Honduras and the challenge of recovering formal employment and investment

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 unemployment rate and the drop in FDI underscore structural issues that demand urgent attention. The circumstances necessitate the introduction of strategies that encourage formal job creation and enhance the investment climate to support sustainable economic development and diminish the vulnerability of groups like young individuals and women.

Increasing joblessness and labor conditions in Honduras

As reported by the Honduran Council of Private Enterprise (COHEP), the unemployment rate climbed to 7.2% by the close of 2024, highlighting an escalation in the labor crisis. This situation predominantly impacts women and the youth, who encounter greater hurdles in finding formal and stable employment. Additionally, underemployment affects over 1.6 million individuals, suggesting that a large segment of the populace is engaged in work that fails to fulfill 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 circumstances do not just impact the workforce’s living standards, but they also restrict economic development and the nation’s potential to draw investment. Employment instability and market unpredictability might impede economic revival and the alleviation of poverty.

Reduction in international investments and financial forecast

Throughout 2024, the flow of foreign direct investment into Honduras decreased. By September of that year, it amounted to $590.7 million, marking a drop of $172.5 million compared to the same months in the preceding year. This reduction indicates an atmosphere of uncertainty for investors, which impacts the influx of capital crucial for economic growth.

The 2025 Global Opportunity Index (GOI) by the Milken Institute places Honduras at the bottom of the list in Latin America for drawing in investments, highlighting the importance of enhancing factors like legal assurance, infrastructure, and political steadiness. The decrease in foreign direct investment constrains the funding of crucial productive ventures and infrastructure necessary for development.

Therefore, an increase in joblessness and a decrease in overseas direct investment in Honduras throughout 2024 and 2025 indicate a state of uncertainty that impacts both economic and social stability. Implementing thorough and synchronized policies will be essential to enhancing the nation’s outlook on the economy and employment.

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.