Honduras - Market Overview Honduras - Market Overview
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 and as the 41st largest export market for U.S. companies in 2018 (0.3 percent of U.S. exports). Total bilateral trade in both goods and services was $11.5 billion in 2017 with a trade surplus ofapproximately $2 billion in favor of the United States. Honduras’ population of 9.1 million is highly receptive to U.S. goods and services. Despite a complex domestic environment resulting from economic downturns and delayed political reforms, the country is taking important steps towards improving its business investment climate, such as: 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 40.3 percent of total merchandise imports and 66.6 percent of general assembly imports. U.S. exports to Honduras were $5.6 billion in 2018, up 10.2% percent from 2017 and up 15.6% from 2008. 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 72 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 $2,595.91 in 2018. It is a low/middle income country, with over 66 percent of its population living in poverty. Honduras has enjoyed moderate economic growth since 2010 after a sharp decline in 2009 that had occurred due to the global economic downturn and Honduras’ domestic political crisis. GDP growth has grown from $2,122.03 in 2013 to 2,595.91 in 2018 (registering a 22% increase during this time), with an estimated growth rate between 3.8 to 4.2 percent for 2018 according to the Honduran Central Bank. 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. The rate of inflation in 2017 was 4.73 percent and is estimated to remain at a similar moderate range in 2018. The Honduran currency, the lempira, has floated in a band system since 2011. The Government of Honduras is targeting annual depreciation of 4.5 percent for 2018, a measure which is supported by the banking sector. In 2017, the U.S. foreign direct investment in Honduras, which is mostly concentrated in the light manufacturing sector, was $1.4 billion, an increase of 9.5 percent from the previous year. 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.