Government Measures Will Have Mixed Effects

While the Honduran government's attempts to provide easier access to credit to small businesses will be a welcome relief, the 60% increase in the minimum wage could force an uptick in unemployment in 2009 as businesses cut back in the face of surging labour costs. We caution that on the whole, further state intervention in the Honduran economy could limit the country's potential to recover strongly from the global economic crisis.

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