Economy of Honduras

Mother Earth Travel > Country Index > Honduras > Map Economy History

Honduras is one of the poorest and least developed countries in Latin America. The economy is based mostly on agriculture, which accounted for 15% of GDP in 1999. Coffee accounted for 26% ($340 million) of total Honduran export revenues in 2000. However, plummeting world coffee prices in 2001 caused coffee export revenues to fall by 50% during the year. 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. The banana sector continued to recover in 2001 and is estimated to generate some $210 million in export revenues, equal to pre-Mitch levels. Cultivated shrimp are another important export generating $125 million in 2001. Honduras has extensive forest, marine, and mineral resources, although widespread slash-and-burn agricultural methods continue to destroy Honduran forests. Remittances from Hondurans living abroad (mostly in the United States--rose 28% to $410 million in 2000 and were expected to rise in 2001 to $450-$500 million. The currency (lempira) has only moderately devalued in nominal terms over the past year.

Unemployment is estimated at around 4.0%, though underemployment is much higher. The Honduran economy grew 4.7% in 2000, recovering from the Mitch-induced recession (-1.9%) of 1999. The economy is expected to grow 3% in 2001, led by continuation of foreign-funded reconstruction projects. The Honduran maquiladora sector, the second-largest in the world, continued its strong performance in 2000, providing employment to more than 125,000 workers and generating over $528 million in foreign exchange for the country. The economic slowdown in the U.S. caused Honduras' maquila sector growth to stagnate in 2001 and employment in the sector to drop to about 115,000.

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 $1 billion.

The country signed an Enhanced Structural Adjustment Facility (ESAF)--later converted to a Poverty Reduction and Growth Facility (PRGF) with the International Monetary Fund (IMF) in March 1999. While Honduras continues to maintain stable macroeconomic policies, it has lagged in implementing structural reforms, such as privatization of the publicly owned telephone and energy distribution companies. 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 U.S.--worth more than $400 million. In July 2000, Honduras reached its decision point under the Highly Indebted Poor Countries Initiative (HIPC), qualifying the country for interim multilateral debt relief. In 2001, the IMF approved Honduras' third year PRGF, and together with the World Bank, the Poverty Reduction Strategy Paper, which makes Honduras eligible for interim debt relief and qualify for $556 million in debt relief in present value terms at its completion point in December 2002.

GDP: purchasing power parity - $17 billion (2000 est.)
GDP - real growth rate: 4.7% (2000 est.)
GDP - per capita: purchasing power parity - $2,700 (2000 est.)
GDP - composition by sector:
agriculture:  16.2%
industry:  31.9%
services:  51.9% (1999 est.)
Household income or consumption by percentage share:
lowest 10%: 1.2%
highest 10%: 42.1% (1996)
Inflation rate (consumer prices): 10.1% (2000 est.)
Labor force: 2.3 million (1997 est.)
Labor force - by occupation: agriculture 29%, industry 21%, services 60% (1998 est.)
Unemployment rate: 28% including underemployment (2000 est.)
Budget:
revenues:  $607 million
expenditures:  $411.9 million, including capital expenditures of $106 million (1999 est.)
Industries: sugar, coffee, textiles, clothing, wood products
Industrial production growth rate: 4% (1999 est.)
Electricity - production: 3.319 billion kWh (1999)
Electricity - production by source:
fossil fuel:  44.71%
hydro:  55.29%
nuclear:  0%
other:  0% (1999)
Agriculture - products: bananas, coffee, citrus; beef; timber; shrimp
Exports: $2 billion (f.o.b., 2000 est.)
Exports - commodities: coffee, bananas, shrimp, lobster, meat; zinc, lumber
Exports - partners: United States 35.4%, Germany 7.5%, El Salvador 6.4%, Guatemala 5.8%, Nicaragua 4.8% (1999)
Imports: $2.8 billion (f.o.b., 2000 est.)
Imports - commodities: machinery and transport equipment, industrial raw materials, chemical products, fuels, foodstuffs
Imports - partners: United States 47.1%, Guatemala 7.4%, El Salvador 5.9%, Mexico 4.8%, Japan 4.7% (1999)
Debt - external: $5.4 billion (2000)
Economic aid - recipient: $557.8 million (1999)
Currency: lempira (HNL)

SOURCES: The World Factbook, U.S. Department of State

Mother Earth Travel > Country Index > Honduras > Map Economy History