Euler Hermes Cuba report - U.S. annual exports could grow by approximately $1B

Euler Hermes Cuba report: U.S. annual exports could grow by
approximately $1B
Post-embargo exports could increase to $6 billion by 2020

BALTIMORE, Md., Aug. 5, 2015 /PRNewswire/ -- With the end of the Cuban
embargo potentially in sight, the U.S. is positioned to become the main
"economic winner," increasing its Cuban exports by an average $1 billion
per year, according to a new report from Euler Hermes, the world leader
in trade credit insurance. The report also indicates U.S. export revenue
could reach $6 billion by 2020 – or 25 percent of Cuba's total imports,
up from 3 percent today.

Traditional Cuban trade partners will also benefit, including:
China (+$360 million/per year)
Spain (+$200 million/per year)
Brazil (+$120 million/year)
France (+$100 million/year)

Euler Hermes expects that Venezuela, currently a major trading partner,
will suffer the biggest loss. As Cuba begins to diversify its oil and
petroleum imports, Venezuela's export share will drop substantially from
$5.4 billion in 2015 to about $1.5 billion in 2020.

"This new landscape will give a tangible boost to the Cuban economy,"
said Daniela Ordonez, Euler Hermes economist. "Cuban GDP will accelerate
from a five-year average of 2 percent to 5-6 percent per year from 2016
to 2020. This activity will largely be driven by foreign investment,
which will grow 15-20 percent in the coming years."

New investment opportunities

In November 2014, the Cuban government presented an extensive project
wish-list to foreign investors. The "Cuba Portfolio of Opportunities for
Foreign Investment" includes 246 projects seeking over $15 billion of
capital. It includes critical sectors such as biotechnology,
construction, energy, food and pharmaceuticals.

It also puts an emphasis on the Mariel Zone development. Cuban officials
hope to transform the Mariel Bay – 28 miles west of Havana and 112 miles
from Florida – into a major cargo traffic hub, including a free-trade
zone and a container port able to host some of the world's largest cargo
ships. By offering low tax and few regulations, the Cuban government
expects to attract enough foreign capital to build industrial factories
and enlarge the Mariel Zone's import-export services.

Risks will remain

Due to Cuba's complex exchange rate system, currency and financing risks
will increase. The government has expressed interest in unifying the
country's two currencies – the convertible peso and the Cuban peso –
however, no concrete steps have been taken. The anticipated increase in
foreign tourism and capital inflows makes unification unavoidable but
could push the country toward currency collapse. In addition, access to
credit will remain limited in the short-term as the inter-bank payment
system and distribution channels need to be re-established.

Political and business climate risks will remain high. Foreign
investments will remain tightly controlled by the state, with most
foreign ventures requiring majority Cuban ownership. Despite the
economic improvements, the private sector is projected to develop only
gradually.

Additionally, in the short-term, non-payment risks by Cuban companies
will remain high. Euler Hermes continues to rate Cuba as D4 (high risk).

To learn more, please read "Cuba: Viva la (economic) Revolution."
http://www.eulerhermes.us/economic-research/economic-publications/Documents/EI-Cuba-August2015.pdf

SOURCE Euler Hermes

Source: Euler Hermes Cuba report: U.S. annual exports could grow by
approximately $1B -- BALTIMORE, Md., Aug. 5, 2015 /PRNewswire/ -- -
http://www.prnewswire.com/news-releases/euler-hermes-cuba-report-us-annual-exports-could-grow-by-approximately-1b-300124079.html