2025 is already the third consecutive year in which the national economy decreases compared to the previous year. For some it was an expected event; some had even announced it before the second half of 2025 began. ECLAC estimated growth at -1.5%.
Without being a total surprise, the -4% decrease in GDP, even though the validity of the indicator or its real capacity to measure how badly or well a country is doing may be questionable, this time synthesized the real situation of the national economy.
They stand out two positive specific events: control of the fiscal deficit at relatively manageable levels (84% of what was planned for the year) and a certain degree of control over the rate of increase in inflation (14.95% interannual variation). This, however, did not lead, as might be expected, to improving the performance of the real economy.
This behavior of the indicator, in this case, summarizes the inability of the economic policy adopted to re-boost the national economy. There are the facts: three consecutive years of negative GDP behavior, accompanied by the continuous worsening of the country’s economic and social situation.
This situation is also explained by the negative performance of other sectors such as exports; tourism, which was very far from the goal announced at the beginning of the year; the disaster of the sugar industry with a production that recalls the first half of the 19th century; the behavior of nickel prices and, above all, the deep energy crisis facing the country, which combines technological deterioration and low availability of fuels.
If we look at the physical volume index of the industrial production The depth of the damage to the Cuban productive system can be better understood.
Taking 1989 as a base, industrial production in 2024 only reached 35.2%; the sugar industry 2.4%; manufacturing of food products 23.8%; manufacturing and refining of petroleum products 15.1% (2023); manufacturing of fertilizers and 0.3% nitrogen products; manufacturing of rubber and plastic products 1.2%; construction products 6.5%; manufacturing of base metals 49.9%; manufacturing of metal products 8.8%; manufacturing of machinery and equipment 0.5%; manufacturing of medical, optical and precision instruments 0.1%; manufacturing of transportation equipment 0.5%. In summary, only one item of the twenty-three listed by the ONEI reaches what was achieved in 1989.
Due to its destination, the physical index of industrial production shows that consumer goods reached 59.9% compared to 1989; equipment and machinery, 3%; and intermediate goods, 13.2%.
These data can illustrate the weak reaction capacity of the national economy to face a process of accelerated growth, the high dependence on imports; They warn about the fact that with a low investment rate (10% planned for 2026) a significant recovery process will be very difficult and point out the enormous need to achieve foreign investment flows that compensate for this rate.
The country faced in 2025 and will face in 2026 well-known and recognized challenges in the last session of the National Assembly of People’s Powersuch as the economic blockade of the United States; the currency crisis; the low productivity and inefficiency of the state sector; the energy crisis; infrastructural collapse; monetary and exchange duality and the expansion of dollarization; macroeconomic imbalances; population aging and the flight of human capital.
The profound damage suffered by the health, education, public transportation and pension and retirement system sectors will make the application of a good part of the measures contemplated in the government program much more difficult.
The high political sensitivity of applying a group of them is recognized, however, it would be necessary to evaluate whether or not part of the high cost that the Cuban population pays today has been motivated by that same “political caution” that has led to delaying measures without which the national economy will not take off.
2026 will be a year of greater tensions because to the existing restrictions we will have to add those others that will emerge from the implementation of the Government Program made public in October: the evolution of the newly created exchange market, the sustainability of a floating exchange rate between bands, the evolution of the new currency allocation mechanism, the implementation of debt-for-asset swap programs, the adoption of a group of measures to “facilitate” foreign direct investment among which is the period of one week to decide on a possible project, interpreting silence as a positive response, the possible creation of new special development zones, the preparation and approval of a regulation that regulates the creation of investment projects. FDI in the sector or state. All of the above undoubtedly constitutes a great challenge to the leadership capacity of the central government’s governing team.
At the same time, one of the prioritized objectives for 2026 is the decentralization of powers and transfer of resources to the municipalities, for which the standard (GOC-2025-603-EX99) has been recently published.
Given the conditions that exist in the municipalities in terms of qualified personnel and resources, it must be a long process, for which a commission is created at the highest level (Temporary National Decentralization Commission) chaired by a deputy prime minister.
Due to its transversal nature to the entire economy and above all due to the degree of impact on all economic actors, the functioning of the exchange market and the behavior of the “floating exchange rate” will be decisive in creating the essential trust that induces a good business environment.
The regulations approved and published at the end of this December consolidate, at least immediately, the segmentation of the economy by actors and exchange rates, one of the greatest distortions that our economy suffers, but at the same time they contribute to making the operations of “segment three” more transparent in terms of accounting records and taxation.
Meanwhile, the state budget law for 2026 (Official Gazette of Cuba 137-2025) eliminates the tax advantages enjoyed by Local Development Projects and in fact puts them in a disadvantageous situation in relation to other actors, since these projects must also contribute to the Trust Fund for Local Development.
This can contribute to discouraging this “form of management” and reduce the income that municipalities receive in this way. While municipalities will only be able to use 50% of the local development tax, this 50% being subject to decisions depending on the country’s fiscal situation.
A significant part of the goals set at the end of 2024 for this year 2025 were not met. For 2026, modest goals are proposed, but undoubtedly difficult to achieve: GDP growth of 1%; total exports 9,969 million (2,530 million in goods and 7,438 million dollars in services); total electricity generation 18,606 GWh; 2,200,000 visitors; transportation of 936,635,000 people… All are goals greater than what was achieved in 2025.
However, to the weight of the objective factors that limit growth and hinder production, exports, investments, and innovation, we must add that other enormous weight associated with “distortions, insufficiencies and bureaucratic obstacles” that the government itself has not been able to eradicate.
Constantly repeating that it is necessary to change the mentality is not enough to achieve that purpose. We must act decisively, because unfortunately there are multiple individual and sectoral interests that sometimes stand as insurmountable obstacles on the path to recovery and development.
It is not possible to perfect what does not work, it is not worth updating what is already archaic; You have to create, even if necessary, from the very beginning.
