Honduras - Country Commercial Guide
Market Overview

Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.

Last published date: 2021-12-02

Located in the geographic heart of Central America, Honduras has a democratic government and a free market economy. Exports to Honduras continue to perform well as it is the 44th largest export market for the United States in 2020 (0.34 percent of total U.S. exports). Total bilateral trade in both goods and services was $9.2 billion in 2020, with a trade surplus of $567 million in favor of the United States. Honduras’ population of 9.4 million is highly receptive to U.S. goods and services.

Despite a complex domestic environment resulting from an economic downturn due to the COVID-19 pandemic and hurricanes Eta and Iota successively hitting the country in November 2020, the country is taking important steps towards improving its business investment climate, including adopting fiscal discipline and consolidation for macroeconomic stability; infrastructure reconstruction and development through public private partnerships; climate change and disaster resilience efforts; combating corruption and security concerns; simplifying bureaucratic procedures; implementing structural regulatory reforms and focusing on improving overall competitiveness and productivity.

The United States is Honduras’ largest trade and economic partner, accounting for 33.1 percent of total merchandise imports and 65 percent of general assembly imports. In 2020, U.S. exports of goods and services to Honduras were $4.9 billion, down 26.9 percent from 2019. Total imports, however, are expected to register a stronger inter-annual growth rate of 35 percent by year-end 2021, resulting from an increase in external demand, investment, and the gradual reactivation of domestic economic activity. The United States- Central America – Dominican Republic Free Trade Agreement (CAFTA-DR), which entered into force in 2006, has boosted U.S. export opportunities and diversified the composition of bilateral trade. On average, U.S. exports to Honduras have more than doubled since 2005, the year before implementation of this Free Trade Agreement. CAFTA-DR implemented important measures related to investment, customs administration and trade facilitation, technical barriers to trade, government procurement, intellectual property rights, transparency, labor, and environmental protection. As a result of this FTA, more than 95 percent of U.S. consumer and industrial goods exports to the Central America region — meeting relevant rules of origin are no longer subject to tariffs.

Honduras had a nominal GDP per capita of $2,405.7 in 2020. It is a low/middle income country, with approximately 50 percent of its population living in poverty. Honduras has enjoyed moderate economic growth since 2010 after a sharp decline in 2009 that occurred due to the global economic downturn and the country’s domestic political crisis, with an average growth rate of 3.8 percent during the last three years prior to COVID-19. Honduras also registered the second highest economic growth rates in Central America, only behind Panama and above the average in Latin America and the Caribbean. After being severely impacted by the pandemic and natural disasters, however, Honduras’ GDP contracted by 9 percent in 2020 but is expected to rebound in 2021 to a 4.5 percent growth.

Boosting the country’s productivity levels is seen as crucial for maintaining economic growth. Honduras’ economic activity is highly influenced by economic performance in the United States, particularly tied to exports and family remittances. Honduras registered a moderate inflation rate of 4 percent in 2020 and is targeted at a similar level for 2021. Honduras’ currency, the Lempira, has floated in a band system since 2011.

In 2020, the U.S. direct investment position in Honduras (outward) was $1.1 billion. More than 200 American companies currently operate in Honduras.

Top five reasons why U.S. companies should consider exporting to Honduras:

1) Free Trade Agreement (FTA) market.

2) Strategic location and proximity to the United States.

3) Among the most receptive markets for U.S. goods and services worldwide.

4) Modernized port infrastructure and logistical platform for the region.

5) Large market share and opportunities for U.S. firms.