BY CHRONICLE STAFF
As president-elect Porfirio Lobo attempts to rebuild Honduras' international relations, his motivation is clearcut. While the Central American nation depends heavily on foreign credits, it also is heavily dependent on foreign trade, tourism, remittances, investments and more.
In fact, apart from Panama, no other Latin American nation is as globalized as Honduras, according to the fifth annual Latin Globalization Index from Latin Business Chronicle.
The index of 18 countries looks at six factors that measure a country's links with the outside world:
- Exports of goods and services as a percent of GDP.
- Imports of goods and services as a percent of GDP.
- Foreign direct investment as a percent of GDP.
- Tourism receipts as a percent of GDP.
- Remittances as a percent of GDP.
- Internet penetration.
The Latin Globalization Index - the most extensive of its kind - aims at measuring how the region overall and each country individually fares when it comes to globalization. By measuring as a percent of GDP rather than by real numbers, the index reveals the impact of key globalization benchmarks on a nation's economy.
HONDURAS THIS YEAR
The index uses data for the latest available full year - in this case 2008. This year, Honduras may be less globalized thanks to a major political crisis that started before the June ousted of President Manuel Zelaya, but strengthened in the months since. To protest the ouster, the United States cut credits and neighboring Central American countries stopped trade for a time. Additionally, the Honduran government that succeeded Zelaya imposed curfews that restricted retail sales.
Combined, the effect deterred badly-needed investments. Honduras may have lost as much as $200 million in investment since Zelaya’s overthrow, Jesus Canahuati, vice president of the Business Council of Latin America in Honduras, told Bloomberg.
Last year, exports of goods and services accounted for 50 percent of Honduras’ GDP. That was the third-highest rate in Latin America. Meanwhile, imports accounted for as much as 78 percent, according to the World Bank. That’s the second-highest rate in Latin America, according to a Latin Business Chronicle analysis of data from the World Bank and central banks in the region.
Honduras dependence on foreign direct investment is also high. Last year, they reached $888 million, or the equivalent of 6.3 percent of its GDP.
Tourism is another important revenue source, which has been impacted by the crisis. Last year, tourism revenues reached $621 million, which was the equivalent of 4.4 percent of GDP. That was the fourth-highest rate in Latin America, according to the Latin Business Chronicle analysis.
Honduras has also been hit by another blow – remittances from the United States. Honduras is Latin America’s top recipient of remittances as measured to its GDP. Last year, they amounted to $2.7 billion, or the equivalent of 19.6 percent of Honduras’ GDP of $14.1 billion, according to a Latin Business Chronicle analysis of data from the Inter-American Development Bank and the International Monetary Fund.
Both Honduras and Latin America became more globalized last year. Latin America’s average score increased 1.06 points to 11.50.
Panama remains the most globalized country thanks to ...
Keywords: Brazil, Chile, Colombia, Mexico, Nicaragua, Panama
Latin Globalization Index 2009
Winners & Losers
Country Score by Category