Economy of Honduras

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Local shop in La Ceiba

Economy of Honduras is the measure of economic activity in Honduras. It is one of the poorest countries in Latin America. The economy 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.

Economic activity map of Honduras, 1983

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. While Honduras continues to maintain stable macroeconomic policies, it has lagged in implementing structural reforms, such as privatization of the publicly owned telephone and energy distribution companies. 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.

GDP purchasing power parity - $14.1 billion (1999 est.)

GDP - real growth rate 4% (2004)

GDP - per capita purchasing power parity - $2,050 (1999 est.)

GDP - composition by sector
- agriculture 20%
- industry 25%
- services 55% (1998 est.)

Population below poverty line 50% (1992 est.)

Household income or consumption by percentage share
- lowest 10% consume 1.2%
- highest 10% consume 42.1% (1996)

Inflation rate (consumer prices) 14% (1999 est.)

Labor force 2.3 million (1997 est.)

Labor force - by occupation agriculture 29%, industry 21%, services 60% (1998 est.)

Unemployment rate 12% (1999); underemployed 30% (1997 est.)

Budget
- revenue $980 million
expenditures $1.15 billion including capital expenditures of $NA (1998 est.)

Industries bananas, sugar, coffee, textiles, clothing, wood products

Industrial production growth rate 9% (1992 est.)

Electricity - production 2,904 GWh (1998)

Electricity - production by source
- fossil fuel 34.44%
- hydro 65.56%
- nuclear 0%

Electricity - consumption 2,742 GWh (1998)

Electricity - exports 16 GWh (1998)

Electricity - imports 57 GWh (1998)

Agriculture - products bananas, coffee, citrus; beef; timber; shrimp

Exports $1.6 billion (f.o.b., 1999 est.)

Exports - commodities coffee, bananas, shrimp, lobster, meat; zinc, lumber

Exports - partners US 73%, Japan 4%, Germany 4%, Belgium, Spain (1998)

Imports $2.7 billion (f.o.b., 1999 est.)

Imports - commodities machinery and transport equipment, industrial raw materials, chemical products, fuels, foodstuffs

Imports - partners US 60%, Guatemala 5%, Netherlands Antilles, Japan, Germany, Mexico, El Salvador (1998)

Debt - external $4.4 billion (1999)

Economic aid - recipient $557.8 million (1999)

Currency 1 lempira (L) = 100 centavos

Exchange rates lempiras (L) per US$1 - 19.00 (October 2005), 14.5744 (January 2000), 14.5039 (1999), 13.8076 (1998), 13.0942 (1997), 12.8694 (1996), 10.3432 (1995) .... 1.00 (1980)