Since oil prices crashed in 2014 and Venezuela, Cuba's closest ally and main economic partner and fuel supplier, began to struggle, foreign currency revenues and oil supplies have steadily fallen, forcing cuts in imports and energy use.
Raul Castro, first announced the need for a new constitution in 2011 after embarking on a series of reforms cautiously opening up the economy to foreign investment and the private sector in order to make Cuban socialism sustainable.
57-year-old Diaz-Canel, who was the only candidate for the presidency, was elected to a five-year term with 603 out of 604 possible votes in the National Assembly, the official Cubadebate website said.
Raul Castro announced his departure several years ago and has long signalled that Diaz-Canel, a 57-year-old Communist Party stalwart, was his likely successor, carefully managing the transition to ensure political continuity.
Once the approximately 600 members of the National Assembly have been elected, the new legislature will convene on April 19 to elect a new president of the State Council, the post Raul Castro currently occupies
Castro, 86, said last month he would step down as President in April. He took over in 2008 after his brother Fidel Castro, who had governed Cuba since leading the 1959 revolution, became seriously ill. Fidel Castro died in 2016.
The backtracking on the private sector hints at unease among some in the ruling Cuban Communist Party that free market reforms may have gone too far, amid a broader debate about rising inequality on the island.
The Cuban government on Wednesday selected 57-year-old First Vice President Miguel Mario Diaz-Canel Bermudez as the sole candidate to succeed Raul Castro. It is the first time in almost sixty years that a Castro will not be the president of Cuba.