Cuba Outlook On External Position

• Cuba's goods trade deficit will gradually widen in the next decade, as the decline in heavily subsidised oil from Venezuela outweighs the positive impact of currency unification and new trade deals. 
• The services account will fare better as rising tourist arrivals bode well for service sector export growth. Given expectations of solid hard currency inflows from tourism after the COVID-19 shock fades, the beneficial impact of a currency devaluation on exports and a falling debt burden, Fitch expects the stability of Cuba's external accounts will broadly improve over the next decade. 
• That being said, the agency forecasts for Cuba's current account balance shows a shift to a large deficit in 2021. This largely reflects the devaluation of the Cuban peso, which has reduced the forecast for Cuba's GDP in US dollar terms and therefore widened the headline deficit relative to GDP in US dollar terms. 
• Fitch Solutions notes that official data on Cuba's primary and secondary income balances are not regularly updated, introducing significant uncertainty into its forecast.

(Source: Fitch Solutions)