Economic challenges ahead for Honduras’s Castro

Significance

GDP growth of 9% in 2021 represented a complete rebound following the 9% contraction recorded in 2020. Reconstruction efforts after two tropical storms in late 2020 partly explain this boost. The manufacturing, financial intermediation and commerce sectors registered the largest contribution to real GDP growth in 2021.

Impacts

• Inflation will continue to rise this year but will remain within the central bank’s target of 4% plus or minus 1 point.
• Castro’s inability to deliver quickly on her election promises could foster public discontent and protests.
• The medium-term growth outlook remains below 4%, hindered by slowing investment, low productivity growth and climate change effects.