Honduras Economy

Honduras Economy

How is the economy in Honduras?

According to eningbo, Honduras is one of the poorest countries in Central America. 17 percent of the population lives below the international poverty line and is therefore considered extremely poor. The affected people have less than $ 1.90 a day to live. Almost a third of the population is considered “poor”.

Crime is particularly high in Honduras. Honduras is the second most homicide country in the world. Only in neighboring El Salvador are there more. Criminal youth gangs like the Maras also practice violence in Honduras. All of these are obstacles to a country’s economy, as are corruption and poor infrastructure, such as a lack of roads.

If then there is a natural disaster like Hurricane Mitch in 1998, which destroyed 70 percent of all coffee and banana plantations, the economy is completely shattered. In the meantime, the economy has at least recovered from this event.

There are rich reserves of mineral resources including gold, silver, lead and zinc. These are mined in mines. Remittances from Hondurans living abroad to their families make a not inconsiderable contribution to the gross domestic product. Honduras ranks 132nd out of 189 countries in the Human Development Index.

What is a banana republic?

Today, a banana republic is a country in which there is a lot of bribery, which is unstable, in which political arbitrariness prevails or the legal system does not work. The term was originally only used for several Central American states that were economically dependent on banana exports. Honduras was one of them. The production was in American hands, the governments of the states could not assert themselves against these interests. The economic power from abroad was greater than the political power in the country itself.

Agriculture: coffee and bananas

Although almost 40 percent of the working population work in agriculture, this area only generates 14.2 percent for the country (14.2 percent of the gross domestic product). Bananas had become the main crop in the 1920s. They were (and are) grown on large plantations and then exported.

Coffee, cotton and tobacco were added in the 1950s. Today, Honduras ranks fifth among the world’s largest coffee producers. Coffee is grown less on large areas than by smaller landowners.

When it comes to bananas, other countries have long ousted Honduras from first place, and today the country is no longer even one of the 15 largest exporters.

Other products now include melons, pineapples, sugar, cigars and palm oil. The USA is the main customer for these products. Many of the plantations – as well as the existing mines – are US-owned. The banana plantations almost all belong to Chiquita and Dole.

Only 12 percent of the country’s area is used for agriculture, although around twice that could be used. Some big landowners leave their land fallow. Many smallholders, on the other hand, have just enough arable land to grow for their own needs, especially corn and beans. For the fast growing population in the cities, own cultivation is not enough.

A large part of the rainforest has also been cleared. On the one hand you get the wood for sale or as firewood, on the other hand you also get arable land, the soil of which is only cultivated for a short time because it is then depleted. This leads to erosion.

Cattle, pigs and poultry are bred on cattle. Fishing also plays a role on the coasts. Above all, shrimp and lobster are exported.

Industry: Maquila factories

Industry, which employs 21 percent, generates 28.8 percent. There are factories that process sugar and coffee, as well as those that make clothes, drinks and wood.

In the industry the maquila companies (maquiladoras) now play a major role, similar to Guatemala. Following the example in Mexico (see also Mexico Economy), they have spread to Central America. In these factories, imported parts are assembled into finished goods. In Honduras, they are mainly found in the cities in the north. Especially clothes are sewn together here – mostly by women – and wood products are also made.

The finished goods are sold abroad again, i.e. they are exported. The maquila companies do offer jobs and free many people from unemployment. However, they often pay very little wages and people work hard, often 12 hours a day, and they have no labor rights. In addition to the Americans, the maquila companies often belong to Koreans or Taiwanese. The finished goods are mainly exported to the USA.

Services: the largest item

57 percent of the gross domestic product comes from services. Almost 40 percent of the working population is active in this area. This includes the entire trade, but also telecommunications and energy. Tourism is growing. The Mayan ruins in Copán and the diving and beach paradises of the Caribbean islands attract more and more visitors.


The currency of Honduras is the Lempira. It is divided into 100 centavos. The Lempira is named after a freedom fighter. Lempira fought against the Spanish conquerors in the early 16th century. He was a Kazike (chief) of the Lenca Indians.

Honduras Economy