Why does Honduras remain the poorest country in Central America despite a decade of growth?

Woman cooking in Honduras. Maria de la Cruz Rodriguez, 80, Elguanabano. — photo caption, In Honduras, poverty affects 60% of families, and extreme poverty affects 40%.

- author, Cecilia Barea
- Author title, BBC World News
November 28, 2025

Whoever wins Sunday’s presidential election in Honduras will face the challenge of leading the poorest country in Latin America, save for Haiti.

Whether it is the victory of the ruling leftist party led by Rexy Moncada, the victory of Salvador Nasrallah – a former broadcaster who has run through various parties, including that of President Xiomara Castro – or the right-wing opposition led by Nasri Asfora, persistent poverty will remain one of the greatest open wounds in the Central American nation.

The new government will have to respond to the expectations of a country where 60.1% of its families live in poverty and whose history is marked by organized crime, political violence and corruption.

An emblematic case of the country’s institutional fragility is that of former President Juan Orlando Hernandez, who in June last year was sentenced by a US court to 45 years in prison for crimes linked to cocaine trafficking.

In a society punctuated by corruption scandals at the highest levels, international observers, such as the Organization of American States, have expressed concern in recent days about the independence of the upcoming electoral process.

In this context, approximately 11 million Hondurans will continue to face harsh living conditions that have worsened in recent years due to the pandemic, the global economic crisis and the two hurricanes that destroyed entire towns in November 2020.

With the end of the huge caravans of migrants traveling from their country and the rest of Central America to the United States, many Hondurans have been forced to put aside their plans to build a life elsewhere and face the challenge of finding a way to survive in their homeland by working in the production of coffee, bananas, palm oil, clothing, or informal trade.

Many families still depend on remittances sent by their relatives from abroad, which make up about a quarter of the country’s gross domestic product.

Without remittances, poverty in Honduras would be even greater, explains Sergio Zepeda, director of the Institute of Economic and Social Research of the Faculty of Economic Sciences at the National Autonomous University of Honduras.

A country that has historically suffered from poverty

In the past 15 years, the average poverty level in Honduras was 63.8%, according to calculations by the International Institute for Economic Studies, using data from the National Institute of Statistics of Honduras (INE), and own estimates for the years 2000 and 2022, given the lack of official information.

As the chart below shows, poverty has increased slightly from its pre-pandemic level compared to its current level. The percentage increased from 59.9% to 60.1%.

Because the pandemic has caused a global economic catastrophe and caused poverty to increase exorbitantly in 2020 and 2021, international experts often compare current poverty and economic growth with what they were in 2019 (before the pandemic) to avoid distortions when observing developments in recent years or decades.

As in most countries, poverty becomes a very sensitive issue during election times.

In the midst of the electoral battle in Honduras, the government of Xiomara Castro celebrated an important social victory: poverty fell by 13.5%, and extreme poverty by 15.4%.

According to data from the National Institute of Statistics, the information is correct, but it should be noted that the current situation has been compared to the year 2021, a year in which poverty rose to historic levels, affecting 73.6% of the population of Honduras, after the onslaught of the health crisis and the damage caused by Hurricanes Eta and Iota, which left hundreds of thousands affected and displaced.

One key to understanding why Honduras is poor is that it is a nation “vulnerable to all kinds of shocks,” some of which have nothing to do with what is happening in the country, says José Antonio Cuesta, chief economist at the World Bank and an assistant professor at Georgetown University.

Poor houses in El Guanabano, near Tegucigalpa. — photo caption, Poverty increased slightly between 2019 (before the pandemic and Hurricanes Eta and Iota) and 2025.

The Honduran economy suffers, for example, when the war in Ukraine affects oil prices, or when there are problems in the United States and remittances decrease, or when changes occur in China and its demand for raw materials decreases.

But in addition, Honduras is vulnerable to environmental shocks, even more than other Central American countries, as Cuesta explains in an interview with BBC Mundo, as happened with the hurricanes of 2020 or Hurricane Mitch in 1998.

In fact, it is the country most vulnerable to climate change in Latin America, surpassed only by Haiti, the economist points out. On the other hand, Honduras is exposed to so-called “social shocks” that are reflected in low levels of trust in the country’s institutions and among people. It is also among the countries with the highest rates of corruption worldwide.

He adds that it is a country facing difficulties in diversifying its economy and attracting foreign investment, its educational levels are very low, and its food insecurity problems affect more than half of the population.

Although the Honduran economy has seen moderate economic growth in recent years, Cuesta says its development has not been sustainable. He says that if you build a house, you should lay the foundation first and then the bricks every day. On the other hand, in Honduras, “bricks are not laid every day. One day they are laid, the next day they are removed, and then it becomes very difficult to sustain growth in the long term.”

With the poverty level exceeding 60% and the extreme poverty level approaching 40%, the economist notes that the situation is “extremely worrying” because the country has not been able to reduce poverty in a sustainable way.

The poorest in the region

This is reflected in the fact that Honduras remains the poorest country in Latin America (excluding Haiti), according to the latest World Bank report titled. Update on poverty and inequality in Latin America and the Caribbeanwhich was released in October.

The World Bank uses its own methodology to compare poverty between different countries, taking purchasing power parity into account, as this chart shows.

If estimates in Latin America indicate that half of the population works informally (that is, they do not have any contract or social protection of any kind and live on what they can get every day), then about 70% of people in Honduras live this way.

Since few students finish secondary education or go to university, the country also does not have a workforce prepared to boost its economic development. Many companies are unregistered or unable to access credit, while investment – both foreign and national – in productive sectors capable of generating employment – has been declining.

Businessmen say some of the barriers to increasing investment and fighting poverty are legal uncertainty, corruption and security of citizens.

“We have a weak rule of law,” Anabel Gallardo, president of the Honduran Council of Private Enterprises (COHEP), told BBC Mundo. “Laws must be enforced.”

The economy has grown at an average rate of 3.6% over the past 15 years, according to calculations by the Institute for Economic and Social Research (IES), based on central bank data.

Leave aside shock Experts consider it moderate in relation to the situation in Honduras.

The problem, says economist Sergio Zepeda, is that an important part of this growth did not generate significant improvement in productive sectors.

The researcher asserts that this growth “has not translated into a real impact on the well-being of Hondurans.” “Adequate conditions have not been created for residents to enjoy a better standard of living.”

He adds that the country undoubtedly needs more investment and more good jobs, as well as a clear focus on social policies so that the benefits reach the most vulnerable families. But all of this requires that the country reduce corruption rates, explains Zepeda.