Honduras is best known for the production and export of agricultural products (coffee, tropical fruits and sugar cane) as well as for its textile industry (maquila). Remittances sent by Hondurans abroad represent 20% of the country's GDP.
Honduras is the only country in Latin America where poverty has not declined in recent years. This is due, among other things, to the concentration of economic power in a small group of Honduran society; high levels of corruption and impunity; to an unbalanced fiscal base; and to high demographic pressure. As a small open economy, the country is vulnerable to external shocks, particularly the growth of the US economy and oil prices.
In addition to high levels of economic inequality in Latin America, rampant crime and violence represent major challenges to the country's development.
Under the current programming period (2014-2020) the EU’s main priorities cover:
- food security with focus on family agriculture (€100 million)
- employment and decent work (€85 million)
- rule of law (€40 million)
Due to development progress over the past 10 years, bilateral cooperation with the region has broadly declined under the current financial framework, while the portfolio of regional cooperation has increased by over 30%. This change reflects the emphasis on addressing common regional challenges and priorities in Latin America which make up the regional focal points for 2014-2020: security-development nexus; good governance, accountability and social equity; inclusive and sustainable growth; environmental sustainability and climate change; supporting higher education.
As one of the main donors in the country, the EU allocated a total of €235 million for the Development Cooperation Instrument (DCI) for the 2014-2020 period.
There are 2 EU regional programmes: the Continental programme, which covers all 18 countries and amounts to some €805 million 2014-2020 and the Central America programme which amounts to some €120 million and covers 6 countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama).
The main regional programmes delivered in Latin America are: AL-INVEST 5.0 covering the internationalisation of SMEs; COPOLAD II supporting cooperation on drugs policies; EUROsociAL+ strengthening social cohesion and good governance; EUROCLIMA+ addressing environmental sustainability and climate change; Erasmus Mundus+ dacilitating education mobility and capacity building in academic institutions.
Under South-South cooperation the country will participate in the new international facility for cooperation, whose activities started in 2016. As an aid recipient Honduras will benefit from a project focusing on promoting entrepreneurship and innovation for SMEs in Mesoamerica.
A number of projects are being implemented unter the Latin America Investment Facility (LAIF) (infrastructure) blending facility.