Cuba Economic Review: Micro-level Resilience and Macro-level Pessimism

This edition of the Cuba Economic Review, our last of 2025, examines four key developments shaping Cuba’s current moment: the Communist Party’s acknowledgment of a fifth consecutive year of recession, a dramatic worsening of electricity shortages in early December, growing evidence that official inflation statistics miss the real increases Cubans face daily, and new rules governing foreign currency and payments that aim to ease transactions while maintaining government control. In By the Numbers, we look at Cuba’s increasingly lopsided trade relationship with China and what it means for the island’s economic independence and diplomatic maneuverability. Our In Depth section uses AUGE’s 2025 Business Climate Study to take the temperature of Cuba’s small and medium-sized businesses—companies showing remarkable resilience even as they navigate regulatory confusion, currency shortages, and chronic power outages. We close with our Recommended Reading: a look at China’s Gilded Age by Yuen Yuen Ang, which reminds us that incentives drive behavior more than rhetoric ever can—and that without clear rules, arbitrary decisions become a hidden tax on investment and productivity.