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Cuba Country Risk Report Q1 2019

Cuba Country Risk Report Q1 2019

The Cuban economy holds immense potential given the island's size and proximity to the US market However, investment and growth will depend on political dynamics in both Cuba and the US

While US-Cuba relations will remain strained following President Donald Trump's decision to partially restrict travel and investment on the island, we do not expect relations will deteriorate further

The US embargo will remain in place in the coming years, due to the Republican Party's resistance towards lifting it, capping potential investment into the island

Falling support from Venezuela will undermine Cuba's growth in the short term, by forcing Cuba to rely on more expensive fuel imports from other sources

The constitutional rewrite begun in June 2018 is likely to bring only modest reforms, with the Partido Comunista de Cuba's dominance of the island's economic and political life unlikely to change

Key Risks

The Cuban economy is highly dependent on US tourism to fuel growth A continued rollback of recent US policy on Cuba or more sluggish US growth than we current expect could dampen headline economic activity

Raúl Castro stepped down as president in April 2018 While Miguel Díaz-Canel, the new president, has pushed forward with Castro's planned reform drive, he may lack the cachet to force through reforms at a pace fast enough to address the economy's needs Cuba Country Risk Q1 2019


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Economic Growth To Remain Modest In Cuba, Despite New Constitution
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Outlook On External Position
TABLE: IMPORTS FAR OUTWEIGHING EXPORTS
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
10-Year Forecast
The Cuban Economy To 2027
Reforms To Underpin Steady Economic Growth
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Constitutional Reform Will Support Political Stability In Cuba
TABLE: POLITICAL OVERVIEW
Cuba Country Risk Q1 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.ContentsLong-Term Political Outlook
Mounting Uncertainty Will Not Undermine Political Stability
Global Macro Outlook
Inflation And Policy Risks Rising
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: CUBA – MACROECONOMIC DATA & FORECASTS

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