As we have noted, Cuba is experiencing an unprecedented economic crisis in the wake of COVID-19. According to government reports, the economy is expected to shrink by 1.1 % in 2024. This downturn has prompted the Cuban government to declare a “war economy,” a reflection of the severe challenges facing the country. Its productive sector has all but collapsed, causing dire energy shortages. With oil flows from Venezuela having all but disappeared, hundreds of thousands of Cubans are now faced with acute supply shortages and a daily life of misery.
A perfect storm of misfortunes has aggravated the situation. We must understand that last year’s hurricane season not only tore through our civil and physical infrastructural foundations, it ignited a tumultuous public uproar. Cuban residents in Havana have repeatedly taken to the streets. They are protesting the acute lack of potable drinking water and the extended blackouts of up to 20 hours in some regions. These protests both reflect the anger and desperation that Cubans have experienced living under these unprecedented conditions.
Cuba’s energy sector has been hit hard in recent years from neglect, lack of maintenance and investment. Venezuela’s oil exports have fallen off a cliff. They plummeted from an average of 96,000 barrels per day in 2011 to less than a third of that today, crippling electricity generation and choking general economic activity.
The combined impact of the 2024/2025 harvest dealt an overwhelming punch to crop production. It dropped to only 150,000 tons, less than half the previous year’s total, representing the worst performance in more than a century. This steep loss in agricultural production exacerbates the severe supply shortages that island residents continue to face.
Even the tourism sector—which was, prior to the pandemic, a pivotal economic lifeline for Cuba—is flailing. This is partly because hotels got hit hard in the first quarter of 2024, with an average occupancy rate of only 24%. That was a hefty 11-point decrease since this time last year. From January through July 2024, you attracted over 1.58 million guests! That number is just 83% of the visits you counted during the same months back in 2023.
Traditionally, Cuba’s economy has focused on sugar and tourism, but both industries have left the country in a downward spiral. Jorge Pérez, a local entrepreneur, remarked on the impact of these challenges on tourism:
“The tourist arrives and sees that there is an energy situation; it makes the experience not good, and that they prefer other destinations.” – Jorge Pérez
On August 1, the Cuban government made headlines by greatly raising the amount of pensions, with monthly incomes increasing from roughly US$65 to almost US$160. This change is intended to alleviate some of the financial burden pensioners face. Unfortunately, it does not do enough to address the long-term economic challenges facing our nation.
Cuba now operates an official, state sanctioned exchange rate of 24 pesos per US dollar. At the same time, the new parallel exchange rate has skyrocketed to over 400 pesos. This gap further makes transactions in hard currency especially confusing for all Cubans, who must now contend with high prices for everyday essentials.
Díaz-Canel, Cuba’s president, acknowledged the issues facing the nation during recent statements:
“You don’t defend the revolution by hiding the problems we have.” – Díaz-Canel
Pérez Villanueva, an economist, highlighted the paralysis affecting many sectors due to a lack of essential services:
“which is almost paralyzed in many activities for lack of necessary services.” – Díaz-Canel
He pointed out that unresolved internal issues continue to hamper progress:
“there are internal issues that have not been resolved.” – Pérez
De Miranda noted:
“has not been able to present a credible strategy for overcoming the crisis.” – De Miranda
It’s the everyday realities of Cuban citizens that show you just how badly they’re suffering. Everleny Pérez Villanueva described navigating through Havana’s streets:
“I go out with my car and there are no traffic lights in the city, there are complicated high-speed areas.” – Everleny Pérez Villanueva
Business owners like Lázaro Hernández emphasize how energy shortages affect their livelihoods:
“They affect everyone; it’s difficult to stay connected. I always have to be connected; if not, I lose clients.” – Lázaro Hernández
Even as these trials increase, countless Cubans continue to put in effort towards presenting their country’s splendor even through misfortune. Pérez added:
“You try to show the most beautiful side. The goal of being able to do tourism is to make you fall in love with Cuba, despite the difficulties.” – Jorge Pérez
Cubans overwhelming attribute their current situation to the cumulative effects of six decades of economic mismanagement and systemic repression. Despite this, from 1990 until 2024 Cuba’s average annual GDP change is still expected to be low, at just 1.1%. The issue of these fundamental goods that contribute to social equity came into sharper focus as the overall economy has declined.
