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.
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.