Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
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 2019 (0.3 percent of total U.S. exports). Total bilateral trade in both goods and services was $10.3 billion in 2019, with a trade surplus of approximately $616 million in favor of the United States. Honduras’ population of 9.3 million is highly receptive to U.S. goods and services.
Despite a complex domestic environment resulting from an economic downturn surrounding COVID-19 and delayed political reforms, the country is taking important steps towards improving its business investment climate, including adopting fiscal discipline and consolidation for macroeconomic stability; infrastructure development through public-private partnerships; 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 46 percent of total merchandise imports and 65 percent of general assembly imports. U.S. exports to Honduras were $5.4 billion in 2019, down by $154 million from 2018. The Central America – Dominican Republic Free Trade Agreement (CAFTA-DR), which entered into force in 2006, boosted U.S. export opportunities and diversified the composition of bilateral trade. Currently, U.S. exports to Honduras are up by 67 percent 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 $2,241 in 2019. It is a low/middle-income country, with over 48 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 Honduras’ domestic political crisis, with an average growth rate of 3.7 percent during the last three years. Due to the economic contraction resulting from COVID-19, it is estimated that GDP growth could drop to -3.30 percent by year-end 2020. 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 4.37 percent in 2019 and is targeted at 3.16 percent for 2020. Honduras’ currency, the Lempira, has floated in a band system since 2011.
In 2019, the U.S. direct investment position in Honduras was $1.3 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) Close 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.