The second largest nation in Central America, Honduras has a vast stretch of mountainous region covering nearly 80% of its total land. Although the country has rich forest resources and deposits of silver, lead, zinc, iron, gold, antimony, and copper, inadequate road and rail systems hamper their exploitation. The country is one of the poorest nations in the Western Hemisphere and largely dependant on foreign aid. Agriculture plays an important role, with coffee and banana being exported in large quantities. Unequal distribution of income, large scale unemployment and underemployment, and growing fiscal deficits are the major problems faced by Honduras.
Honduras Economy: Reforms and GDP
Although the country’s inadequate infrastructure and its vulnerability to frequent natural disasters restrict economic activity, investments in maquila (export processing apparel assembly) and non traditional export segments have helped diversify the economy. Various reform measures undertaken by Honduras’ government have resulted in a steady increase in its real GDP growth rate.
The global economic crisis and Honduras’ dependence on the US has, however, restricted the country’s economic growth in recent years. Honduras’ real GDP growth rate declined from 6.3% in 2007 to 4% in 2008 and -3.1% in 2009.
Honduras Economy: Honduras Economic Profile
Honduras’ banana plantations and the companies running them have had a significant social and political influence for many years. Inadequate infrastructure in terms of limited rail and road links, unequal distribution of income, high fiscal deficits due to heavy defense spending, and large scale poverty and high unemployment levels are the major problems faced by this country.
Like all other Latin American nations, Honduras’ has United States as its biggest trading partners, and obtains nearly two thirds of its foreign direct investment. The US-Central America Free Trade Agreement (CAFTA) in 2005 paved the way for the opening up of Honduras telecommunication sector besides resulting in increased investments in country. Exports to the United States and remittances from abroad account for nearly 50% of Honduras total economic activity.
Honduras Economy: Statistics
Here are some key statistics as per the 2009 estimates:
Unemployment rate: 6%
Public debt: 24.9% of GDP
Consumer price inflation : 5.2%
Industrial Production growth rate: -9.5%