Havana/The Cuban economy contracted around 5% in 2025, marking its third consecutive year in the red and deepening a crisis that has reduced the gross domestic product (GDP) by more than 15% since 2020, according to estimates by the Center for Studies of the Cuban Economy (Ceec), attached to the University of Havana.
The center’s report describes a panorama marked by multiple simultaneous crises, macroeconomic imbalances and high inflation. To these problems is added the loss of response capacity of the internal economy, emigration and demographic deterioration, as well as greater dependence on external financing, the increase in inequality and poverty.
The data consolidate one of the longest periods of economic contraction in the Island’s recent history. For 2026, in addition, the outlook continues to be negative. The Economic Commission for Latin America and the Caribbean (ECLAC) predicts a drop in Cuban GDP of 10.3%, the largest contraction in the region.
The Ceec considers the path to development practically postponed under current conditions. Among the main obstacles, he identifies the deficit in electricity generation, aggravated by the difficulties in accessing fuel and the lack of sufficient investments to renew an aging national electrical system.
The economic fall last year was also related to the decrease in income from exports of goods and services, the sharp decline in tourism and energy restrictions.
Electricity generation fell 13.7% in 2025 compared to the previous year, according to the study. The energy crisis has become one of the main brakes on productive activity, with prolonged electricity outages affecting both state-owned companies and private businesses and homes.
The economic fall last year was also related to the decrease in income from exports of goods and services, the sharp decline in tourism and energy restrictions. Added to these factors were internal problems, including the lack of implementation of pending productive reforms.
The study highlights, however, the growing weight of the private sector in an economy where the state company continues to lose productive capacity. Private businesses already contributed close to 29% of the State’s tax revenues and have become an important part of the supply of consumer products.
The Government has presented the package as a way to partially decentralize the economy, although it maintains the predominance of the state company in the economic model.
This advance has not meant, however, an equivalent improvement in the purchasing capacity of Cubans. Much of the food and other items available in private businesses are sold at prices that are inaccessible to those who depend on state salaries and pensions, greatly deteriorated after several years of inflation.
In recent months, the Government has been expanding the operating margin of the private sector. In June it announced a package of 176 economic and social transformations that includes, among other measures, greater openness to private companies, changes in trade, investment and tourism and new formulas to attract capital.
The Ceec report, prepared with data from 2025, does not yet incorporate the possible effects of these reforms. Its authors warn, however, that one of the greatest dangers is the distance that may open between what was announced and its effective application.
Between 2020 and 2024, GDP had fallen by around 11%, and the estimated fall for 2025 extended the accumulated contraction above 15%
The new provisions allow, among other changes, private companies with more than 100 workers and expand the possibilities of participation of non-state actors in areas that have until now been reserved or very restricted. The Government has presented the package as a way to partially decentralize the economy, although it maintains the predominance of the state company in the economic model.
The Cuban economy reaches this new stage after several years without being able to recover pre-pandemic levels. Between 2020 and 2024, GDP had fallen by around 11%, and the estimated fall for 2025 extended the accumulated contraction to above 15%.
For this year, the Government had initially planned a growth of 1%, after having set the same goal for 2025 without achieving it. The Ceec considers that economic evolution will once again fall below the official objective if greater changes do not occur and new financing comes in.
Uncertainty, the researchers conclude, continues to dominate the prospects for the Cuban economy for 2026.
