The Honduran Economy
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Hondurans at Work

Honduras is one of the poorest countries in the American continent, with over 60% of the population living in what the United Nations officially classify as poverty.  Most Hondurans work very hard to earn, on average, USD183.00 a month.  Those in the agriculture and industrial sectors earn the lowest wages; those employed by the services sector earn slightly better salaries.

Making_a_wallet_in_Honduras

Pedro Castro crafts leather wallets in his workshop in the town of Valle de Angeles

Photo by Anibal Villatoro

Hondurans busy rolling cigars for export

At a factory in Danlí, in south-eastern Honduras, high quality cigars are being hand-rolled for export.

Photo credit: Davidoff AG

Honduran_farmer_and_his_children

A Honduran farmer and his two sons use an ox-pulled cart to carry firewood to be sold in the city of La Esperanza.

Photo by Anibal Villatoro

According to official figures, no more than 40% of Hondurans are economically active.  This group is made up of Hondurans between 20 to 45 years of age.  40% of them work in the agriculture sector, 30% in services and 16% in industry.  The number of people employed in agriculture is decreasing, whilst the opposite is true for the services and industry sectors.  The employment figure above might seem small at first glance, but many Hondurans work as part of what is called "the informal economy", which means that they work independently selling fruits, vegetables, clothes, and various other items in the streets.  They do not contribute taxes and are far too numerous for the government to keep track of or have any accurate data on.

What Honduras Produces

For most of the XX century, the Honduran economy was primarily agricultural-based, depending on traditional exports such as bananas and coffee.  Political stability in the last 25 years has allowed the Honduran economy to diversify into other areas such as tourism, apparel manufacture and shrimp farming.

Honduran_bananas

Honduras exports bananas to the U.S.A., Belgium, and the UK

Honduran_coffee_fruit_before_picking

Coffe fruit before picking.  Coffee "beans" are actually the seeds extracted from the fruit, then dried and roasted.

Photo by Juan Bendeck

Pineapple plantation in northern Honduras

Pineapple plantations in northern Honduras

Photo by Juan Bendeck

Drying coffee in western Honduras

Coffee seeds (what you may call "coffee beans") are laid out on concrete patios to dry under natural sunlight.

Photo by Mike Vickers

Honduras at work in an apparel shop

Photo from La Tribuna

Over the last 15 years, the apparel industry has firmly established itself in Honduras, employing 130,000 Honduras. These are generally better paid that other industry workers in the country, but the apparel business is notorius for its ability to swiftly relocate to another country as soon as conditions become unfavourable.

In terms of volume, the mayor outputs of the Honduran agricultural sector are sugar cane, African palm, bananas, maize (corn) and coffee.

Honduras's natural resources hold great potential, but these need to be managed carefully if they are to contribute to the country's prosperity.

Perhaps the greatest untapped potential source of income for the country is tourism, which for many years was dormant compared to that of other countries in the region, but thanks to recent public and private investment, the Honduran tourism industry is beginning to grow rapidly.

The most technologically advanced products made in Honduras right now are probably wiring harnesses and interior components for luxury automobiles.  These are made by a German company called Novem Car Interior Design, in an assembly plant in the village of Amarateca, 23km drive north of the capital, Tegucigalpa.    Novem's harnesses and other vehicle interior products are used by Mercedes Benz, BMW, and other european car manufacturers.

Luxury_vehicle_interior_components_made_ in_Honduras

Some interior and electronic components for this luxury vehicle were made in Honduras.

International Trade

Trade relations with the U.S. have long been of absolute importance to the Honduran economy.  Even today, half of Honduras's exports go to the U.S and over a third what it imports comes from the U.S.  However, trade with European countries and the rest of Latinamerica is on the rise.

Exports:

Honduras is not a heavily industrialized nation, so the list of exports is relatively limited:


  • Automotive interior components (dashboards, wiring, electronics)
  • Bananas
  • Clothing apparel
  • Coffee
  • Gold
  • Lobster
  • Melons
  • Palm oil
  • Pineapple
  • Shrimp
  • Soaps/detergents
  • Sugar
  • Tobacco
  • Timber
  • Zinc/lead concentrates
  • Of the above, coffee, bananas, shrimp, and lobster provide the greatest income from international trade.  Honduras exports mainly to the U.S.A., Belgium, El Salvador, Guatemala and Germany.

    According to a recent article by International Bussiness Times, Honduras's bananas exports have more than doubled from 2002 to 2012, from just over 400,000 tons/year to near 850,000 tons/year.  Almost all of this goes to the U.S.A., an smaller shares go to Belgium, the UK, and other European countries.

    Honduran_banana_export_2002-2012

    Honduran banana exports, 2002-2012

    Source: International Bussiness Times

    Honduran coffee is regarded for its taste in the global market and Honduran hand-rolled cigars are known internationally for their outstanding quality. In an article in its April 2015 Issue, Cigar Aficionado rated a particular Honduran cigar, Camacho Carojo, with a score of 92.  Internationally-famous cigar manufacturer Davidoff has announced that it will expand its manufacturing capability in both Honduras and Nicaragua to keep up with demand of high-quality Central-American tobacco.

    Honduran cigars scored highly by Cigar Aficionado magazine

    Honduran cigars scored highly by Cigar Aficionado magazine

    Imports:

    Not being an industrialised nation, Honduras has to import almost everything:  fabrics, yarn, machinery, chemicals, everything petroleum-based (including all fuels & lubricants), motor vehicles, industrial machinery, processed foods, metals, agricultural supplies, plastics, paper products, electrical appliances, computers, electronics, etc.  These products come mainly from the U.S., Guatemala, Costa Rica, México, Japan, Brasil, and Europe.

    The Honduran Economy in Facts and Figures

    If you want to understand the economy of any country, you must at the very least take a glimpse at a few economic indicators.  The following paragraphs and graphs will give you an idea of what challenges the Honduran economy faces.

    Gross Domestic Product and Per Capita Income

    GDP(Gross Domestic Product) is perhaps the most commonly quoted economic indicator when judging the health of a country's economy.   The chart below shows Honduras's GDP for the last 12 years.  The more keen readers will notice that the GDP had an apparently exponential growth trend up to 2006 and then the trend reversed, showing that the rate at which the Honduran economy grows has diminished.  This may, at least in part, be explained by the effect of the global economic recession of 2008 and the global economy's struggle to recover (and the Honduran economy being dragged along with it).

    Honduras-GDP-and-PCI

    Chart by ThisIsHonduras, based on data from Banco Central de Honduras

    As for per capita income, on average, Honduras make do with less than USD2,200 per year. As if the figure were not bad enough in itself, our per capita income follows the same trend as our GDP:  descelerating growth.   At the same, time our population is growing at an exponential rate.

    Population growth

    Like most countries in the world today, the population of Honduras is growing at an exponential rate.  The chart below, built from census data collected by the Honduran government for the last 130 years, shows this trend very well.  If the trend continues, it should not be a surprise if Hondurans number 10 million by 2020.

    Honduras-population-1880-2011

    Chart by ThisIsHonduras, based on data from Banco Central de Honduras

    Inflation

    The chart below shows Consumer Price Index (CPI) data for the last 12 years.  The data shows a steady and predictable inflation rate, which should mean that companies and individuals in Honduras should be able to work around it - but we are not.  While the rate is constant, the rate is in itself is too high: 7% per year, on average.  For example, if you could purchase a product or service in Honduras with 1.00 Lempira in 1999, today you'd have to pay 2.60 Lempiras.  That's quite a mark-up in only 12 years, while base rates of pay for most Hondurans have not risen at the same pace as inflation has.

    Honduras-consumer-price-index-2000-2012

    Chart by ThisIsHonduras, based on data from Banco Central de Honduras

    Unemployment

    Unemployment has been historically quite high in Honduras. At the turn of the century it was as high as 65% but there has been a slight improvement over the last 6 years - it is now closer to 60% (which is still no reason to celebrate).  Bear in mind that many Hondurans that statistically register as "unemployed" actually are working and making a living every day- they simply do not have a formal job and they are part of the country's "informal economy" and there is no accurate data on how much they do earn.

    Honduras-umemployment-2000-2011

    Chart by ThisIsHonduras, based on data from Banco Central de Honduras

    If you're interested in more detailed data on the Honduran economy, the best source is the Banco Central de Honduras's website. They maintain an archive of the financial reports they publish every year.  The following is a link to thier archive webpage:

    http://www.bch.hn/informes_y_publicaciones_periodicas.php

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