Foreign direct investment falls and worsens unemployment in Honduras

The economic outlook for Honduras in 2025 faces significant challenges, characterized by a notable increase in unemployment and a considerable reduction in foreign direct investment (FDI). These conditions reflect an environment of political and economic uncertainty that affects both the labor market and investor confidence, impacting the country’s development and stability.

The rise in the jobless rate and the drop in foreign direct investment underline structural issues that need urgent action. It is crucial to introduce measures that encourage the creation of formal employment and enhance the investment landscape, aiming to support long-term economic growth and lessen the susceptibility of groups like youth and women.

Increasing joblessness and labor environment in Honduras

The Honduran Council of Private Enterprise (COHEP) reported that by the close of 2024, the unemployment rate had climbed to 7.2%, exacerbating the employment crisis. This situation particularly impacts women and youth, who encounter more challenges in securing formal and steady employment. Additionally, over 1.6 million individuals experience underemployment, highlighting that a large segment of the population works in situations that fail to satisfy their financial requirements.

Furthermore, close to one million youths encounter obstacles when trying to enter the official job market, restricting their chances for career growth. Employment without formal contracts remains a continuous issue, with 37% of those in informal jobs being between 15 and 29 years old, highlighting employment instability and the absence of social benefits.

These situations impact not just the well-being of employees, but they also restrict economic progress and the nation’s potential to draw in investments. Employment instability and market volatility may impede economic recovery and efforts to alleviate poverty.

Drop in overseas investments and future economic projections

In 2024, the trend for foreign direct investment in Honduras was on the decline. By September of that year, FDI had reached $590.7 million, marking a decrease of $172.5 million from the same timeframe in the preceding year. This drop indicates an atmosphere of uncertainty felt by investors, which influences the capital influx vital for economic growth.

The 2025 Global Opportunity Index (GOI) by the Milken Institute places Honduras at the bottom of the list in Latin America regarding investment appeal, highlighting the necessity to enhance areas like legal certainty, infrastructure, and political stability. The decrease in FDI hampers the funding of productive projects and crucial infrastructure for development.

Therefore, the increase in unemployment and the decrease in foreign direct investment in Honduras throughout 2024 and 2025 indicate an atmosphere of unpredictability that impacts economic and social stability. Implementing cohesive and synchronized strategies will be essential to enhance the nation’s economic outlook and job opportunities.

To change this scenario, it is seen as crucial to put in place measures that boost investor trust, enhance infrastructure, and enhance security. A joint effort by the government, the business sector, and civil organizations is vital to tackling ongoing economic and employment issues and encouraging more robust and fair development.