Macroeconomic Forecast Honduras

BMI View: The Honduran economy is in our view unlikely to stage a brisk recovery in 2010, as the after-shocks of the political crisis and the global downturn continue to weigh on growth. The cut-off of vital foreign aid and reduction in foreign investment has forced the government to borrow heavily domestically, putting upward pressure on interest rates - despite very subdued inflation. Mounting debt-servicing difficulties in conjunction with the uncertain state of domestic politics underpin our view that real GDP growth will only rise to a sub-trend 1.8% in 2010, from an estimated -3.7% in 2009.

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