Business was bad in Honduras even
before the president was ousted in a June coup, unleashing months of political
turmoil that have deepened the impoverished country’s economic woes.

Honduras was already suffering from the recession in the US, its top
trade partner, due to slack demand for its key clothing exports and a plunge in
the amount of cash being sent home by relatives.

And while Central American neighbours show
signs of recovery from the global slowdown, Honduras’s economy is shrinking at
an annual rate of more than 3 percent as nervous tourists shun the country and
shoppers tighten their purse strings.

“Sales have fallen something rotten
since the coup,” said fruit seller Ana Julia Varela, 45, at the capital’s
Jacaleapa market. “I’ve been in this market for 30 years and it’s never
been like this. We just want peace so our sales pick up.”

A de facto government is running the coffee
and textile producing nation as campaigning for a disputed presidential vote
gathers pace, and a US-led deal to end the five-month political crisis is in

FDI plunged 42 percent in the first half of
the year to $251.7m and economic analysts say it will likely fall further as
investors freeze plans due to the lingering uncertainty.

“The situation in Honduras is hampering its ability to move
forward,” said Jose Antonio Cordero, an economist at the Washington-based
Centre for Economic and Policy Research who has written a recent report on Honduras.

“If there hadn’t been this political
instability, the government might have been able to apply corrective measures
such as a more evident and decisive fiscal stimulus package,” he added.



Tourists are staying away, particularly US visitors put
off by a state department travel warning that urges “extreme

“There’s no denying it’s affected us,
mainly because of the drop in American visitors,” said Sandra Guerra of
the Copan
tourism chamber. “In July we had a tremendous decline of 70 percent (but)
now things are starting to pick up a bit.”

In an effort to boost flagging sales,
managers at one of Tegucigalpa‘s
biggest shopping malls have put up the Christmas decorations early and stores
are cutting prices.

Trade with neighbouring countries is also
suffering as their governments refuse to recognise the de facto government,
complicating customs procedures for agricultural goods, although coffee exports
have not been disrupted by the crisis.

Main coffee areas were not the scene of
roadblock protests meaning beans have been able to arrive at port as usual.

“Tourism and intra-regional trade have
been worse affected because by not recognizing the government of (de facto
leader Roberto) Micheletti, we can’t resolve any problems,” said Juan
Daniel Aleman, secretary general of the El Salvador-based Central American
Integration System, or SICA.

Meanwhile, health and welfare programmes
are suffering due to a freeze on aid by the EU and lending by international
development banks in protest at the toppling of President Manuel Zelaya.

Critics of Zelaya, who irked the country’s
business elite by hiking the minimum wage and forming close ties with Venezuela‘s
socialist president, Hugo Chavez, blame his economic policies for scaring off

Zelaya is urging his supporters to boycott
any election, but at the Jacaleapa market, stall-holders hope the poll will get
the country back to normal and encourage customers to loosen their purse

“Things are awful, really awful,”
said Maria Teresa Molina, who sells painted wooden toys and flowers. “I
imagine it’ll calm down after the elections. Let’s hope it all goes smoothly
because everyone wants that with all their heart.”

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