Honduras

In-depth country-focused analysis on Honduras' economic, political and operational risk environment, complemented by detailed sector insight

Honduras

Our comprehensive assessment of Honduras' operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Honduras, as well as the latest industry developments that could impact Honduras' industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Honduras before your competitors.

Country Risk

Honduras Country Risk

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Core Views

  • Belize will post slower growth rates over the next decade than over the previous 20 years, underpinned by our expectation that productivity gains will remain limited. Furthermore, the government will be unable to pursue much-needed reforms in infrastructure and education due to a lack of available funding, further dampening Belize's long-term growth prospects.

  • Belize's current account deficit will remain substantial over the 10-year forecast period due to declining oil production and weakening export growth.

  • Public debt sustainability will remain precarious over the next several years, as Belize's debt load continues to grow. A rising debt burden, combined with a history of defaults, will drive up financing costs and increase rollover risk in the country.

  • Belize will...

Honduras Country Risk

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External Tailwinds Supporting Regional Underperformers

Core View

Central American outperformers Costa Rica and Panama are facing a more challenging road ahead in the coming years. As real GDP growth slows in Panama on the back of the end of canal construction, establishing fiscal discipline and ensuring adequate employment will be crucial. Should the country fail to rein in spending in an environment of lower growth, this would likely cool investor enthusiasm toward the country. Similarly, Costa Rica is also facing a challenging fiscal outlook - a situation which is only exacerbated by the fragmented political environment.

In contrast, our economic outlook for most of Central America's underperformers is brightening. Guatemala, Honduras and El Salvador will benefit from stronger US demand for their manufactured goods, rising remittance...

Honduras Industry Coverage (10)

Agribusiness

Honduras Agribusiness

BMI View:

BMI View: Central America's agribusiness industry will continue to grow - albeit inconsistently across sectors - through to the end of our forecast period in 2019/20. Along the way, the different sectors of the market will be forced to fight against headwinds that will directly impact output growth across some countries in the region. As a result of rising incomes and growing populations, as well as an improving real GDP outlook for the region, demand will outstrip supply in the livestock and grains sectors...

Autos

Honduras Autos

BMI View:

BMI View: Passenger vehicle sales in Central America in 2016 will continue to be driven by rising private consumption rates due to remittance inflows and a low inflationary environment, but will be tempered by a poor business environment and weaker growth in the construction sector will lead to declining growth in the commercial vehicle segment.

Central America - Fleet Size
Historical Data & Forecasts, 2014-2020 (units)
e/f = BMI estimate/forecast. Source: National sources, BMI ...

Food & Drink

Honduras Food & Drink

BMI View:

BMI View: Our consumer outlook for the region has brightened in recent quarters, as households benefit from low oil prices (which fuel their real purchasing power) and rising remittances flows from the US. Guatemala and Honduras, which have traditionally been vulnerable to structural macroeconomic weaknesses, will be the outperformers. Rising incomes will fuel growth in the food and drink sector, and the region will look increasingly attractive for food manufacturers as the rest of Latin America experiences a deteriorating consumer outlook and market saturation in the food sector. Thanks to its large and young consumer base, Guatemala will offer the strongest growth opportunities in Central America, while a strong tourism sector will drive premiumisation in Costa Rica.

Headline Industry Data (regional averages)

  • 2015 food consumption (US...

Infrastructure

Honduras Infrastructure

BMI View:

BMI View: We forecast an average of 2.1% real growth for the six construction industries of Central America in 2016. The decline from our forecast for 2015 - 4.4% - is mainly due to a steep drop-off in Panama as it concludes expansion of the Panama Canal and a normalisation of a housing boom in Nicaragua. The region will still offer significant opportunities: the transport sector will see strong growth as development funds target regional...

Honduras Infrastructure

BMI View:

BMI View: The Honduran construction industry recovery will accelerate in 2016, following the end of a two-year contraction in 2015. The impetus will come from large transport projects which are supported mainly by development institutions as well as heightened private sector investment through the successful use of the PPP model.

Latest Updates And Structural Trends

  • Our view that international support would help to advance major transport projects is playing out, with 2015 posting 2.1% positive growth in real terms and 2016 set to accelerate to 3.2%.

  • ...

Insurance

Honduras Insurance

BMI View:

BMI View: Central America's insurance markets differ significantly in many ways from one another, in terms of scale, development, competition and product composition. Growth rates vary, although most outperform more developed markets despite ongoing structural issues and currency weakness in much of the region. Consolidation would bolster development in many markets, as would innovation in low-cost products, including microinsurance which has a limited presence in Central America.

BMI expects Central American insurance markets to continue to grow rapidly in the coming years. Annual growth rates outside Nicaragua, the region's underperformer, will consistently hit high single-digit rates, with some sectors consistently posting growth rates in excess of 10%. We highlight Costa Rica and El Salvador as markets...

Honduras Insurance

BMI View:

BMI View: Life insurance will grow at double-digit rates in HNL terms through to 2020, outperforming the non-life sector and the wider economy. Both property and health insurance, two of the dominant lines of business in the country, will grow at rates of around 9% annually, offering substantial opportunities for both incumbents and new entrants. Competition remains high in an open market, helping to encourage innovation but also depressing prices.

Headline Insurance Forecasts (Honduras 2013-2020)
2013 2014 2015...

Pharmaceuticals & Healthcare

Honduras Pharmaceuticals & Healthcare

BMI View:

BMI View: Legislative and regulatory improvements to the Central American healthcare system will further strengthen sector coordination, enhancing medical efficiencies and treatments over the long-term. The region's ageing population and dependence on pharmaceutical imports will increase foreign investment appeal as public health provision grows.

Headline Expenditure Projections

  • Pharmaceuticals: USD3.7bn in 2014 to USD3.9bn in 2015; +4.6%. Our forecast has been maintained since Q115.

  • Healthcare: USD16.5bn in 2014 to...

Honduras Pharmaceuticals & Healthcare

BMI View:

BMI View: Inequity and low coverage will continue to characterise the healthcare sector in Honduras. The local government will continue to support the primary healthcare network and promote the decentralisation of the healthcare sector. In 2016, there will be limited demand for advance medicines in Honduras.

Headline Expenditure Projections

Pharmaceuticals: HNL10.33bn (USDb473mn) in 2015 to HNL10.70bn (USD480mn) in 2016; +3.5% in local currency terms, and +1.0% in US dollar terms. Our forecast has not changed since Q216.

Healthcare: HNL37.98bn (USDb1.74bn) in 2015 to HNL41.02bn (USD1.83n) in 2016; +8.0% in local currency terms, and +5.3% in...

Telecommunications

Honduras Telecommunications

BMI View:

BMI View: The region's telecoms markets are increasingly competitive, with four out of eight Central American countries having introduced mobile number portability. In several Central American markets, high mobile penetration rates have significantly slowed subscriber growth. However, markets such as Nicaragua offer considerable growth potential. Government intervention remains a problem in some regional markets such as Guatemala, where it is seemingly increasing. Across the region, data-driven 3G/4G services offer strong future potential and the region's largest operators are investing...

Latest Honduras Articles

  • An unsettled political and economic environment in the wake of the Brexit v...

  • We maintain our above-consensus forecast for the year, with Brent and WTI f...

  • The 2015-2016 El Niño episode had a severe negative impact on agricultural ...

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