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Cuba Country Risk Report Q4 2018

Cuba Country Risk Report Q4 2018

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 dominance of the US Congress, 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.


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
Structural Constraints To Keep Cuba's Growth Modest
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
Cuba's Constitutional Rewrite Will Bring Modest Reform
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Mounting Uncertainty Will Not Undermine Politial Stability
Cuba Country Risk Q4 2018ContentsGlobal Macro Outlook
Fewer Negative Surprises, But Trade Risks Rising
TABLE: GLOBAL MACROECONOMIC FORECASTS
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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