A cash short and crippled Cuban economy will grow 4% next year as the Communist-run country struggles to recover from an economic crisis, according to a report by the prime minister posted over the weekend.
Prime Minister Manuel Marrero’s annual report said the economy began a slow recovery of around 2% this year after declining 10.9% in 2020 and stagnating for several years before that.
New U.S. sanctions on top of the decades-old trade embargo and the coronavirus pandemic cost the import-dependent nation at least $4 billion in revenues over the last two years, according to the government.
The shortfall led to a 40% decline in imports and has hobbled the government’s ability to provide Cubans with food, medicine, consumer goods and inputs for industry and agriculture. Cuba has defaulted on some payments to its creditors and suppliers.
The government’s decision to devalue the peso for the first time since Cuban leader Fidel Castro’s 1959 revolution combined with increased dollarization of the economy have sparked triple-digit inflation estimated by local economists at around 500% this year.
The goal of 4% growth could indicate that Cuba will still see shortages of critical goods and have continued difficulty paying creditors, said a western businessman in Cuba with years of experience in the market.
The government is preparing measures to tame inflation and strengthen the peso, Marrero said. The peso is trading for around 70 to a dollar on the informal market versus the official rate of 24 pesos.
“A set of measures must be adopted with a view to stopping the inflationary spiral,” Marrero said in his report, without stating what they might be.
Marrero credited a vaccination campaign that has reached 80% of the country’s population for clearing the way for a nascent recovery next year.