|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
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.
purchasing power parity - $17 billion (2000 est.)
SOURCES: The World Factbook, U.S. Department of State
Mother Earth Travel > Country Index > Honduras > Map Economy History