To most of us it is quiet clear that the COVID-19 pandemic will cause a profound impact on the worlds economy. Directly or indirectly, we are already perceiving its consequences in all sectors, especially in those related to the hotel industry.
So far and with the appropriate measures being taken, Cuba has managed to keep the disease under control. But what does the future look like in regards to it’s economy?
Cuba: pandemic and economy
A recent research from McKinsey shows that “recovery to pre-COVID-19 levels could take until 2023—or later”. The outbreak of COVID have resulted in an abrupt closure of not only hotels and restaurants but also many professions and commercial activities related to tourism, which are a fundamental pillar of the island’s development. Therefore the Cuban economy has suffered by being deprived of its main source of income.
In this difficult and unclear scenario, the island’s government has announced a series of strategic lines that will be implemented in order to prepare the state budget for 2021. Also they are intended to boost the national economy and deal with the global crisis.
Key areas of development of the Cuban economy
According to this Strategic Plan, efforts will focus on promoting specific industries that are vital for the country’s economy.
1. Food production
Cuba is an agricultural country, but over the past decades it has been very dependent on the importation of food products. To confront this situation, it is proposed to reverse this fact by providing more autonomy to the agricultural sector.
2. Sugar sector
The sugar industry will receive generous support from the government to increase the production not only of cane sugar but also all it’s derivatives.
Even with the new challenges that COVID-19 is requesting from the main industry players, tourism continues to be a priority sector for the Cuban economy. However, more measures will be adopted in order to guarantee the health of tourism workers and tourists.
4. Professional services
The export of professional services related to health, sports and education is another source of income for the Cuban state. For this reason, new alternatives will be established in order to overcome obstacles and create more flexible conditions for their hiring process.
During this COVID-19 pandemic Cuba has shown the strength of its health system having one of the lowest mortality rate in Latin America. The Caribbean island has also a good experience in vaccine research. Francisco Duran, head of epidemiology at Cuba’s public health ministry, announced recently that “finding an efficient vaccine to fight COVID-19 is a top priority for our science and innovation system”.
6. Pharmaceutical industry, biotechnology and biomedical productions
This sector of the economy has gained a great importance during these times of pandemic, not only by maintaining the products that were previously offered but also including others related to COVID-19. Cuban scientist are still working on the Soberana 01 vaccine and the official results will be announced next February 15th 2021.
Probably the biggest challenge for the country. The pandemic has shown the importance of the computerization of society and the possibility to work from home. For that reason the country will continue to improve the technology and the Internet access.
8. Construction sector
Without infrastructure, there is no possible development. For this reason, this sector will also receive government support and several aspects of the investment process will be made more flexible.
Cuba will invest in renewable sources of energy, more efficient control systems and will also improve the energy efficiency.
10. Internal trade
Main objective will be the development and modernization of domestic trade, including new measures to make wholesale trade more flexible and to promote self-employment. The development of electronic commerce will be also another challenge.
11. Foreign trade
Many regulations around the import and export of products and foreign investment will be relaxed, with an emphasis on the commercialization of national products.
12. Financial system
New measures will be announced to:
– consolidate the banking system
– increase the digitization of transactions
– achieve monetary unification of the Cuban economy and the tax system.
“The crisis is the greatest blessing for people and nations, because the crisis brings progress”.
In this sense, the flexibility and incentives that the Cuban government is proposing to promote the development of its economy, including the role of foreign investment, is an aspect that must be carefully considered.
During the time I have lived on the island (more than six years), I can attest to the entrepreneurial spirit of the Cuban people, their high qualification and their willingness to work. I also recognize that many of the bureaucratic procedures and the prevailing obstacles to doing business in Cuba have been frustrating many times for the foreign investors.
However, due to the current situation and as expressed by the will of the Cuban government, at least in the previous twelve sectors, things seem to improve. Cuba, both as a market and as a producer of goods and services, has enormous untapped potential and thousands of business opportunities, especially in the private sector.
For this reason, it is important to be aware of the new provisions of the Cuban State on foreign investment, as everything seems to indicate that despite COVID-19 (or thanks to it), the largest island of the Antilles may become in the following years an excellent country for the international investors.