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Located in the geographic heart of Central America and rich with natural resources, Honduras is a country of rainforests and Mayan ruins, fringed by the world’s second-largest barrier reef. Its economy is heavily reliant on the US and while the tech sector has yet to fully mature, software development companies across Latin America are expanding their networks into Honduras by establishing remote teams in the main centers.
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A pillar of the government’s ICT agenda is the reduction of the country’s digital divide, through a program targeting public infrastructure investment in neglected areas and assigning at least 1% of GDP to science, technology and innovation. However 5G implementation is not expected within the next three years. While the domestic IT sector is small, companies in other parts of Latin America are recruiting in Honduras and setting up satellite software development hubs there.
Spanish is the official language but many professionals and business executives speak English and have been educated in the United States.
Honduras implemented prudent macroeconomic policies during the pre-pandemic years, anchored in the Fiscal Responsibility Law, and posted the second-highest economic growth rates in Central America, behind Panama. However, the COVID-19 pandemic, coupled with two Category 4 hurricanes – Eta and Iota – in 2020, led to a sharp GDP decline of 9%. Income and employment levels sank, with some 400,000 people losing their jobs that year. The country’s economy rebounded to 12.5% growth in 2021, slowing to 3.5% in 2022 and a forecast of 3.1% in 2023. Development challenges persist for the new government, which took office in 2022, as poverty and inequality levels are likely to remain stubbornly high.
President Xiomara Castro of the leftist Libertad y Refundación (Libre) party, faces an increasingly challenging outlook as she nears the end of her first year in office. Castro’s personal approval ratings remain high. However, the legislative alliance between Libre and the centrist Partido Salvador de Honduras has collapsed, which will hinder efforts to advance her reform agenda. Stalled growth and inflationary pressures have also placed stress on her administration. However, the Economist Intelligence Unit expects gradual progress to be made on Castro’s agenda. The next big test in Congress will be fulfilling a campaign pledge to install an International Commission against Impunity in Honduras, seeking to uncover past corruption.