Now that the U.S. has re-established diplomatic relations with Pearl of the Antilles, interest in Cuba is rising. While there are no crystal balls about Cuba’s future, here are a few things we do know about the island-nation’s economy, thanks to Pew Research.
1. Cuba was doing business with the U.S. even before the embargo was lifted. A partial repeal of the embargo allowed for this, and Cuba really needed food, medical supplies and medicine.
2. Cuba’s economic growth has slowed dramatically in the past few years.
The CIA estimates that Cuba’s GDP grew just 1.3% last year in real (inflation-adjusted) terms – 177th out of 222 countries ranked. One big reason: With global oil prices still well below their pre-recession highs, the heavily discounted oil that Venezuela sends Cuba – some of which Cuba re-exports – is less valuable.
3. Cuba’s private sector is not up-to-speed; the state still dominates. The government of Cuba is responsible for 75 percent of Cuba’s economic activity.
4. More Cubans work for themselves. These are really small businesses; think “microenterprise.” Also, while there is a rise in small business owners, it’s still less than 10 percent of the Cuban population.
5. Cuba imports goods and exports services.
Getting a clear read on Cuban trade is especially tricky, not least because exports and imports are effectively valued using different exchange rates. As The Economist recently explained, state-owned firms and foreign joint ventures value each ordinary peso at one convertible peso – that is, at $1: “The massively overvalued rate … creates huge distortions in the economy, allowing importers to buy a dollar’s-worth of goods for one peso.”