Honduras Macroeconomics at a Glance - Paper Example

The economic growth of Honduras has picked up from 2015. The performance of the country has been significantly brought by favourable external factors. One of the factors that have been highly increasing this growth is the expansion of the United States Economy relationship with the country and also the sharp fall in the international oil prices. Another sector that has health recovery of the nation is the recovery of the coffee sectors.

Some of the macrocosmic indicators

Production and growths: the Gross Domestic Product of the country has significantly gown over the time. In 2016. The Honduras gap grew by 3.6%. The overall gap in 2016 was recorded at 21,367 million.

In 2016. The gap precipitate in 2016 was $2,345 this was about $ 32 higher than the value recorded in 2015

Year GDP GDP growth

2016 21,367 3.6%

2015 20,729 3.6%

2014 19,688 3.1%

2013 18,436 2.8%

2012 18,846 4.1%

2011 17,649 3.8%

Honduras inflation rate

In the country, it is recorded that the most significant category in the consumer price index is usually the food and non-alcoholic beverages. The overall inflation is calculated as the percentage change as experienced intern consumer price index. This is generally from one year to another. As such, it can be said that the CPP usually illustrate the prices which are payable by an average urban consumer. The inflation rate for the country was recorded at 2.7 in 2016. This was a significant improvement form 2015 which the country recorded an inflation rate of 3.2. It was however in 2014 that the county had a higher inflation rate of 6.1. As such, it can be concluded that the inflation rate of the country has been continually improving

Unemployment rate

The unemployment rate has however in increased in the region from 7.40 recorded in 2016 from 7.30 ion 2015

The long-term growth prospect is one of the factors that will affect the decision to invest in the country. This has precisely been brought by the promising economic status of the nation. Also, it has been significantly encouraged by the existing bilateral agreement that the country established with the United States in2001. Another factor is the existence of labor. Honduras has an extensive labor thus making it an investment hub. The presence of high labor is significantly brought by the increasing number of unemployment in the region.

Political, and economic aspect in Honduras. Another important factor to consider when doing business in Honduras is the general living standards of the people. For instance, the following are the retailing prices of major boutique products in the country.

Household spending in Honduras

Clothing and Shoes

Pair of Jeans (Levis 501 or Similar) = 45.48 $

Summer Dress in a Chain Store (Zara, H&M, = 31.69 $

Pair of Nike Running Shoes (Mid-Range) = 87.66 $

Pair of Men Leather Business Shoes = 86.70 $

Political issues likely to affect the decision

The government has taken a series of steps to enhance fiscal management and help in achieving fiscal consolidation. First, the Congress of the areas has since approved a comprehensive fiscal reform with the following motives; increasing the domestic revenues. This has been significantly done while limiting expenditures. The effect of trifocals policy saw central government fiscal deficit declining from 7.9 which was recorded in 2013 to 4.4 in 2014

Economy overview

In the short-term, and medium-term economic overview, the economy of Honduras can be said to stay on track in the year 2016. This has seen significantly been supported by accommodative monetary policy. Also, it has had stable external conditions. In light of this, it can be said that both the short-term and the long-term of the countries investment look promising. As such, the economic activities in the country are likely to benefit from low-interest rates and better access to the credit

The long-term sources of growth

According to the Solow model, the production usually takes place by the linear homogeneous production function. In the state the y=f (KL) where y is the total output, k is the capital stock, and l is the supply of labor. In the Honduras economic history, it is possible to attain a long run growth. This is because both the capital and labor of the country will be increasing. As such it can be concluded that high capital-labor ration or the aspect of capital intention is usually considered to be very beneficial for the development of the country.

Works cited

Moreno-Brid, J. C. (2016). Development and macroeconomics: Reflections from the Mexican case. ECLAC Books, 353-374.

Uribe, M., & Schmitt-Grohe, S. (2017). Open economy macroeconomics. Princeton University Press.

Mundi, I. (2015). Honduras Economy Profile 2014. Retrieved 13.04. 2015.

Lefebvre, S. (2015). Honduras: IMF Austerity, Macroeconomic Policy, and Foreign Investment.