Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
Covid-19 – Honduras suffered a similar economic impact as much of the world due to the COVID-19 pandemic. Estimates on Honduras GDP expect to see negative growth for 2020, but optimistically forecast a return to positive growth in 2021. The economic downturn has impacted the government of Honduras as well as the private sector, with tax revenue down and government budgets suffering. Most government procurement opportunities were delayed in 2020 due to the pandemic, however, a resumption in 2021 is expected. Due to the severe impact on economic activity, particularly through a collapse of cross-border tourism, an interruption of supply chains, and an overall decrease in consumer demand, many businesses started operating on a limited capacity or ceased operations. Despite the uncertainty in the pace of recovery for certain industry sectors, new opportunities for U.S. exporters are arising in areas such as information technologies and healthcare.
Fiscal Imbalance – Post-COVID-19 in 2021, the balance of external public debt is estimated at 50.90 percent of the country’s Gross Domestic Product, 7.80 percent more than in 2017. The country’s focus on fiscal transparency and macroeconomic stability is perceived as instrumental to improving conditions for sustainable economic growth, strengthening its external commercial position, and bolstering investors’ confidence.
Lengthy Due Process – While open to foreign investment with limited restrictions and performance requirements, companies have experienced long waiting periods for regulatory and legislative approvals. Although starting a business is fairly easy and efforts are underway to further streamline administrative procedures through the government’s “Transformation Unit,” obtaining some licenses can still take a few months. Ranked at 133 out of 190 economies, Honduras received ease of doing business score of 56.3 in the World Bank’s Doing Business 2020 report, an increase of 0.3 percentage points from its regulatory performance during the previous year.
Social Investment – Honduras’ business climate is hampered by low education levels and a weak healthcare system.
Large Informal Economy – Firms in different sectors may often be pushed into competition with informal firms for market share.
Corruption – U.S. firms and citizens have found corruption to be a continued constraint to successful commercial activities in Honduras. Honduras scored 26 (a drop of 14 percentage points compared to 2018) in Transparency International’s (TI) 2019 Corruptions Perceptions Index, which ranks perceived levels of public sector corruption by experts and businesspeople (using a scale of 0 to 100, where 0 is highly corrupt and 100 is very clean).
Security – While citizen security is one of the government’s highest priorities, it faces difficult challenges and personal security remains a major concern in Honduras. Although the homicide rate has dropped by half since 2011, it remains high by international standards. Theft, pickpocketing, and armed robberies can occur in urban areas.
Civil Unrest –Honduras has witnessed several periods of civil unrest since the reelection of President Juan Orlando Hernandez in December 2017. Immediately following the president’s reelection, country-wide protests erupted in some cases resulting in the looting and vandalizing of stores as well as roadblocks intended to choke off transit routes. In June 2019, similar protests began as a result of the Honduran government’s intended reforms to the health and education sectors. While Honduran protests are largely passive in nature, on multiple occasions these events have turned violent and resulted in significant damage to property.