2019 Index of Economic Freedom

Honduras

overall score60.2
world rank93
Rule of Law

Property Rights43.4

Government Integrity25.3

Judicial Effectiveness31.0

Government Size

Government Spending78.2

Tax Burden82.8

Fiscal Health95.9

Regulatory Efficiency

Business Freedom56.9

Labor Freedom32.0

Monetary Freedom73.0

Open Markets

Trade Freedom79.4

Investment Freedom65.0

Financial Freedom60.0

Create a Comparison Chart

See how Honduras compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 8.3 million
  • GDP (PPP):
    • $46.2 billion
    • 4.8% growth
    • 3.6% 5-year compound annual growth
    • $5,562 per capita
  • Unemployment:
    • 4.5%
  • Inflation (CPI):
    • 3.9%
  • FDI Inflow:
    • $1.2 billion

Honduras’s economic freedom score is 60.2, making its economy the 93rd freest in the 2019 Index. Its overall score has decreased by 0.4 point, with declines in scores for trade freedom, judicial effectiveness, and government integrity exceeding a significant increase in fiscal health. Honduras is ranked 20th among 32 countries in the Americas region, and its overall score is just above the regional average but below the world average.

Although policymaking is hampered by legislative gridlock, the government continues to prioritize fiscal consolidation and implementation of structural reforms to improve tax collection and streamline public-sector institutions. These and other reforms are needed to spark more self-sustained economic growth. Although steps have been taken to open the domestic market and facilitate engagement in global commerce, the business environment still suffers from weak protection of property rights and political instability. Systemic corruption erodes the rule of law and public trust.

Close

Background

Honduras is Central America’s second-poorest country and has one of the world’s highest homicide rates. Gangs and transnational criminal networks prey on communities, often in collusion with authorities. The country’s location leaves it vulnerable to money laundering and narco-trafficking. Juan Orlando Hernández of the center-right National Party was reelected president in November 2017. Although credible allegations of fraud provoked a crisis in the weeks after the election, political stability eventually returned. Historically dependent on exports of bananas and coffee, Honduras has diversified its export base to include apparel and automobile wire harnessing, but the economy remains heavily dependent on U.S. trade and remittances.

Rule of LawView Methodology

Property Rights 43.4 Create a Graph using this measurement

Government Integrity 25.3 Create a Graph using this measurement

Judicial Effectiveness 31.0 Create a Graph using this measurement

Approximately 80 percent of the privately held land in Honduras is either untitled or improperly titled. Because the judicial system is weak and politicized, it often takes years to resolve title disputes. 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.

Government SizeView Methodology

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 21.6 percent of total domestic income. Over the past three years, government spending has amounted to 27.0 percent of the country’s output (GDP), and budget deficits have averaged 0.4 percent of GDP. Public debt is equivalent to 43.9 percent of GDP.

Regulatory EfficiencyView Methodology

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 works in the informal sector. The government maintains price controls for basic food items, fuel, water, telecommunications, and ports and often imposes temporary price controls on other basic goods.

Open MarketsView Methodology

The combined value of exports and imports is equal to 102.4 percent of GDP. The average applied tariff rate is 2.8 percent. Additional barriers impede imports of certain agricultural goods. The regulatory systems may act as barriers to foreign investment. The financial sector remains relatively stable and continues to expand. About 51 percent of adult Hondurans have access to an account with a formal banking institution.

Country's Score Over Time

View Chart of Scores over Time

Regional Ranking

rank country overall change
1Canada77.70.0
2United States76.81.1
3Chile75.40.2
4Saint Lucia68.71.1
5Jamaica 68.6-0.5
6Uruguay 68.6-0.6
7Peru67.8-0.9
8Colombia67.3-1.6
9Panama 67.20.2
10Saint Vincent and the Grenadines65.8-1.9
11Costa Rica 65.3-0.3
12Mexico64.7-0.1
13Barbados64.77.7
14Dominica63.6-0.9
15The Bahamas62.9-0.4
16Guatemala 62.6-0.8
17El Salvador 61.8-1.4
18Paraguay 61.8-0.3
19Dominican Republic61-0.6
20Honduras 60.2-0.4
21Nicaragua 57.7-1.2
22Trinidad and Tobago57-0.7
23Guyana56.8-1.9
24Belize55.4-1.7
25Haiti52.7-3.1
26Argentina52.2-0.1
27Brazil51.90.5
28Suriname48.10.0
29Ecuador46.9-1.6
30Bolivia42.3-1.8
31Cuba27.8-4.1
32Venezuela 25.90.7
See Entire Region List ›

View all countries ›

Back to Top