Overview

Honduras remains one of the poorest countries in Latin America, with poverty concentrated in the rural areas where half the population of 7 million resides. Eighteen percent of Hondurans live on less than US$1.25/day. Despite strong economic growth in 2007 and 2008, the financial crisis of 2009 has slowed Honduras' export-led economy, deteriorating its economic indicators and shrinking its migrant remittances. This, coupled with the political upheaval generated by the political crisis, has put recent development progress at risk.

In the short term, it will be difficult for the government to meet the country's needs for health and education services. This is due to the worsening fiscal situation combined with the significant pressure placed on these services by a young and rapidly growing population, 60 percent of which is under the age of 25. At the same time, this young population represents significant human capital potential.

The growing rural population also exerts pressure on the natural resource base. Land degradation, through over-use, deforestation, and poor agricultural practices, in turn makes the country more vulnerable to climate-related and other natural disasters.

Food security is also at risk. Honduran agricultural productivity is currently low, and the country is a net importer of agricultural products, though there is significant room for growth in agricultural production. An increase in food prices of 18 percent in 2008 added about 4 percent to the poverty rate and worsened Honduras' already high malnutrition rates.

Local government continues to be weaker than national structures, although both face limitations in their capacity for policy making and planning. Insecurity related to organised crime is increasing and is a major challenge for the Honduran government.