-sized private enterprises (Díaz, 2022).
New contributions have also examined the scope and impact of the crisis on aspects of society that traditionally had not been as affected—most notably, as reflected in Cuba's demographics (Albizu Campos, 2024).
Indeed, the demographic situation has become one of the defining features of the current crisis. Between 2019 and 2024, Cuba’s population declined by about 1.4 million people, driven by mass emigration, a negative migratory balance, and falling birth rates. The replacement rate remains below sustainable levels, and further population decline is expected in the coming years (Aja, 2025).
Finally, one of the analyses that has gained growing academic recognition is Mayra Espina’s proposal (Espina Prieto, 2023) to view the current situation as the intersection of multiple, overlapping crises. Consequently, the context in which Cuba’s economy is evolving has been defined as one of “multi-crisis”. Here the deep structural constraints play a decisive role.
Evolution of Economic Growth
The severity of the crisis stems from the convergence of multiple imbalances—among them, demographic challenges; the dominance of recessionary conditions in the domestic economy; the lingering effects of the COVID-19 pandemic and the global crisis it triggered; the inadequacies of economic policy design and implementation; and the ongoing difficulties arising from the six-decade-long conflict with the United States.
These constraints have negatively affected Cuba’s growth dynamics, aggravating the economy’s structural deficit and giving rise to new developmental problems.
From 2012 to 2024, growth rates steadily deteriorated—especially after 2019. The average growth between 2012 and 2018 was 2.2%, while between 2019 and 2024 the economy contracted by a cumulative 11.9%.
As a result, the economy has entered a state of stagnation that became even more pronounced in 2024 and has persisted into 2025. All indications suggest that this situation may continue. Determining when the economy might hit bottom—or when it could resume a sustained growth path—is an extremely complex task.
The stagnation trend has gained momentum and could persist for some time. The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) projects that Cuba’s economy will shrink by 1.5% in 2025 and grow by only 0.1% in 2026 (ECLAC, 2025, p.123). This implies that crisis conditions would still prevail in 2026.
In short, reversing Cuba’s negative growth trajectory will be very difficult in the short term, given the widespread decline across nearly all economic sectors. The sugar agroindustry, in particular, has suffered a severe collapse.
Photo: Central Narcisa dismantled.
In 2024, sugar production reached only 2.7% of the 1989 total production—about 160,000 tons, less than 30% of domestic demand (ONEI, 2025).
Sectoral linkages have weakened considerably, reducing the multiplier effects once generated by industries such as tourism. Tourism’s performance has been unstable and growth rates have slowed markedly since 2020.
A similar pattern has occurred in inter- and intra-sectoral relations connected to the sugar industry, which deteriorated sharply after the 2002 downsizing of that sector. Rebuilding these inter-sectoral linkages in the coming years will be extremely difficult.
Frequent power outages have also seriously hindered economic growth, affecting every sector without exception.
Cleanup and debris removal work at the Antonio Guiteras Thermoelectric Plant.
Without a structural solution to the problems facing the national power system, sustainable growth will remain out of reach.
The government has drafted a “Program for the Recovery of the National Electro-Energy System”, prioritizing short-term investment in renewable energy—particularly solar power, which have been developed in an intense investment in 2025. This year, construction began on 60 photovoltaic parks across the country, expected to generate over 1,000 megawatts daily. A similar effort is planned for 2026, which, if achieved, would bring significant relief to the national energy system.
Other Constraints
Another limitation the economy faces is the increasing difficulty of supporting the investment process with its own resources, at least to sustain construction activities. In 2024, Cuba produced only about 50% of the gray cement output of the previous year (ONEI, 2025)—a situation reminiscent of the sugar industry’s transformation from exporter to net importer.
The nation’s physical infrastructure—especially its roads—has also deteriorated to unprecedented levels, leaving many routes in disrepair or impassable.
Source: National Office of Statistics and Information (ONEI)
Between 2018 and 2023, nearly all sectors recorded negative performance:
- agriculture (-51.3%),
- fishing (-52.7%),
- mining and quarrying (-30.4%),
- sugar industry (-67.7%),
- manufacturing (-40.7%),
- electricity, gas, and water (-23.8%),
- financial intermediation (-8.6%),
- science and innovation (-9.1%), and
- social services (-11%) (ONEI, various years).
The difficulties that have accumulated in Cuba’s economic growth dynamics are also the result of the negative impact of various structural factors and the complexities arising from the current economic situation.
The sustained decline in tourism arrivals has also drained vitality from many towns—Trinidad and Viñales among them.
Low levels of gross fixed capital formation and the dominance of services in the national economy have reinforced trends toward deindustrialization, import dependency, and technological obsolescence.
As a result, fiscal and monetary imbalances have worsened, and tensions in international finance have grown amid a sharp reduction in foreign income. External debt has reached critical levels, making it increasingly difficult to meet payment obligations. This problem has become one of the economy’s most serious.[1]
Access to international financing has also become more limited, forcing the economy to operate with minimal foreign reserves and growing reliance on current income from exports and remittances. External vulnerability has deepened, and the government’s room for maneuver has narrowed considerably.
One of the government’s responses has been to seek more foreign investment. However, this effort has been hindered by barriers deterring foreign companies—such as the continued use of state employment agencies—and by the failure to acknowledge that Cuba’s productive base is no longer what it was in the early 1990s.
Conclusion
A defining feature of the current crisis is that it may last for quite some time. Beyond the internal difficulties already noted, the international economic and geopolitical environment remains unstable, with multiple repercussions worldwide (CIEM, 2024).
In this context, Cuba may experience further weakening of the social mobilization factors that have traditionally helped sustain public consensus.
However, this aspect requires future reassessment, as the evolution of the crisis has eroded such cohesion and fueled growing public questioning of how the authorities are handling the situation.
[1] Cuba’s external debt at the end of 2023 exceeded 35% of GDP at current prices, with debt payments consuming more than 55% of export earnings from goods and services (The Economist Intelligence Unit, Cuba, 2023).
Bibliography
Albizu-Campos, J. C. (2024). “Cuba: The Polycrisis and the Political Power that Inverts the Relationship between Politics and Economics” Horizonte Cubano, Columbia Law School.
Aja, Antonio (2025). “Cuba y su política de población para la atención a la dinámica demográfica.” Special presentation at the XV Labor Studies Seminar, CIPS, Havana, September 18.
Carranza Valdés, Julio (2024). Prologue to Las empresas estatales cubanas: Situación y propuesta de transformación. Editorial Ciencias Económicas, Havana.
CEPAL (2025). Estudio económico de América Latina y el Caribe. Movilización de recursos para el financiamiento al desarrollo. LC/PUB.2025/12-P, Santiago de Chile.
CIEM (2024). Informe de la evolución de la economía mundial en el 2023., Havana.
Díaz Fernández, Ileana & Leandro Zipitría Deambrosio (Eds.) (2024). Las empresas estatales cubanas: Situación y propuesta de transformación. Editorial Ciencias Económicas, Havana.
ONEI (2019–2025). Anuarios Estadísticos de Cuba. ONEI.
Espina Prieto, Mayra (2023). Keynote lecture at the Annual Conference of the Center for the Study of the Cuban Economy, Havana, September 23.
Hiram Marquetti Nodarse
Holds a degree in Political Economy from the University of Havana. He began his career at the Higher Institute of Economic Management, later joined the University of Havana, and in 1989 became part of the founding team of the Center for the Study of the Cuban Economy, where he remained until 2012. He then joined the Center for Public Administration Studies. He is coauthor of more than twenty books, including Reflections on the Cuban Economy, Public Administration and Local Economic Development, and Public Administration: Concepts and Realities.