Honduras is a low middle-income country that faces major challenges, with more than 66 percent of the population living in poverty in 2016, according to official data. In rural areas, approximately one out of 5 Hondurans live in extreme poverty, or on less than US$1.90 per day.
Since the 2008-2009 global economic crisis, Honduras has experienced a moderate recovery, driven by public investments, exports and higher remittances. In 2016, the country’s economy grew by 3.7 percent, according to the latest estimates, and is expected to grow by 3.5 percent in 2017.
Despite the favorable economic outlook, the country faces the highest level of economic inequality in Latin America. Another major challenge is the rampant crime and violence. Although in recent years, the number of homicides has declined, Honduras continues to have one of the highest rates in the world (59 murders per 100,000 inhabitants in 2016, according to the Observatory of Violence at the National Autonomous University of Honduras).
The country is also vulnerable to external shocks. Its agricultural sector, for example, lost nearly one-third of its revenue over the past two decades, in part due to the declining prices of the country’s export crops, especially banana and coffee.
Additionally, Honduras is susceptible to adverse natural events such as hurricanes and droughts. Measures to mitigate the impact of these shocks focus on strengthening the adaptation capacity of households, expanding market-based risk management mechanisms, and developing effective social safety nets.
World Bank studies have highlighted the importance of improving the quality of education and diversifying sources of rural income given that most of the country’s poor live in rural areas and depend on agriculture for their livelihoods. Other studies have found that targeted social programs can potentially reduce poverty.
Last Updated: Apr 07, 2017