The Economy of Honduras

Linked with our presentation of Jessica García – Honduras.

The Economy of Honduras is the measure of economic activity in Honduras. It is one of the poorest countries in Latin America. In the 1960s it was the poorest nation of the region, but after the earthquake in 1972 that devastated Managua, and the two wars that followed ( the first being the one in between the Sandinistas and Anastasio Somoza Debayle and the second being in between the Sandinistas and the Contras; Nicaragua became the poorest of Central America’s modern nations. 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 4.0%, though underemployment is much higher. The Honduran economy grew 4.8% in 2000, recovering from the Mitch-induced recession (-1.9%) of 1999. The economy is expected to grow 4-5% in 2001, led by continuation of foreign-funded reconstruction projects. The Honduran maquiladora sector, the second-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) has only moderately devalued. 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 … (Read more on wikipedia).

Economy and Government – Honduras is one of the poorest nations in the Western Hemisphere and remains dependent on U.S. aid. The economy is based on agriculture; bananas and coffee are the most important exports. The vast banana plantations, established by U.S. companies, are mainly along the northern coast; the United Fruit Company and the Standard Fruit Company, fiercely resented by many as exploitive monopolies, have had much social and political influence in Honduras. Timber, minerals (silver, lead, zinc), beef, and seafood are also exported. Other important food crops include corn, beans, rice, and sugarcane. Honduras has rich forest resources and deposits of silver, lead, zinc, iron, gold, cadmium, antimony, and copper, but exploitation is hampered by inadequate road and rail systems, and the country remains underdeveloped. Its only railroads link the banana plantations in the north to San Pedro Sula and the principal ports, La Ceiba, Puerto Cortés, and Tela; they do not penetrate more than 75 mi (121 km) inland. Air transportation, however, has opened up remote areas. Industry, concentrated chiefly in San Pedro Sula, is small and consumer-oriented, including the production of processed food (mainly sugar and coffee), textiles, clothing, lumber, and wood products. The country’s economy was severely disrupted by a hurricane in 1998. Honduras is governed under the constitution of 1982. A president, popularly elected for a four-year term, heads the executive branch. The unicameral legislature has 128 members, also elected for four years. The country is divided into 18 administrative departments. (Read more on Info please).

The World Fact Book/Honduras.

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