Honduras, the second poorest country in Central America and one of the poorest countries in the Western Hemisphere, with an extraordinarily unequal distribution of income and massive unemployment, is banking on expanded trade under the US-Central America Free Trade Agreement (CAFTA) and on debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. Despite improvements in tax collections, the government's fiscal deficit is growing due to increases in current expenditures and financial losses from the state energy and telephone companies. Honduras is the fastest growing remittance destination in the region with inflows representing over a quarter of GDP, equivalent to nearly three-quarters of exports. The economy relies heavily on a narrow range of exports, notably bananas and coffee, making it vulnerable to natural disasters and shifts in commodity prices, however, investments in the maquila and non-traditional export sectors are slowly diversifying the economy. Growth remains dependent on the economy of the US, its largest trading partner, and on reduction of the high crime rate, as a means of attracting and maintaining investment.
GDP (purchasing power parity):
$32.26 billion (2007 est.)
GDP (official exchange rate):
$12.28 billion (2007 est.)
GDP - real growth rate:
6.3% (2007 est.)
GDP - per capita (PPP):
$4,300 (2007 est.)
GDP - composition by sector: