Honduras reduces growth in 2018 to 3.7% with stable outlook to 2019

Honduras reduces growth in 2018 to 3.7% with stable outlook to 2019



The economic growth of Honduras in 2018 will be 3.7%, lower than the 4.8% of 2017, and is estimated to reach 3.6% by 2019, according to ECLAC estimates released today.

The data provided by the United Nations agency for the Central American country for 2018 was due to a lower foreign exchange inflow in the country, as a result of a reduction in the flow of remittances, as well as a decrease in the value of net exports.

The value of exports to June 2018 has suffered a decrease due to the fall in coffee prices (15.7% compared to June 2017), its main export product.

The deficit of the current account had a slight deterioration of -3.3% of the GDP, due to an increase in the oil bill, adds the Preliminary Balance of the Economies of the region presented today by the Economic Commission for Latin America and the Caribbean. Caribbean (Cepal).

It is expected that the central administration deficit will close the year at 3.4% of GDP (compared to 2.7% in 2017), as a result of energy subsidies.

As for consumer prices, at the end of the year year-on-year inflation will be 4.7%, the same record as at the end of last year, due to the increase in the price of fuels and their impact on electricity rates .

Five years after the beginning of the fiscal adjustments that led to an agreement with the International Monetary Fund (IMF) in December 2014, the Honduran government's deficit fell from 7.9% of GDP in 2013 to 2.7% in 2017; although for 2018 an increase in the deficit is expected due to the increase in the deficit of the balance of income of the National Electric Energy Company (ENEE).

Regarding the state debt, the ECLAC report indicated that the government debt was equivalent to 47% of GDP, 0.7% less than the balance of debt as of December 2017.

This dynamic of indebtedness is within the parameters established in the Fiscal Responsibility Law, which establishes that the deficit of the global balance of the non-financial public sector can not exceed 1.2% of GDP, and in the stand-by agreement with the IMF, which ended in December 2017.

Despite an environment of inflationary pressure, the central bank kept the monetary policy rate at 5.5%.

The average exchange rate of sale closed October at 24.24 lempiras per dollar, a nominal depreciation of 2.16% compared to the close of 2017, which is attributed to the appreciation of the dollar with respect to most currencies.

Up to October 2018, year-on-year inflation stood at 4.7%, within the target range of the central bank (between 3.0% and 5.0%).

The prices that showed the greatest increases were those of education (7.2%), transport (6.1%) and personal care items (5.5%).

The open unemployment rate will reach 5.7% of the economically active population in 2018, while the average monthly minimum wage, effective as of January 1, 2018, is 8,910 lempiras, and the average minimum wage per hour is 37.13 lempiras, which represents an increase of 5.5% in nominal terms with respect to 2017.

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