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HONDURAS
B
WORLD RANK:
100
REGIONAL RANK:
21
ECONOMIC FREEDOM STATUS:
MOSTLY UNFREE
roader implementation of deeper institutional reforms
remains critical to spurring dynamic economic growth
throughout the Honduran economy. Despite the implementation
of policies that aim to sustain market openness and facilitate
engagement in global commerce, the overall entrepreneurial
environment continues to be hurt by weak protection of property rights and political instability.
Management of public expenditures has improved in recent
years. In April 2016, Congress approved a fiscal responsibility
law intended to institutionalize the ongoing fiscal consolidation.
Systemic corruption continues to erode the rule of law and trust
in the government. Reducing severe crime and violence remains
a priority.
ECONOMIC FREEDOM SCORE
58.8

( ▲ UP 1.1 POINTS )
0
50
60
70
80
60.0
60.9
REGIONAL AVERAGE
WORLD AVERAGE
(AMERICAS REGION)
NOTABLE SUCCESSES:
Trade Freedom and
Monetary Stability
100
CONCERNS:
Rule of Law, Business Freedom, and
Labor Freedom
OVERALL SCORE CHANGE
SINCE 2013:
+0.4
QUICK FACTS
FREEDOM TREND
80
70
60
50
POPULATION:
8.4 million
UNEMPLOYMENT:
3.9%
GDP (PPP):
$41.1 billion
3.6% growth in 2015
5-year compound
annual growth 3.5%
$4,869 per capita
INFLATION (CPI):
3.2%
FDI INFLOW:
$1.2 billion
PUBLIC DEBT:
47.4% of GDP
40
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2015 data unless otherwise noted. Data compiled as of September 2016
BACKGROUND: Honduras, the second-poorest country in Central America, has one of the highest homicide rates in the world as street gangs and transnational organized criminal networks prey on communities,
often in collusion with authorities. In 2015, the country’s Supreme Court struck down a controversial term
limit and cleared the way for President Juan Orlando Hernández to seek a second term in 2017. Hernández
has promoted foreign investment and has encouraged leaders of El Salvador and Guatemala to join him
in making Central America more competitive. Continuing high levels of violence, extensive narco-related
money laundering, and reports of government corruption reaching the highest levels have undermined the
country’s international image.
72
2017 Index of Economic Freedom
KEY:
WORLD AVERAGE
RULE OF LAW
112th
GOVERNMENT SIZE
108th
126th
100
100
80
80
70
70
60
60
50
50
0
45.0
38.2
32.2
Property
Rights
Judicial
Effectiveness
Government
Integrity
Approximately 80 percent of the privately held
land in Honduras is either untitled or improperly titled.
Resolution of title disputes in court often takes years,
partly because of the judicial system’s weakness. Rampant corruption and weak state institutions make it
virtually impossible to combat threats posed by violent
transnational gangs and organized criminal groups.
Honduras has one of the world’s highest murder rates.
180th
0
100
80
80
70
70
60
60
50
50
31.2
77.3
Business
Freedom
Labor
Freedom
Monetary
Freedom
The inefficient regulatory environment does not
encourage dynamic entrepreneurship, and the cost
of forming a business is burdensome. Labor regulations are outmoded, and a large proportion of the
labor force is dependent on the informal sector. The
government is continuing to overhaul the struggling
state-owned ENEE electricity utility but maintains
price controls for basic food items along with water,
telecommunications, and port services.
119th
83.3
74.7
64.1
Tax
Burden
Government
Spending
Fiscal
Health
Rank
OPEN MARKETS
99th
56.9
65th
The top individual income and corporate tax rates
are 25 percent (27.5 percent for corporations with an
added social contribution tax). The overall tax burden
equals 20.6 percent of total domestic income. Government spending has amounted to 29.1 percent of total
output (GDP) over the past three years, and budget
deficits have averaged 4.4 percent of GDP. Public debt
is equivalent to 47.4 percent of GDP.
100
0
60th
0

REGULATORY EFFICIENCY
136th
HONDURAS
12 ECONOMIC FREEDOMS | HONDURAS
92nd
73rd
39th
78.4
65.0
60.0
Trade
Freedom
Investment
Freedom
Financial
Freedom
Rank
Trade is extremely important to Honduras’s economy; the value of exports and imports taken together
equals 109 percent of GDP. The average applied tariff
rate is 5.8 percent. In general, the government does
not screen or discriminate against foreign investment.
The financial sector has regained stability following the
liquidation of Banco Continental in late 2015. Capital
markets are not fully developed.
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