The economy of Honduras is based mostly on agriculture, which accounted for 22% of its gross domestic product (GDP) in 1999. Leading export coffee ($340 million) accounted for 22% of total Honduran export revenues. 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. Cultivated shrimp are another important export sector.
Honduras has extensive forest, marine, and mineral resources, although widespread slash and burn agricultural methods continue to destroy Honduran forests. Unemployment is estimated at around 28%. The Honduran economy grew 4.8% in 2000, recovering from the Mitch-induced recession (-1.9%) of 1999. The Honduran maquiladora sector, the third-largest in the world, continued its strong performance in 2000, providing employment to over 120,000 and generating more than $528 million in foreign exchange for the country. 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. Remittances from Hondurans living abroad (mostly in the U.S.) rose 28% to $410 million in 2000. The lempira (currency) was devaluing for many years but stabilized at L19 to the US dollar in 2005. The minimum wage is USD150 a month (probably obsolete datum). The people of Honduras are among the poorest in Latin America; Gross national income per capita (2007) is $US 1,649; the average for Central America is $US 6,736. Honduras is the third poorest country in the Western Hemisphere; only Haiti and Nicaragua are poorer. Utilizing alternative statistical measurements in addition to the Gross Domestic Product can provide greater context for the nation's poverty.
The country signed an Enhanced Structural Adjustment Facility (ESAF) -- later converted to a Poverty Reduction and Growth Facility (PRGF) with the International Monetary Fund in March 1999. Honduras (as of about year 2000) continues to maintain stable macroeconomic policies. It not been swift to implementing structural changes such as privatization of the publicly owned telephone and energy distribution companies—changes which are desired by the IMF and other international lenders. Honduras received significant debt relief in the aftermath of Hurricane Mitch, including the suspension bilateral debt service payments and bilateral debt reduction by the Paris Club—including the U.S. -- worth over $400 million. In July 2000, Honduras reached its decision point under the Heavily Indebted Poor Countries Initiative (HIPC), qualifying the country for interim multilateral debt relief.
Lack of resources, lack of arable land, and a small domestic market continue to impede economic progress in Honduras. Most significantly, Honduras lacks abundant natural resources; only land appears to be plentiful and readily exploitable. But the presence of apparently extensive land is misleading because the nation's rugged, mountainous terrain restricts large-scale agricultural production to narrow strips on the coasts and to a few fertile valleys. Honduras's manufacturing sector has not yet developed beyond simple textile and agricultural processing industries and assembly operations. The small domestic market and competition from more industrially advanced countries in the region have inhibited more complex industrialization.
Full article ▸