Honduras Economic Outlook
In the third quarter, GDP expanded at the softest pace since Q1 2021 due to slower private consumption growth and a faster contraction in public spending. Turning to Q4, average economic activity growth more than halved compared to the third quarter amid high inflation and a weaker external environment. Significant losses of momentum were seen in the transport, manufacturing and agricultural sectors. In contrast, growth in the construction and mining and quarrying sectors improved. Moreover, strong remittances growth—amid a robust U.S. labor market—likely propped up private spending. Heading into 2023, remittances expanded by 12.0% in January–February, which should be continuing to bolster households’ budgets in the face of elevated price pressures.
Honduras Inflation
Inflation rose to 9.8% in February from 8.9% in January, far from the Bank’s target range of 3.0–5.0%. Our panelists see inflation cooling this year amid falling commodity prices and a slowing economy. However, inflation will average well above the Bank’s target range. Unanticipated changes in government subsidies and swings in commodity prices are factors to watch.