ECONOMY
Honduras, with a per capita gross national income of $1,600, is one of the poorest countries in the Western Hemisphere. The economy grew 6% in 2006 or by about 3.2% on a per capita basis, and by an estimated 6.7% in 2007. Historically dependent on exports of agricultural goods, the Honduran economy has diversified in recent decades and now has a strong export-processing (maquila) industry, primarily focused on assembling textile and apparel goods for re-export to the United States, as well as automobile wiring harnesses and similar products. These industries employ about 130,000 Hondurans, out of an economically active population of 2.8 million. Despite the recent economic diversification, there continues to be a large subsistence farmer population with few economic opportunities. Honduras also has extensive forest, marine, and mineral resources, although widespread slash-and-burn agricultural methods and illegal logging continue to destroy Honduran forests.
Remittances from Hondurans living abroad, particularly the U.S., totaled $2.56
billion in 2007--more than a quarter of GDP--but the annual rate of growth of
remittances slowed to 10%, compared with 31% in 2006. Meanwhile, Honduras's fuel
import bill rose sharply with the surge in world oil prices (Honduras produces
no petroleum), and foreign reserves of the Central Bank fell by nearly $98
million--about 4%. The rise in global grain prices also put upward pressure on
Honduran consumer prices in 2007, and the inflation rate accelerated to 8.9%
from 6.2% in 2006. By the end of the year, inflation was running at about a 10%
annual rate, giving rise to political demands for price controls on basic items.
Remittances may decline in 2008 with the slowdown in the U.S. economy,
particularly the construction sector, where many Hondurans are employed, putting
additional pressure on reserves.
The official exchange rate has been fixed at 18.89 Honduran Lempiras to the
dollar since 2005. About 40% of the Honduran workforce was considered either
unemployed or underemployed in 2006. This does not include the roughly 1 million
Hondurans who have migrated to the United States.
Since 2005, Honduras has received nearly $ 4 billion in debt relief from
bilateral and multilateral donors. The donor community estimated this would
reduce annual debt service payments by about $200 million in 2007. The
Government of Honduras has committed to apply these funds to poverty
alleviation, as laid out in the existing Poverty Reduction Strategy. However,
much of the ensuing rise in government spending has gone to public sector
salaries and fuel subsidies. The state electric utility, ENEE, is losing an
estimated $300 million a year, primarily because the rates it charges its
customers do not cover costs.
Economy (2007 est.)
GDP: $12.3 billion.
Growth rate: 6.7%.
Per capita GDP: $1,600 (official exchange rate), $3,130 (PPP, IMF).
Natural resources: Arable land, forests, minerals, and fisheries.
Agriculture (13.8% of GDP): Products--coffee, bananas, shrimp and lobster, sugar, fruits, basic grains, and livestock.
Manufacturing (19.7% of GDP): Types--textiles and apparel, cement, wood products, cigars, and foodstuffs.
Services (54.2% of GDP).
Trade: Exports (goods)--$5.59 billion: apparel, coffee, shrimp, bananas, palm oil, gold, zinc/lead concentrates, soap/detergents, melons, lobster, pineapple, lumber, sugar, and tobacco. Major market--U.S. (69.9%). Imports (goods)--$8.56 billion: fabrics, yarn, machinery, chemicals, petroleum, vehicles, processed foods, metals, agricultural products, plastic articles, and paper articles. Major source--U.S. (52.2%).
