Political crisis deepens and foreign investment in Honduras collapses

In recent years, international investment in Honduras has decreased notably, mirroring an atmosphere of political and economic unpredictability that is impacting the trust of global investors. Data from the Central Bank of Honduras (BCH) shows that by the close of the third quarter of 2024, international investment amounted to US$590.7 million, indicating a drop of US$172.5 million compared to the same time frame the previous year. This reduction is linked to issues like unstable legal conditions, corruption, and political unrest, which have fostered a challenging environment for foreign capital influx.

La Universidad Nacional Autónoma de Honduras (UNAH) ha alertado sobre un desafiante panorama económico para 2025 y 2026, señalando que factores tanto nacionales como internacionales podrían complicar aún más la atracción de inversión. En especial, la incertidumbre política, incrementada durante un año electoral, es considerada un factor clave en la reducción de la IED. Los expertos destacan que la polarización política y la desconfianza en el proceso electoral podrían seguir impactando negativamente en la inversión extranjera en el país.

Structural obstacles and economic outlook

According to studies by the Institute for Economic and Social Research (IIES) of the UNAH, the low competitiveness of the labor market, due to limitations in skills and competencies, reduces the country’s attractiveness to investors. In addition, institutional stability and citizen security continue to be important challenges that must be addressed to improve the investment climate.

In terms of sectors, financial and insurance activities represent the highest portion of international investment, amounting to US$383.9 million, which is 65% of the overall total. Manufacturing comes next with US$119.8 million. Regarding the source of the capital, Colombia, Mexico, Bermuda, Panama, and Belgium are the top countries investing in Honduras.

Though there has been a reduction in foreign direct investment, the Central Bank indicates that there has been an economic increase of 4.1% from January to October 2024, primarily fueled by local expenditure and private investment. The BCH’s Monetary Program anticipates growth ranging from 3.5% to 4.5% for both 2024 and 2025, while maintaining inflation between 4% and 5%. Nevertheless, specialists and business executives concur that to maintain this growth, it is crucial to establish a more inviting climate for investment, comprising structural adjustments, improved clarity, and legal stability.

The decline in foreign direct investment in Honduras not only reflects a scenario of political uncertainty, but also highlights the structural challenges that the country must overcome to ensure its economic stability. The economic future will depend largely on the ability to strengthen institutions, guarantee a safe and transparent environment, and rebuild investor confidence. In an electoral context that adds layers of complexity, the challenge will be to transform these adversities into opportunities to promote sustainable growth and attract the foreign capital necessary for national development.