Cuba runs a large deficit in merchandise trade. Exports are highly concentrated on a small range of products: 82 percent of exports fall under seven product categories, while imports are more diversified. Cuba imports machinery, fuel, and manufactured goods in particular, but also has to import cereals and processed foodstuffs due to low productivity in domestic agricultural production and the destruction caused by hurricanes in recent years.
Cuba is a developing country in Latin America with a state-controlled planned economy that is mainly based on service and industry. The public sector employs about 76 percent of the population while the remaining is the private sector. In 2009, the country had a Human Development Index of 0.863 ranking 51st out of 182 countries. Cuba is the 140th largest world exporter and the 126th largest importer in the world. The country exported 1.74 Billion dollars and imported 5.91 Billion dollars worth of goods, the country’s imports increased at a rate of 3.7 percent between 2009 and 2014 while the exports decreased at an annual rate of minus 0.1 percent during the same period.
Cuba’s main imports include wheat which makes up 3.96 percent of the total exports at 234 Million Dollars, followed by refined petroleum which accounts for 3.87 percent of the total imports at 228 Million Dollars. Other imports are concentrated milk at 207 Million Dollars, corn at 204 Million Dollars, and poultry meat at 196 Million Dollars. Cuba also imports packaged medicaments and machinery. Cuba relies heavily on imported goods for its industries as well as local consumption. Import partners to Cuba include China at 1.05 Billion Dollars followed by Spain at 920 Million Dollars, Brazil at 507 Million Dollars, Canada at 389 Million Dollars, and Mexico at 360 Million Dollars. A lot of food imports to Cuba are from the US.
Despite being a net importer of oil, Cuba exports refined fuels based on oil from Venezuela. Cuba has large reserves of nickel. Hence, that commodity accounts for a significant share of exports, as do pharmaceuticals and better-known Cuban exports such as sugar, tobacco, and beverages majorly hard liquor.
In addition to merchandise exports, Cuba pays for imports through the export of services such as tourism, medical personnel working abroad, remittances from Cubans living abroad, and financing from outside benefactors which as the Soviet Union in the past and Venezuela in recent years.
In 2013, 2.9 million tourists visited Cuba. Most tourists arrived from Canada, around 1.1 million, and the EU accounted for less than 730 000.
Although tourist travel to Cuba is prohibited for US citizens under US law, over 90 000 US Americans were permitted to visit the island in 2012 through a specific licensing procedure. In addition to tourists from abroad, an estimated 300 000 Cuban Americans visit the island every year. In 2012, Cuba earned some 2.3 billion dollars in tourist receipts, a figure which has risen slightly over recent years. Estimates for remittances by Cuban Americans range from 1.4 to 3.5 billion dollars annually, while estimates of Venezuelan support to Cuba are around 3.5 billion dollars per year. Cuba is currently trying to make more use of its strategic position on the shipping routes between the Panama Canal and North America or Europe, by creating the Caribbean’s biggest container port, at Mariel.
This, along with other infrastructure projects, was implemented in close cooperation with Brazil. Cuba recently opened a Chinese-style special economic zone at Mariel Bay and reformed its foreign investment law to attract more foreign direct investment.
Cuba’s Top 10 Exports
Located at the confluence of the northern Caribbean Sea, the Gulf of Mexico, and the Atlantic Ocean, the Republic of Cuba shipped an estimated 1.7 billion dollars worth of goods around the globe in 2020. That dollar amount reflects a minus 20.3 percent decline since 2016 but a 1.9 percent increase from 2019 to 2020.
By value, Cuba’s biggest export product categories are tobacco, sugar, crude oil, nickel, ores, and ash which represent 72 percent of the island country’s total shipments.
The latest available country-specific data from 2018 shows that 87 percent of products exported from Cuba were bought by importers in Canada with 23.8 percent of its global total, China with 18.5 percent, Venezuela with 17.6 percent Spain with 7.8 percent, the Netherlands with 5.2 percent, Singapore with 3.3 percent, Belgium with 2.2 percent, Hong Kong with 2.1 percent, Germany with 2 percent, Portugal with 1.8 percent, France with 1.6 percent and Cyprus with 1.1 percent.
Given Cuba’s population of 11.4 million people, its total of 1.8 billion dollars in 2019 exported products translates to roughly 145 dollars for every resident in the Caribbean island country.
The following export product groups represent the highest dollar value in Cuban global shipments during 2020, at the 2-digit Harmonized Tariff System code level.
Tobacco manufactured substitutes: 329.5 million dollars accounted for 19.2 percent of total exports
Sugar, sugar confectionery: 285.5 million dollars which is 16.6 percent
Mineral fuels including oil: 251.1 million dollars which represents 14.6 percent
Nickel: 210.1 million dollars representing 12.2 percent
Ores, slag, ash: 161.5 million dollars standing at 9.4 percent
Beverages, spirits, vinegar: 114.4 million dollars which is 6.7 percent
Fish: 77.2 million dollars which is 4.5 percent
Wood: 51.9 million dollars standing at 3 percent
Pharmaceuticals: 21.2 million dollars accounted for 1.2 percent
Dairy, eggs, honey: 20.1 million dollars accounts for 1.2 percent
Cuba’s top 10 exported product categories account for 88.5 percent of the value of the Caribbean country’s overall shipments.
Mineral fuels including oil represent the fastest grower among the top 10 export categories, up by 334.9 percent from 2019 to 2020.
In second place for improving export sales was nickel via a 36.2 percent gain.
Cuba’s shipments of sugar including sugar confectionery posted the third-fastest gain in value, up by 21 percent.
The leading decliner among Cuba’s top 10 export categories were pharmaceuticals, thanks to a minus 10.6 percent drop year over year.
Drilling down to the more detailed 4 digit HTS codes, Cuba’s most valuable exported goods are cigars, cigarillos, and cigarettes accounting for 18.5 percent of its global total.
In second place was sugar with 16.4 percent trailed by nickel matte and oxide sinters with 10.5 percent, alcoholic beverages with 6.1 percent, crude petroleum oil with 5.7 percent, zinc ores and concentrates with 5.6 percent, high temperature distilled coal tar with 5 percent, lobsters and other crustaceans with 4.1 percent, refined petroleum oils with 3.7 percent then precious metal ores and concentrates with 3.4 percent.
One key indicator of a country’s economic performance is its unemployment rate. Cuba’s average unemployment rate was forecast to be 2 percent in 2020, compared to 1.2 percent one year earlier, according to Trading Economics.
Cuba had a trade balance of minus 4.17 Billion dollars in 2014 with exports valued at 1.74 Billion dollars while the imports were 5.91 Billion dollars. Cuba’s over reliance on imported goods has led to an increase in the deficit as well as low productivity driving the country into deeper debt. By 2014, the public debt amounted to 25.21 Billion dollars. Some of the countries such as the US from which Cuba imports her food have banned all her product and her imports from the US have to be paid for in cash. Cuba has an estimated nominal GDP of about 72 Billion dollars with an estimated growth rate of 4.7 percent and inflation estimated at 4.4 percent.
Significance Of Cuba In Foreign Trade
Cuba’s involvement in international trade is important both to the nation and its partners. The goods it exports to other countries play a role in the economies of those countries as well as earning from the same. This trade has also fostered ties between her and other countries leading to foreign investors going to Cuba. Cuban imports have played a significant role in the establishment and growth of industries as well as expansion in the private sector. Being a developing country, her relations with other nations has enhanced diplomatic ties enabling Cuba to access funding facilities.