The Cuban government predicts an economic decline of up to two percent by 2023, as the worst economic crisis in decades has triggered an exodus from the island nation.
“There is a possibility that this year we will have a contraction of up to two percent,” Economy Minister Alejandro Gil told parliament on Wednesday.
Cuba’s economy will grow only 1.8 percent in 2022 after recovering from a 10.9 percent contraction in 2020 due to the COVID-19 pandemic that has hit the vital tourism sector hard.
The pandemic and tightening sanctions from the United States in 2021, coupled with the weakness of the economic structure, have made the economic sector worse off.
Gil highlighted the limitations of Cuba, which has been under a US embargo since 1962, in terms of the availability of foreign currency and fuel.
He estimates inflation will reach 30 percent in 2023, compared to 39 percent in 2022.
Economists estimate that actual inflation has reached triple digits in recent years, as the price of the dollar continues to rise against the Cuban peso on the informal market to more than double the official exchange rate.
Tourists walk along a street in Havana, December 20, 2023. (YAMIL LAGE / AFP)
In 2021, financial reforms that eliminated peso conversions pegged to the dollar’s value have caused the value of the regular peso to plummet.
Prime Minister Manuel Marrero told parliament a working group would determine what exchange rate should be set against the dollar.
Gil said production in the agricultural sector and manufacturing industry in particular experienced a decline, while mass migration of workers triggered a complex scenario.
Tourism is recovering as the island nation received 2.4 tourist arrivals in 2023, double the number who came a year earlier.
However, this figure is still below the expected number of 3.5 million tourists.
The poor economic situation has prompted many Cubans to flee, primarily to the United States via Central America.
The Washington Office for Latin America (WOLA) said nearly 425,000 Cuban migrants have come to the United States in the past two years, while another 36,000 have applied for asylum in Mexico, accounting for about four percent of the island nation’s population. (ns/hour)