Honduras: Economic Outline
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Honduras' GDP grew by an estimated 4% in 2022, mainly boosted by higher remittances from expatriates in the U.S. and, by extension, household consumption, as well as high demand for textiles and agricultural products from the U.S. - the country's leading export destination. According to updated IMF forecasts, GDP growth is expected to slightly decrease to 3.7% in 2023 and to 3.5% in 2024. Still, a favourable trade scenario with the U.S. and remittances from expatriate workers is expected to continue to promote growth.
In 2022, government debt reached an estimated 50% of GDP, and the country's inflation rate increased to 9.1%. However, inflation should slightly decrease to 6.9% in 2023 and 5.3% in 2024. The Honduras government closed 2022 with an account deficit of 3.4%, which should slightly increase in the coming years, reaching 4.2% in 2023 and 4% in 2024. Furthermore, the government has opted to maintain a 3% interest rate to avoid further economic slowdown, contrasting with other regional central banks. The overall economic outlook is positive, but a continued effort to improve social indicators is required. The tourism sector, although still underdeveloped, is expected to grow in the coming years, especially thanks to the opening of the new Palmerola International Airport in December 2021. Nonetheless, weakened public and external accounts pose challenges, potentially requiring debt restructuring and additional financing sources to maintain stability.
The country's unemployment rate reached an estimated 5.2% in 2022 and should decrease to 4.9% in 2023. Current GDP performance is insufficient to improve living standards for the nearly 65% of the population that live in poverty. Moreover, 39% of households in Honduras live in extreme poverty, and only 25% of them benefit from social security. 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 | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 23.66 | 28.29 | 31.52 | 34.34 | 36.35 |
| GDP (Constant Prices, Annual % Change) | -9.0 | 12.5 | 4.0 | 3.7 | 3.5 |
| GDP per Capita (USD) | 2,380 | 2,796 | 3,062 | 3,278 | 3,410 |
| General Government Gross Debt (in % of GDP) | 52.7 | 50.3 | 50.0 | 0.0 | 0.0 |
| Inflation Rate (%) | 3.5 | 4.5 | 9.1 | 6.9 | 5.3 |
| Current Account (billions USD) | 0.68 | -1.49 | -1.08 | -1.46 | -1.46 |
| Current Account (in % of GDP) | 2.9 | -5.3 | -3.4 | -4.2 | -4.0 |
Source: IMF – World Economic Outlook Database - October 2021.
Note: (e) Estimated Data
| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Honduras Lempira (HNL) - Average Annual Exchange Rate For 1 GBP | 30.83 | 30.23 | 31.89 | 30.63 | 31.52 |
Source: World Bank - Latest available data.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 29.5 | 21.4 | 49.1 |
| Value Added (in % of GDP) | 11.0 | 26.6 | 57.0 |
| Value Added (Annual % Change) | 0.4 | 20.1 | 11.2 |
Source: World Bank - Latest available data.
| Socio-Demographic Indicators | 2022 | 2023 (e) | 2024 (e) |
|---|---|---|---|
| Unemployment Rate (%) | 8.9 | 8.1 | 8.0 |
Source: IMF – World Economic Outlook Database - Latest available data
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Labour Force | 4,499,901 | 4,627,392 | 4,122,919 |
Source: International Labour Organization, ILOSTAT database
| 2017 | 2018 | 2019 | |
|---|---|---|---|
| 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
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.
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Source: Index of Economic Freedom, Heritage Foundation
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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.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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.).
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Latest Update: September 2023
