Cuban American economist Carlos Martinez examines how the Cuban economy will perform in 2025 after the Cuban Communist Party released its economic policies for the new year. Spoiler Alert: It doesn’t look good.
2025: Cuba’s Economic Crossroads
Regressive Policies, Market Reforms, and the Shadow of Inefficiency
It has been almost two weeks since the announcement of Cuba’s economic policies for 2025. Initially, I didn’t plan to write about them, as it often feels redundant to highlight how these policies are destined to fail. Yet, I feel compelled to address the latest developments—not only to share these updates but also to analyze them through the lens of economics.
As with every year, the Communist Party of Cuba convened its plenaries, which typically serve to outline updates to economic planning and policy. Over the summer, I discussed how the regime’s price controls and tightened import regulations hinted at a rollback of prior reform efforts. Now, with recent legislative changes—most notably, the prohibition of private wholesale markets—it is evident that this regressive trend is accelerating.
In a recent interview with ADN Cuba, I shared my perspective on Resolution 56, stating:
“[The decree] further reduces the competitiveness of the Cuban market through the effective monopolization of wholesale supply and the decrease in competition between private and state entities.”
I elaborated further:
“Cuba has transformed into a country dominated by economic agents focused on rent-seeking. Instead of prioritizing efficient and productive ways to satisfy consumer needs, they rely on legislative protections and privileges for survival. This applies primarily to state-owned enterprises but also to the GAESA conglomerate and certain private monopolies closely aligned with the Party.”
Unfortunately, these concerns barely scratch the surface. During the plenary, Minister of Economy and Planning Joaquín Alonso Vázquez announced an expected economic growth of 1% for 2025. This projection seems wildly unrealistic given the dire economic circumstances. Over the past four years, economic growth has been consistently negative, even when taking the regime’s dubious statistics at face value. Worse still, CEPAL (the Economic Commission for Latin America and the Caribbean) projects continued economic contraction in 2023, 2024, and 2025. Even by the regime’s own estimates, Cuba has only met its economic growth targets twice in the past 13 years.
Adding to the bleak outlook, the Cuban government announced the implementation of a floating exchange rate for the first time since the 1990s. The presumed goal is to capture the informal currency trading, which has become essential for SMEs importing goods to the island. However, with the announcement of the Resolution 56, SMEs are importing less to the island and as such the informal exchange rate has been declining over the past month. Yet it is difficult to assess whether the floating exchange rate will have any impact in consumer goods given that wholesale markets are no longer private.
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