One might think that the normalization of diplomatic relations between the U.S. and Cuba would have significantly brightened the island nation’s economic outlook. A number of airlines are planning regular routes to Cuba, an indication that commerce between America and Cuba is set to expand.
Tourism is already on the rise, with the number of visitors expanding by nearly fourteen percent during the first four months of the year. While the longer term outlook for Cuba may be improving, the near term outlook remains dismal. Cuba’s economy expanded by just one percent during the first half of twenty sixteen. Export income is dropping as is fuel supply.
Under an agreement signed in two thousand, Venezuela supplies Cuba with about eighty thousand barrels of oil per day, a deal that has been valued at approximately one point three billion dollars. As reported by the New York Times, Venezuela’s ongoing economic crisis has led to a contraction in that oil supply.
Reuters recently reported that shipments of crude oil to Cuba have fallen by about forty percent. Cuba’s economic minister has indicated that the nation will need curtail fuel consumption by nearly a third during the second half of the year and also reduce state investment.
