Honduras - Economy

Economy

The economy has continued to grow slowly, but the distribution of wealth remains very polarized with average wages remaining low. Economic growth in the last few years has averaged 7% a year, one of the highest rates in Latin America, but 50% of the population, approximately 3.7 million people, still remains below the poverty line. It is estimated that there are more than 1.2 million people who are unemployed, the rate of unemployment standing at 27.9%. According to the Human Development Index, Honduras is the sixth poorest/least developed country in Latin America, after Haiti, Nicaragua, Guatemala, Guyana, and Bolivia.

Honduras was declared one of the heavily indebted poor countries by the World Bank and the International Monetary Fund, and was made eligible for debt relief in 2005.

The government operates both the electricity (ENEE) and land-line telephone services (HONDUTEL), as ENEE receives heavy subsidies for its chronic financial problems. HONDUTEL, however, is no longer a monopoly, as the telecommunication sector was opened to private sector on 25 December 2005, as was required under the CAFTA. The price of petroleum is controlled, and the Congress often ratifies temporary price regulations for basic commodities.

Gold, silver, lead and zinc are produced at mines owned by foreign companies.

After years of decline against the U.S. dollar, lempira recently stabilized at around 19 lempiras per dollar. In June 2008, the exchange rate between U.S. dollar and lempira was approximately 1 to 18.85.

In 2005, Honduras signed the CAFTA, the free trade agreement with the United States. In December 2005, Puerto Cortes, the main seaport in Honduras, was included in the U.S. Container Security Initiative.

On 7 December 2006, the U.S. Department of Homeland Security and the Department of Energy announced the first phase of the Secure Freight Initiative, an unprecedented effort to build upon existing port security measures by enhancing the U.S. government’s authority to scan containers from overseas for nuclear and radiological materials to better assess the risk of inbound containers. The initial phase of Secure Freight involves the deployment of nuclear detection and other devices to six foreign ports: Port Qasim in Pakistan; Puerto Cortes in Honduras; Southampton in the United Kingdom; Port Salalah in Oman; Port of Singapore; and the Gamman Terminal at Port Busan in Korea. Since early 2007, containers from these ports have been scanned for radiation and other risk factors before they are allowed to depart for the United States.