We are in the middle of the third month of 2025. Everything seems to indicate that we will not be able to head towards a path of positive growth this year. Reaching a rate that would allow us to escape the red ink in which the national economy has been mired for the past three years seems far away.
It is paradoxical, but being a tropical country, we have always depended on winter for almost all of our crops, from sugarcane to tourists. From potatoes, organic or not, to lettuce, onions, garlic, and tomatoes, which, by the way, have dropped slightly in price.
The avocados and mangoes we will eat in the spring and summer also depend on winter, because their flowering is determined by the temperatures and winds of March. Our economy continues to be highly seasonal, and therefore these initial months are crucial for the annual result.
Although it is relatively early to compare results with targets, I believe it is worth doing so wherever possible.
According to the minister of economy’s report in December, a GDP growth of 1% was forecast for 2025, supported “mainly by projections for the recovery of tourism and revenue from the main exportable items.”
This revenue plan is based on achieving exports of goods worth $2.867.9 billion. Nickel plus cobalt, lead and zinc concentrate, cigars and rum should be the largest exporters.
The best news comes from tobacco, where exports reached more than $800 million this year —although not all of it goes to our country, given that there is a joint venture that keeps a portion of those revenues.
Nickel prices have shown some stability in these first three months of the year, with an upward surge in March to $16,600/ton, which appears to remain stable until the end of the year.
The estimated price for the revenue plan is not public. Based on the above, the decisive factor will be domestic capacity to achieve planned production volumes, which, according to Sherrit International’s own report, have been affected by power outages.
Meanwhile, cobalt prices have hovered around $25,000/ton in these first three months, which appears fairly stable for the entire year. Once again, production restrictions may weigh more heavily, given the difficulties previously mentioned.
The export of 30,000 tons of sugar will depend on the performance of the harvest. Fourteen sugar factories were planned for milling, but less than half had been incorporated by January. These eight mills, which were incorporated late, represent 75% of the planned production. The harvest will also face financing problems, as according to statements from an AZCUBA group official, only 10% of the necessary financing is available.
New York contract No. 11 shows prices around 20 cents per pound, or more than $400 per ton.
Despite the facts and the fact that Trump will do everything in his power to hit us where it will do the most damage, we are insisting on tourism. The facts of these two months show is that:
- Tourism had a planned arrival rate of 2.6 million for 2025. The ONEI report for the first two months of this year confirms the following: “In January, 264,492 travelers were received, representing 84.1% compared to the same period in 2024, equivalent to 49,852 fewer travelers. 196,004 international visitors were received in January, representing 75.4%, or 63,815 fewer international visitors than in the same period last year.”
- Regarding airport revenues, airlines have reduced and/or canceled flights.
- Medical services continue to represent the bulk of our potential revenue from the export of services; the previewed plan contemplated revenues of $5.484.3 billion. It is probably the most secure of all revenues. However, Marco Rubio’s latest attack on this sector, which threatens to revoke U.S. visas for officials from countries that support or have supported Cuba’s medical services export program, could jeopardize that figure.
So, if GDP growth depends on export revenues, we should conclude that there is a real possibility that we will not reach the forecasted 1%. The other question would be to ask ourselves to what extent exports impact/pull our country’s domestic product. And this is a structural issue that leads to several questions:
1- To what extent does nickel production and its dynamics impact the rest of the national economy’s sectors? How many of our thousands of state-owned enterprises produce any input for our nickel industry? And downstream, how much of our nickel and cobalt ore is used by some national enterprises? Have “productive chains” been created around one of the resources of which we are major global producers and of which we also have reserves that rank among the top ten in the world?
2- Practically the same can be asked of our small and battered sugar industry, which was once the most powerful industrial system in the country. To what extent can those fourteen sugar factories support a significant portion of industry and agriculture and decisively impact growth?
3- The same is true for tourism. Unfortunately, there is no public data on the weight of tourism imports in total inputs, both in terms of investment and daily operations. The tourism “locomotive” has long been disconnected from the rest of the national economy; its multiplier effect is minimal. I think it’s evident that the glass panels that today cover the K Street tower were not produced by any Cuban industrial group.
4- Our exports of medical services, Cuba’s most important “export industry,” have, due to their operating modality, very little impact on the rest of the economy. Efforts have been made, but the advantages of this “industry” have been wasted for years, all due to the educational and vocational training policy that the Cuban Revolution implemented from its early days.
Our doctors have ample prestige, and some of their procedures and treatments are competitive in the region. But they continue to receive negative incentives while we passively watch the growth of private clinics abroad run by Cuban doctors who have emigrated.
From that other perspective, which has to do with the structure of our economy, the structure of exports and their impact on growth also doesn’t seem to be waiting for the boost that will lift us out of economic stagnation. It is part of the structural weakness of our economy, which we aspired to correct when we identified a group of strategic axes within which productive transformation occupied a special place.
In October 2024, ECLAC presented its study “Development Traps in Latin America and the Caribbean: Vital Transformations and How to Manage Them.” The analysis identified three traps: 1) a trap of low capacity for growth; 2) a trap of high inequality, low social mobility, and weak social cohesion; and 3) a trap of low institutional capacity and ineffective governance.
The events of the last ten years allow us to affirm, unfortunately, that our country shares these same traps, even though there are differences in the causes that produce them.
This document also states that these three traps are associated with structural gaps, which I list below:
Gaps associated with a low capacity for growth:
- i) Low productivity growth,
- ii) Low investment, and
iii) Insufficient quality of human resources.
Today we share all three, because even in terms of the insufficient quality of human resources, a long-acquired advantage, our country is experiencing an intense process of draining those resources.
Gaps associated with high inequality, low social mobility, and weak social cohesion:
- i) Low growth,
- ii) Regressive tax systems,
iii) Weak social and social protection policies, which do not reduce the effects of inequality rooted in productivity,
- iv) Education systems with serious weaknesses,
- v) Gender inequality, and
- vi) High inequalities and spatial segregation in urban areas.
Gaps associated with low institutional capacity and ineffective governance:
- i) Low administrative efficiency,
- ii) Poor bureaucratic quality,
iii) Low-quality public administration,
- iv) Low long-term and forward-looking planning capacities, and
- v) Deficiencies in Weberian qualities, such as hiring through meritocratic processes, job stability, and professionalization.
It’s likely that we don’t all suffer from them, nor does each one have the same relevance to our case. A thorough and documented examination of Cuba deserves more time and space than this article, because it’s clearly not about treating deceases, but about healing the sick.
I’ve only brought it up because it brings us closer to a topic that deserves much more time in our debates, speeches, and reports: that of our country’s economic and social development. A goal to which much effort was devoted years ago and which today seems relegated/forgotten/frozen. And because part of what is needed to heal has already been written and is contained in those strategic axes of the National Economic and Social Development Plan. And because hunting for distortions doesn’t necessarily advance development.
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Note:
- The concept of a development trap does not only refer to negative trends, whether medium- or long-term, but also to the existence of vicious cycles that reinforce each other and limit the ability to advance toward higher levels of development.
