Country Private Sector Diagnostic - Creating Markets in Honduras - Fostering Private Sector Development for a Resilient and Inclusive Economy - May 2022

Jul 19, 2026

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The Country Private Sector Diagnostic for Honduras assesses the investment climate, growth constraints, and opportunities to strengthen private-sector development. It highlights the country’s significant potential—productive resources, industrial base, reform agenda, strategic location, and expanding manufacturing—as well as sectoral strengths in agriculture, tilapia and shrimp exports, BPO, and digital financial services. Despite rising private investment and higher trade and FDI inflows, the report finds limited spillovers, persistent poverty, informality, vulnerability to shocks, weak institutions, security challenges, and regulatory burdens that constrain new economic opportunities.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages17

Reading Time43 min

Executive Summary

Country Context

Private Sector Development Constraints

Priority Opportunities and Way Forward

Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public COUNTRY PRIVATE SECTOR DIAGNOSTIC CREATING MARKETS IN HONDURAS Fostering Private Sector Development for a Resilient and Inclusive Economy May 2022 About IFC IFC—a member of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, [visit www.ifc.org](visit www.ifc.org). © International Finance Corporation 2022. All rights reserved. 2121 Pennsylvania Avenue, N.W. Washington, D.C. 20433 [www.ifc.org](www.ifc.org) The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon. The findings, interpretations, views, and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the Executive Directors of the International Finance Corporation or of the International Bank for Reconstruction and Development (the World Bank) or the governments they represent. Photo credits: Cover photo: Estudiante latino usando el ordenador portátil (Latin male student using a laptop sitting on a bench outside) . © [aldomurillo / iStock.com](aldomurillo / iStock.com) EXECUTIVE SUMMARY Country Context Honduras has significant investment potential, with ample productive resources, a solid industrial base, a market-oriented reform agenda, a strategic location with access to many international markets, and a growing labor force. A variety of microclimates along its fertile plains yield diverse agricultural products, while clean lakes and coastal resources with fishing grounds in two oceans have made Honduras the world’s largest exporter of tilapia and Latin America’s second-largest exporter of shrimp. The growing manufacturing sector contributes close to 20 percent of gross domestic product (GDP), and industrial production continues to diversify, supported by the creation of free-trade and export-processing zones, trade liberalization policies and other market-oriented reforms, and the free-trade agreement between Central American countries and the United States. In addition, Honduras is strategically located, and a deep-water port on the northern coast offers convenient access to the US eastern seaboard and the Caribbean. The country’s young and growing population is yielding a demographic dividend, which presents new opportunities for economic growth and diversification, especially in the service sectors such as business-process outsourcing (BPO) and in development of digital financial services (DFS) . Honduras’s rich endowment of resources and improving business climate have attracted rising levels of private investment, and the country achieved the second highest tradeto-GDP ratio in the Latin America and the Caribbean region prior to COVID-19 crisis. Net foreign direct investment (FDI) inflows to Honduras have averaged 5.6 percent of GDP over the past 20 years, well above the regional average of 3.2 percent. FDI inflows are concentrated in the manufacturing and telecommunications sectors. Trade flows have averaged 117 percen

FAQs

What key factors shape Honduras’s investment potential according to the report?

The report cites strong productive resources, a solid industrial base, market-oriented reforms, strategic access to international markets, and a growing labor force, supported by manufacturing diversification and export-processing zones.

How does the report characterize the impact of investment and trade on growth and poverty reduction?

It notes that large-scale investment and trade have not yet translated into rapid economic growth or robust poverty reduction, with limited cross-sector spillovers and persistent structural poverty.

Which constraints most limit private sector development in Honduras?

Honduran firms highlight complex tax policies and burdensome tax administration, insecurity from crime and violence, limited access to finance, and broader weaknesses in the regulatory and business environment.

Jul 19, 2026

Upload by Eliana