Cuba's Economic Challenges: Inflation and Energy Crisis Deepen

Cuba is currently facing severe economic challenges, highlighted by a rising inflation rate and widespread energy shortages exacerbated by Hurricane Melissa. According to OnCuba News, two-thirds of Santiago de Cuba remained without electricity days after the hurricane, with major deficits in electricity generation attributed to damaged infrastructure and fuel shortages. The Minister of Energy and Mines, Vicente de la O Levy, reported that only a fraction of Santiago's electricity service had been restored, while other provinces have shown better recovery rates. However, the overall electricity generation situation remains precarious, with significant outages occurring even in regions not directly affected by the hurricane. The Union Electrica estimated peak deficits of over 1500 megawatts, indicating a severe inability to meet the country's energy demands. This energy crisis is compounded by ongoing issues with aging power plants and a lack of fuel, with many generating units offline due to maintenance and repairs.

In tandem with these energy issues, Cuba is grappling with high inflation rates. OnCuba News reported that the year-on-year inflation rate in the formal market reached 15.41% in October, slightly up from September, marking the end of a previous decline in price increases. While this figure is lower than the inflation rates seen in previous years, such as 28.09% in 2024, the reality on the ground is stark. According to economist Pavel Vidal, the real inflation rate could be as high as 70% when factoring in the informal economy, which often reflects the true cost of living for many Cubans. The cumulative inflation since 2020 has seen prices triple, with essential goods like food, medicine, and fuel becoming increasingly scarce.

The economic contraction, reported as a 1.1% decline in 2024, is part of a broader trend of economic decline over recent years, with an accumulated drop of 11% in GDP across the last five years. This scenario has led to rising social discontent, visible in protests and an unprecedented wave of migration from the island. The combination of the COVID-19 pandemic, tightening U.S. sanctions, and flawed domestic economic policies has worsened Cuba's structural economic issues, leading to a crisis that impacts daily life for millions.

In the wake of Hurricane Melissa, regions like Grito de Yara in Granma province are experiencing dire conditions, with reports of over two weeks without basic services. Residents there are struggling with food and medicine shortages, and many lack access to potable water and electricity. Activist José Díaz Silva highlighted the community's plight, detailing how families are forced to go to local clinics to charge their phones and find some light amid the darkness. The United Nations has reported significant damage, estimating that over 90,000 homes and 100,000 hectares of crops were affected, complicating Cuba's recovery efforts. The UN's initial response plan seeks 74.2 million dollars to address the pressing needs of around one million people impacted by the hurricane.

In summary, Cuba finds itself in a deepening economic crisis characterized by inflation and energy shortages, worsened by natural disasters and structural challenges. The combination of these factors threatens the livelihoods of many Cubans, as the nation seeks to navigate its recovery amidst a landscape of scarcity and discontent.