Honduras

ECONOMY

Honduras is one of the poorest countries in the Western Hemisphere, along with Haiti, Nicaragua, Guyana, and Bolivia. Nearly two-thirds of Hondurans live in poverty – and 45% in extreme poverty – and the unemployment rate hovers at 28%.

Like many developing countries, Honduras is saddled with enormous foreign debt, around US$5.6 billion. It was one of only seven countries outside of sub-Saharan Africa to qualify for the Heavily Indebted Poor Countries (HIPC).

The Honduran economy was for many years almost entirely dependent on coffee and banana exports, and controlled by Standard and United Fruit Companies. Those companies – now Dole and Chiquita – still exert powerful economic and political leverage, but the economy has significantly diversified in the last two decades. Honduras has also expanded its nontraditional exports, such as shrimp and melons, and promoted tourism. Maquilas, which import US yarn and fabric and turn them into clothing for export, now employ 130, 000 Hondurans, mostly around San Pedro Sula and Puerto Cortes.

The controversial Central America and Dominican Republic Free Trade Agreement (CAFTA-DR) went into effect in Honduras in April 2006. The agreement will lower tariffs and trade barriers for scores of goods, services, agricultural products and investments. Supporters say it will stimulate the economies of Central American countries while critics say multinational corporations will squeeze out small businesses.