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Economy - overview: Honduras spent 1999 primarily recovering from Hurricane Mitch, which killed more than 5,000 people and caused about $3 billion in damage. Although it is slated to receive about $2.76 billion in international aid, the economy shrank 3% with widening current account and fiscal deficits in 1999. It nevertheless met most of its macroeconomic targets, and 2000 should see economic recovery as reconstruction projects make progress and the agricultural sector recovers. Honduras may also get relief from its $4.4 billion external debt under the Highly Indebted Poor Countries (HIPC) initiative. GDP: |
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Honduras is one of the poorest and least developed countries in Latin America. The economy is based mostly on agriculture, which accounted for 22% of 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 currency (lempira) 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. In July 2000, Honduras reached its decision point under the Highly Indebted Poor Countries Initiative (HIPC), qualifying the country for interim multilateral debt relief. GDP: |
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