flag Honduras Honduras: Economic Outline

Economic Indicators

Honduras experienced an average annual growth rate of 3.7% from 2010 to 2019, primarily fueled by remittance-driven household consumption. This growth was supported by sound macroeconomic policies, including adherence to the Fiscal Responsibility Law (FRL), a stable exchange rate, sufficient foreign reserves, and a robust financial sector. However, the country's productive capacity did not expand significantly. In 2023, real GDP growth slowed to an estimated 3.5%, down from 4.0% in 2022. This decline was influenced by reduced demand for Honduran textiles in the United States, resulting in a 7.2% contraction in manufacturing. However, steady remittances and sustained credit growth supported household consumption and investment, helping to mitigate the impact of the export decline. As per the World Bank, growth is projected to slow to 3.4% in 2024 and 3.3% in 2025, with a subdued U.S. economy delaying the recovery of manufacturing exports and dampening remittances. This is expected to lead to a deceleration of households' consumption growth.

The fiscal deficit is estimated to have widened to 1.3% of GDP in 2023, as the execution of public investments improved in the second semester, particularly in energy, roads, and productive projects. Public debt decreased to 45.1% of GDP by June 2023, down from 46.2% in June 2022, due to net capital repayments (World Bank). Looking ahead, the fiscal deficit is projected to expand to 2.5% of GDP in 2024 as budget execution continues to improve. However, it is expected to gradually narrow over the medium term towards the Fiscal Responsibility Law's (FRL) 1% target. This trajectory will be supported by broadening of the tax base and enhanced efficiency of revenue collection and public spending. Inflation moderated to 6.7% in 2023, down from a peak of 9.1% in 2022. This decrease was attributed to lower international prices and measures taken by the central bank to absorb liquidity, such as open market operations and increases in reserve requirements and the overnight rate, leading to higher market interest rates. Inflation is expected to fall within the central bank's target range of 4±1 percent in 2024, aligning with declining international prices. Despite potential renewed energy inflation, inflationary pressures are anticipated to remain subdued in the medium term (World Bank).

The unemployment rate was estimated at 6.8% in 2023 by the World Bank (from 7% one year earlier). Labor market gender disparities persist, with women's unemployment nearly doubling that of men, while female labor force participation, at 40% in 2023, is about half the rate of men. In 2023, poverty, defined as living below the USD 6.85 line, is estimated to have reached 51.3%, declining from 2022 but still above pre-pandemic levels. Additionally, inequality, as measured by the Gini index, is estimated to have been 47.3%. Honduras also suffers from a high rate of criminality, which costs the country 10% of GDP according to the World Bank. Progress has already been made, though, as there has been a significant drop in homicides in the country in recent years. Migration is also an issue, as lower coffee production, financial adversity, and high crime rates drive farmers towards the United States.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 31.7234.8937.3639.6241.96
GDP (Constant Prices, Annual % Change) 4.03.53.63.73.8
GDP per Capita (USD) 3,0813,3303,5053,6533,802
General Government Gross Debt (in % of GDP) 49.244.544.644.544.0
Inflation Rate (%) 9.16.74.44.14.0
Current Account (billions USD) -2.08-1.39-1.60-1.64-1.66
Current Account (in % of GDP) -6.6-4.0-4.3-4.1-4.0

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
Honduras Lempira (HNL) - Average Annual Exchange Rate For 1 GBP 30.8330.2331.8930.6331.52

Source: World Bank - Latest available data.

 

Main Sectors of Industry

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 24.8 23.3 51.9
Value Added (in % of GDP) 12.6 26.3 56.4
Value Added (Annual % Change) -0.7 5.3 6.2

Source: World Bank - Latest available data.

 
Socio-Demographic Indicators 2024 (e)2025 (e)2026 (e)
Unemployment Rate (%) 8.08.08.0

Source: IMF – World Economic Outlook Database - Latest available data

 

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The Active Population in Figures

201820192020
Labour Force 4,499,9014,627,3924,122,919

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 68.74%70.77%71.05%
Men activity rate 88.32%87.88%87.96%
Women activity rate 49.38%53.83%54.28%

Source: International Labour Organization, ILOSTAT database

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
59,8/100
World Rank:
98
Regional Rank:
19

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
4/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
151/180

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Sources of General Economic Information

Main Online Newspapers and Portals
La Tribuna (in Spanish only)
La Prensa (in Spanish only)
Tiempo (in Spanish only)
El Heraldo (in Spanish only)
Diez (in Spanish only)
Honduras Newspapers
Useful Resources
Ministry of Finance
Ministry of Economic Development
Ministry of the Interior, Justice and Decentralization
Central Bank of Honduras
 
 

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Latest Update: May 2024

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