Foreign direct investment (FDI) in Honduras has fallen significantly in recent years, reflecting a climate of political and economic uncertainty that is affecting the confidence of international investors. According to figures from the Central Bank of Honduras (BCH), at the end of the third quarter of 2024, FDI reached US$590.7 million, representing a reduction of US$172.5 million compared to the same period last year. This decline is attributed to factors such as legal uncertainty, corruption, and political instability, which have created an unfavorable environment for the arrival of foreign capital.
The National Autonomous University of Honduras (UNAH) has warned of a complicated economic outlook for 2025 and 2026, noting that both internal and external factors could make it even more difficult to attract investment. In particular, political uncertainty, accentuated in an election year, is seen as a determining factor in the decline in FDI. Experts highlight that political polarization and mistrust in the electoral process could continue to negatively affect foreign investment in the country.
Barriers in structure and financial prospects
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.
At the sectoral level, financial and insurance activities account for the largest share of foreign investment, with US$383.9 million, equivalent to 65% of the total recorded. Manufacturing ranks second with US$119.8 million. In terms of the origin of capital, Colombia, Mexico, Bermuda, Panama, and Belgium are the main investor countries in Honduras.
Despite the decline in FDI, the Central Bank reports economic growth of 4.1% between January and October 2024, driven mainly by domestic consumption and private investment. The BCH Monetary Program projects growth of between 3.5% and 4.5% for 2024 and 2025, with inflation controlled between 4% and 5%. However, experts and business leaders agree that in order to sustain this growth, it is essential to create a more favorable environment for investment, including structural reforms, greater transparency, and legal certainty.
The reduction in overseas direct investment in Honduras indicates not only a context of political instability but also underscores the fundamental issues that the nation needs to address to secure economic steadiness. The financial outlook will significantly rely on enhancing institutions, ensuring a secure and clear setting, and restoring trust among investors. Amid an electoral environment that contributes to the complexity, the task will be to turn these challenges into prospects to encourage enduring growth and draw in the external capital required for the country’s progress.
