Cristian Padilla 3/17/2023

Macro Economics

Country Project (Honduras)

Catrachos! Is the famous way to describe or call a Honduran when he is in a foreign country. With
pride I call myself a “Catracho” and will like to begin telling that Honduras is a country that is
almost located in the heart of Central America in between Guatemala, El Salvador and Nicaragua,
with the Caribbean Sea at the northern coast also including one special department out of the 18
we have called the Bay Island which always brings up many tourists, and the Pacific Ocean
narrowing to the southern coast the also has the Gulf of Fonseca. The largest city found in
Honduras is Tegucigalpa which is also the Capital of the country. Its population is around
10,593,798 today and the official language in our country is Spanish. Also, Honduras currency is
Honduran Lempiras (HNL). On the other hand, focusing more on the history of our country,
everything began since the European settlement in all Central America where the Spanish
specifically arrive to colonize Honduras. Our land was mostly occupied by indigenous people in
which our most powerful warrior was found, he was “ El Indio Lempira”. Spanish exchausted our
gold which was their main goal by conquering us to steal it, but our bravest warrior defend us for
a long time until he died being betrayed by Spanish with the famous white flag. Finally we got our
independence in September 15th, 1821 and joining in what that time was called the United
Provinces of Central America which end up separating because of Friction between Liberal and
Conservatives, and Nowadays Honduras is a beautiful country with a lot of buildings on the main
cities and nature in other parts of the country which tourists can visit.

Honduras is a country well known for its agriculture and manufacturing which is the base of the
economy of the country. Its mainly productions of everyday are the coffee, bananas and African
palm which is something that I always see when I am traveling from one city to another, every
time I have the opportunity to see how they are transporting the African palm in big trucks that
always go in front of our car while traveling. Also, while been one of the poorest in Central
America, our economic growth has been affected during these recent years due to political
problems that have happen with some of the people that have been on top of the power in the
government and a lot of crime that have occurred, and climatic problems. The economy is heavily
dependent on external trade, with exports accounting for about 60% of GDP. The agricultural
Cristian Padilla 3/17/2023
Macro Economics

sector is a major source of employment, especially in the rural areas of the country like the
department of Colon which the most popular known for the agriculture in there. The manufacturing
sector has grown significantly in recent years, particularly in the textile industries, which have
benefited from trade agreements with the United States and other countries which has helped us a
lot with our economy. Also another major contributor to our economy is the tourism that our
country offers due to the beautiful beaches and coasts that we have just like I mention the Bay
Islands before that makes many people want to come and visit. With all of these being major
contributors, they have helped a lot with the Honduran economy even though we are of the poorest
countries we have made it until today’s date.

In recent years, Honduras has faced several economic challenges that have made our economy
struggle. My country, Honduras, has the following economic indicators, including GDP, inflation,
unemployment, and others. First of all, Gross Domestic Product (GDP) is one of the most
significant indicators of an economy's performance. In 2020, Honduras had a GDP of $24.4 billion,
which represented a 9.7% decrease compared to the previous year. This decline was largely due to
the economic impact of the COVID-19 pandemic, which has had a significant effect on the
country's economy. As a result of a recovery in the tourism sector and increased private
consumption, the country's GDP was expected to grow by 3.8% in 2021, according to the World
Bank and now for 2023 it is expected to have a GDP of $62.9 billion. Another important economic
indicator is inflation, which tracks how quickly prices for goods and services are rising. At an
inflation rate of 4.4% in 2020, Honduras fell just short of the 4.5% objective set by the central
bank. Nonetheless, in some months of 2021 it was seen an increase in inflation, which was
expected to reach a rate of 5.3% in that year and now for this year it is more than expected to be
4.5%. Among other things, this was impacted by increased food prices.
Cristian Padilla 3/17/2023
Macro Economics

On the other side we can talk about the unemployment in Honduras which seems to be worse than
before every year the happens. The unemployment rate in Honduras increased from 5.9% in 2019
to 7.9% in 2020. This increase in unemployment was mostly brought on by the COVID-19
pandemic's negative economic effects, which included job losses across several industries. The
expected unemployment rate for 2023 is 11.0% as the economy steadily improves.

A further crucial economic indicator is the trade balance of a nation. So, because imports have
surpassed exports, the Honduran economy has been running a trade imbalance. The nation's trade
imbalance increased from $7.2 billion in 2018 to $7.9 billion in 2019. A reduction in exports,
notably in the agricultural sector, was a major contributor to this imbalance. Also, not less
important, with only $1.5 billion coming to Honduras in 2019, foreign direct investment there has
been relatively low in prior years. In comparison to other nations in the area, this marks a
considerable decline and was down from $2.2 billion in 2018. Many economic issues, such as high
rates of inflation, unemployment, and a trade imbalance, are present in Honduras. The expected
expansion of the GDP and a drop in the unemployment rate are two encouraging signals for the
Cristian Padilla 3/17/2023
Macro Economics

future, nevertheless. It will be critical going ahead for the nation to solve these issues and establish
a setting that supports long-term economic growth.

Honduras still has economic problems, but there are also indications of development and room for
expansion. The COVID-19 epidemic, which resulted in a reduction in economic activity and an
increase in poverty, has had a negative economic impact that the economy is currently working to
recover from. In Honduras, the poverty rate is still high at 60.8%, with 33.2% of the population
living in severe poverty, according to the Economic Council for Latin America and the Caribbean
(ECLAC). Additionally, there is still a lot of disparity in the nation, with the richest 20% of the
population earning 56.5% of the national income while the lowest 20% only receive 4.5%.
Notwithstanding these obstacles, the Honduran government is putting policies and initiatives in
place to support economic development and growth. The "Plan Honduras 20/30" is one such
project. It intends to advance sustainable development by making investments in infrastructure,
education, and health. The strategy places an emphasis on e-commerce, the digital economy, and
the agro-industry in addition to tourism, renewable energy, and agro-industry.

The government has also taken steps to fight corruption and enhance the nation's business
environment. The nation's agriculture industry, which contributes significantly to its Economy, has
also seen indications of expansion. With a total of 10 million coffee bags exported in 2022, the
Honduran coffee sector saw its greatest exports in ten years. To summarize, while Honduras
continues to face economic issues, there are still indicators of development and growth potential.
Cristian Padilla 3/17/2023
Macro Economics

The government's attempts to encourage sustainable development and combat corruption, as well
as growth in the agricultural sector, provide promise for the country's economic future.

The Honduras economy's future prospects are excellent, although there are significant problems
ahead. The country has economic potential in a variety of industries, but it must also address
concerns such as poverty, inequality, corruption, and climate change. Manufacturing is one
industry with development potential, which has been aided by the country's participation in free
trade agreements such as CAFTA-DR. The Honduran government is also encouraging the growth
of the digital economy and e-commerce through the "Honduras Digital" initiative, which has the
potential to offer new business possibilities. Yet, serious difficulties remain, such as poverty,
inequality, and corruption. In Honduras, the poverty rate is high, and inequality persists, with the
wealthiest getting a disproportionate amount of national revenue. Corruption has also been a
concern, and it must be addressed in order to promote economic growth and progress.

Climate change is another issue that the government must handle, since natural catastrophes like
as hurricanes and floods have caused major damage to infrastructure and agriculture. To
summarize, while the Honduran economy's future prospects seem promising, the government must
address issues such as poverty, inequality, corruption, and climate change to ensure long-term
growth and development. Honduras' economic future can be brightened by the government's goals
and policies to encourage sustainable development, as well as initiatives to overcome these
difficulties.
Cristian Padilla 3/17/2023
Macro Economics

Studying the economy of Honduras has been very important because I have learned a lot while
doing this paper. It is incredibly important everything that has happened the last years through the
economic problems, how the governments sometimes makes it difficult to grow in our country and
other organizations have to come up with plans that will help the country. During the pandemic
which was a big shock not only for Honduras but also for the whole world, this made a great impact
in our economy because besides of being one of the poorest countries this pandemic made us
struggle even more. Many members of my family were struggling a lot during this economics
situations and even get to close their small business that they were trying to bring up. After all I
can say that just as the economy is recovering my family was also being able to recover after that
economic shock that Covid brought to everyone’s lives.

In addition, I want to say that the is important to know a lot of these factors about the GDP,
inflation, and unemployment, because they are the ones that play the most important roles in the
economy of every country around the world. These help us know how the economy is in our
country without us not knowing too much about it, but they are simple to understand in order for
even a kid to know how it works and how the economy currently situations is going through. This
assignment was really beneficial for me because I had never studied and research that much of the
economy of my own country and this made value more what is happening in my country. Even
though I know the history and its geography, the parts of the economy were very valuable
information and I can say that I have learned a lot about it.

Cited Sources

Honduras - The World Factbook. (n.d.). [Link]

TRADING ECONOMICS. (n.d.). Honduras Inflation Rate - February 2023 Data - 1990-2022
Historical - March Forecast. [Link]
Cristian Padilla 3/17/2023
Macro Economics

United Nations. (2000, January 1). Challenges of the Honduran society to make its economy
growth. Human Development Reports. [Link]
make-its-economy-growth

Honduras | History, Geography, & Culture. (2023, March 15). Encyclopedia Britannica.
[Link]

Overview. (n.d.). World Bank. [Link]

Banco Central de Honduras, Inicio. (n.d.). [Link]

Honduras Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. (n.d.). Index
of Ecnomic Freedom. [Link]

Caribe, C. E. P. a. L. Y. E. (2023, January 30). [Link]

Donaciones - Plan International Honduras. (n.d.). Plan International Honduras.

Producción Nacional – IHCAFE – Instituto Hondureño del Cafe. (n.d.). Gracias Por Su Interés En
IHCAFE. [Link]

[Link]
sala_prebisch-[Link]
Cristian Padilla 3/17/2023
Macro Economics