Macroeconomic Forecast Honduras

According to preliminary figures, foreign direct investment came in at US$816mn in 2007, roughly equivalent to a 21% y-o-y increment from the previous year. This result was encouraging, but may be something of a peak, in our view. The drying up of global liquidity amid US financial sector woes is likely to hit capital inflows into Honduras this year. As such, there is a srisk that slowing FDI will unmask the country's current account shortcomings. We see the current account deficit in 2008 remaining at around last year's level, at 2.6% of GDP.

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