Executive Briefings

Cuba's Economic Growth Could Reach 4 Percent Yearly Through 2021, Research Says

As Cuba has begun to liberalize its economy, U.S. companies have begun to show significant interest - and for good reason. The experiences of China, Russia, Vietnam, and the countries of Central and Eastern Europe have shown that such liberalization can lead to rapid economic growth, along with opportunities for multinational companies and foreign investors to stake an early claim in an untapped market.

Yet there is a lot of uncertainty about the potential opportunity in Cuba. Despite the country's proximity, most U.S. executives know very little about how its economy functions. Quite simply, those considering a move into Cuba lack the facts needed to make smart business decisions.

Research shows that Cuba's GDP growth will increase by 2 percent to 4 percent annually over the next five years. That is a conservative estimate; Cuba’s GDP has risen by 5 percent to 6 percent in recent years. But the country has the potential for even faster growth over the long term. For that to happen, however, Cuba will need to take decisive, comprehensive measures to overcome structural limitations on its economy—by improving infrastructure, attracting foreign capital, and continuing to open its markets. In addition, the U.S. government will have to further ease trade and travel restrictions.

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Yet there is a lot of uncertainty about the potential opportunity in Cuba. Despite the country's proximity, most U.S. executives know very little about how its economy functions. Quite simply, those considering a move into Cuba lack the facts needed to make smart business decisions.

Research shows that Cuba's GDP growth will increase by 2 percent to 4 percent annually over the next five years. That is a conservative estimate; Cuba’s GDP has risen by 5 percent to 6 percent in recent years. But the country has the potential for even faster growth over the long term. For that to happen, however, Cuba will need to take decisive, comprehensive measures to overcome structural limitations on its economy—by improving infrastructure, attracting foreign capital, and continuing to open its markets. In addition, the U.S. government will have to further ease trade and travel restrictions.

Read Full Article