Honduras: Economy

Honduras, with an estimated per capita gross domestic product (GDP) of $4,200 in 2010 (PPP), is one of the poorest countries in the western hemisphere, with about 65% of the population living in poverty. While 2010 estimates project GDP to have grown by 2.8%, Honduras’ GDP fell by 2.1% in 2009. Reasons for this contraction included the worldwide economic downturn and the political crisis surrounding the forced removal of President Zelaya from power. Previously, the economy grew by more than 6% per year from 2004 to 2007, and by 4% in 2008.

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. Despite the recent economic diversification, there continues to be a large subsistence farming 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.

Because of a strong commercial relationship with the United States, Honduras was hit hard by the international economic downturn, especially in the maquila industry, where orders were estimated to have declined about 40%, and where about 30,000 workers lost their jobs in 2008 and 2009 out of a pre-crisis workforce of 145,000. The maquila sector began to see an upswing toward the end of 2009 as the U.S. economy stabilized, and it has begun re-expanding its employment base. Over one-third of the Honduran workforce was considered either unemployed or underemployed in 2010.

Roughly 1 million Hondurans have migrated to the United States. Remittance inflows from Hondurans living abroad, mostly in the United States, are the largest source of foreign income and a major contributor to domestic demand. Remittances totaled $2.8 billion in 2009, down 11.8% from 2008 levels; that is equivalent to about one-fifth of Honduras’ GDP.

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