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    A Rough Economic Year Ahead for Cuba

    A Rough Economic Year Ahead for Cuba
    Media Center, Image DECEMBER 22, 2015 | 20:23 GMT

    According to a U.N. 2015 study led by the Economic Commission for Latin
    America and the Caribbean, Cuba’s services sector is responsible for the
    growth in the Cuban economy, representing roughly 70 percent of gross
    domestic product. Tourism in particular has and continues to provide
    significant revenue to Havana, contributing $2.5 billion, or roughly 3
    percent of GDP.

    Furthermore, Cubans and Cuban-Americans have sent approximately $2
    billion worth of remittances in the past year. The revenue is expected
    to grow within the coming years as well, ever since the U.S. Treasury
    Office of Foreign Assets Control raised the limit of remittance exports
    from $500 to $2,000 per quarter. U.S. citizens are now authorized to
    import $400 worth of Cuban goods, which will boost Cuba’s domestic
    market sales. As a result, the Cuban economy is forecast to grow on
    average more than 4 percent between 2016 and 2020.

    Unfortunately for Cuba, the U.S. trade embargo and the restrictions it
    places on economic growth remain. For all the benefits tourism and
    remittances provide, Cuba’s economy still heavily depends on these
    revenues, with no alternatives to diversify the economy because of the
    embargo. Because of this, Cuba will continue to be dependent on
    Venezuelan aid and fuel subsidies, a situation made more precarious by
    the results of Venezuela’s Dec. 6 legislative elections. The
    opposition-led National Assembly can now call a referendum on
    Venezuela’s international treaties that are deemed to compromise its
    national sovereignty, specifically its controversial treaties with Cuba.

    The embargo on Cuba will define the state of its economy in 2016, and
    unfortunately for Cuba, chances that the United States will lift
    restrictions are slim. With congressional and presidential elections
    approaching in 2016, domestic politics will limit U.S. politicians’ and
    lawmakers’ ability to cooperate in lifting the embargo. Thus, despite
    the thaw in U.S.-Cuba relations in 2015, it is unlikely that the United
    States will lift its embargo in 2016. It will be a more difficult year
    for Cuba as it becomes more dependent on tourism, remittance revenues
    and Venezuelan oil subsidies, all while remaining economically isolated.

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    Source: A Rough Economic Year Ahead for Cuba | Stratfor –