Honduras: Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Honduras' GDP grew by an estimated 4.9% in 2021, mainly boosted by higher remittances from expatriates in the U.S. and, by extension, household consumption. According to updated IMF forecasts, GDP growth is expected to slightly decrease to 4.4% in 2022 and to 3.5% in 2023. Still, a favourable trade scenario with the U.S. and remittances from expatriate workers is expected to continue to promote growth.

In 2021, government debt reached an estimated 58.9% of GDP, and it should slightly decrease to 58.6% and 55.5% in 2022 and 2023, respectively. The country's inflation rate increased in 2021, reaching 4.6%. Still, that rate should slightly decrease to 3.7% in 2022 before increasing to 4% in 2023. The Honduras government closed 2021 with an account deficit of 3%, which should slightly increase in the coming years, reaching 3.2% in 2022 and 3.5% in 2023. The overall economic outlook is positive, but a continued effort to improve social indicators is required. To mitigate the impact of COVID-19, the government continued implementing a series of fiscal measures in 2021, which included emergency health care expenditures; temporary unemployment benefits to formal workers, delivery of food supplies to poor families, cash transfers to informal workers, tax breaks for businesses maintaining employment at pre-pandemic levels, reduced advance payments in corporate income tax to provide cash flow relief to companies, temporary VAT exemptions for medical supplies, deferrals to the second half of 2020 and early 2021 for payments of income taxes and social contributions, and temporary freezes in prices of goods in the basic consumption basket. Although the pandemic had a significant impact on the Honduran economy, the measures implemented by the government in light of the crisis have been effective in boosting economic activity, which has been gradually recovering.

The country's unemployment rate reached an estimated 5.8% in 2021. While that rate increased due to the negative economic impacts of the COVID-19 pandemic, unemployment remained bellow the estimated IMF rate of 8%. Furthermore, unemployment should decrease to 5.2% in 2022 and 4.9% in 2023. Current GDP performance is insufficient to improve living standards for the nearly 65% of the population that live in poverty. Moreover, 39% of households in Honduras live in extreme poverty, and only 25% of them benefit from social security. Honduras also suffers from a high rate of criminality, which costs the country 10% of GDP according to the World Bank. Progress has already been made, though, as there has been a significant drop in homicides in the country in recent years. Migration is also an issue, as lower coffee production, financial adversity, and high crime rates drive farmers towards the United States.

Monetary Indicators	2016	2017	2018	2019	2020
Honduras Lempira (HNL) - Average Annual Exchange Rate For 1 MUR	0.64	0.68	0.70	0.69	0.62

Source: World Bank - Latest available data.

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Latest Update: February 2023