Economy

Honduras is the third poorest country in the Western Hemisphere with 42.6% of its people living on $2 a day.  About 40% of Hondurans are unemployed or underemployed, with predictable consequences in terms of crime and propensity to migrate, primarily to the United States.  With the cost of food, household energy, and transportation rising dramatically, the threat of malnutrition and social instability is growing.

Honduras’s major industries include sugar, coffee, bananas, textiles, shrimp, and wood products. The most abundant natural resources are timber, gold, silver, copper, lead, zinc, antimony, coal, and fish.  The United States is by far Honduras's most important trade partner, accounting for 50% of Honduran exports and 41% of Honduran imports. In March 2006, the Central American-Dominican Republic Free Trade Agreement with the United States was ratified, and is expected to increase foreign investment, exports, and employment in Honduras.

In 2005 Honduras received a $215 million donation from the Millennium Challenge Corporation. This program has two goals: the first is to increase productivity and business skills of farmers and the second is to reduce transportation costs between production centers and markets, through the construction of part of a highway that extends from the northern Port of Puerto Cortes to the southern border between Honduras and El Salvador.  In addition to the Millennium Challenge Corporation’s donation, Honduras received almost $4 billion in debt relief (DOC 43kb) in 2006.  It is estimated that the U.S. alone forgave almost $1 billion of the total debt relieved.   

In the last three years, Honduras’s remittances (money sent from Hondurans living abroad back to Honduras) have increased to almost 20% of Honduras’s GDP.  Tax collection has become more efficient with about a 2% increase without additional taxes.  It is expected that these factors will contribute to greater investment and economic growth.