Economy of Honduras

Economy of Honduras

San Pedro Sula, industrial center of Honduras
Currency	Honduran Lempira (HNL, L)
Fiscal year	Calendar year
Trade organizations	DR-CAFTA, WTO
Country group	Developing/Emerging[1] Lower-middle income economy[2]
Statistics
Population	9,587,522 (2018)[3]
GDP	$34.34 billion (nominal, 2023 est.)[4] $75.72 billion (PPP, 2023 est.)[4]
GDP rank	104th (nominal, 2019) 105th (PPP, 2019)
GDP growth	3.7% (2018) 2.7% (2019e) −5.8% (2020f) 3.7% (2021f)[5]
GDP per capita	$2,524 (nominal, 2018 est.)[4] $5,216 (PPP, 2018 est.)[4]
GDP per capita rank	132nd (nominal, 2018) 135th (PPP, 2018)
GDP by sector	agriculture: 14.2% industry: 28.8% services: 57% (2017 est.)[6]
Inflation (CPI)	4.348% (2018)[4]
Population below poverty line	48% (2019)[6] 26% on less than $3.20/day (2022)[7]
Gini coefficient	48.2 high (2022)[8]
Human Development Index	0.624 medium (2022)[9] (138th) 0.480 low IHDI (2022)[10]
Labor force	4,376,463 (2019)[11] 67.7% employment rate (2018)[12]
Labor force by occupation	agriculture: 39.2% industry: 20.9% services: 38.9% (2005 est.)[6]
Unemployment	7% (2022)[13] about one-third of the people are underemployed[6]
Main industries	sugar processing, coffee, woven and knit apparel, wood products, cigars
External
Exports	$8.675 billion (2017 est.)[6]
Export goods	coffee, apparel, shrimp, automobile wire harnesses, cigars, bananas, gold, palm oil, fruit, lobster, lumber
Main export partners	United States 34.5%  Germany 8.9%  Belgium 7.7%  El Salvador 7.3%  Netherlands 7.2%  Guatemala 5.2%  Nicaragua 4.8% (2017)[6]
Imports	$11.32 billion (2017 est.)[6]
Import goods	communications equipment, machinery and transport, industrial raw materials, chemical products, fuels, foodstuffs
Main import partners	United States 40.3%  Guatemala 10.5%  China 8.5%  Mexico 6.2%  El Salvador 5.7%  Panama 4.4%  Costa Rica 4.2% (2017)[6]
Current account	−$380 million (2017 est.)[6]
Gross external debt	$8.625 billion (31 December 2017 est.)[6]
Public finances
Government debt	39.5% of GDP (2017 est.)[6]
Budget balance	−2.7% (of GDP) (2017 est.)[6]
Revenues	4.658 billion (2017 est.)[6]
Expenses	5.283 billion (2017 est.)[6]
Credit rating	Standard & Poor's:[14] B (Domestic) B (Foreign) B+ (T&C Assessment)
Foreign reserves	$4.708 billion (31 December 2017 est.)[6]
All values, unless otherwise stated, are in US dollars.

The economy of Honduras is based mostly on agriculture, which accounts for 14% of its gross domestic product (GDP) in 2013. The country's leading export is coffee (US$340 million), which accounted for 22% of the total Honduran export revenues. Bananas, formerly the country's second-largest export until being virtually wiped out by 1998's Hurricane Mitch, recovered in 2000 to 57% of pre-Mitch levels. Cultivated shrimp is another important export sector. Since the late 1970s, towns in the north began industrial production through maquiladoras, especially in San Pedro Sula and Puerto Cortés.^[15]

Honduras has extensive forests, marine, and mineral resources, although widespread slash and burn agricultural methods continue to destroy Honduran forests. The Honduran economy grew 4.8% in 2000, recovering from the Mitch-induced recession (−1.9%) of 1999. The Honduran maquiladora sector, the third-largest in the world, continued its strong performance in 2000, providing employment to over 120,000 and generating more than $528  million in foreign exchange for the country. Inflation, as measured by the consumer price index, was 10.1% in 2000, down slightly from the 10.9% recorded in 1999. The country's international reserve position continued to be strong in 2000, at slightly over US$1 billion. Remittances from Hondurans living abroad (mostly in the United States) rose 28% to $410 million in 2000. The Lempira (currency) was devaluing for many years, but stabilized at L19 to the United States dollar in 2005. The Honduran people are among the poorest in Latin America; gross national income per capita (2007) is US$1,649; the average for Central America is $6,736.^[16] Honduras is the fourth poorest country in the Western Hemisphere; only Haiti, Nicaragua, and Guyana are poorer. Using alternative statistical measurements in addition to the gross domestic product can provide greater context for the nation's poverty.

The country signed an Enhanced Structural Adjustment Facility (ESAF) – later converted to a Poverty Reduction and Growth Facility (PRGF) with the International Monetary Fund in March 1999. Honduras (as of the about year 2000) continues to maintain stable macroeconomic policies. It has not been swift in implementing structural changes, such as privatization of the publicly owned telephone and energy distribution companies—changes which are desired by the IMF and other international lenders. Honduras received significant debt relief in the aftermath of Hurricane Mitch, including the suspension of bilateral debt service payments and bilateral debt reduction by the Paris Club—including the United States – worth over $400  million. In July 2000, Honduras reached its decision point under the Heavily Indebted Poor Countries Initiative (HIPC), qualifying the country for interim multilateral debt relief.

Land appears to be plentiful and readily exploitable, but the presence of apparently extensive land is misleading because the nation's rugged, mountainous terrain restricts large-scale agricultural production to narrow strips on the coasts and to a few fertile valleys. Honduras's manufacturing sector has not yet developed beyond simple textile and agricultural processing industries and assembly operations. The small domestic market and competition from more industrially advanced countries in the region have inhibited more complex industrialization.

In 2022, according to the National Institute of Statistics of Honduras (INE), 73% of the country's population is poor and 53% lives in extreme poverty.^[17] The country is one of the most unequal in Latin America.^[18]