Unemployment and low foreign investment affect the Honduran economy

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 environment in Honduras

As per the Honduran Council of Private Enterprise (COHEP), the jobless rate climbed to 7.2% by the conclusion of 2024, highlighting a worsening employment crisis. This situation predominantly impacts women and the youth, who encounter more challenges in securing formal and secure employment. Additionally, over 1.6 million individuals experience underemployment, illustrating that a large segment of the population is working in circumstances that fail to satisfy their financial requirements.

In addition, nearly one million young people face barriers to entering the formal labor market, limiting their opportunities for professional development. Informal employment is a persistent challenge, with 37% of informal workers in the 15-29 age group, reflecting job insecurity and lack of access to social benefits.

These situations impact not just the well-being of employees, but they also restrict economic progress and the nation’s potential to draw in investments. Employment instability and market volatility may impede economic recovery and efforts to alleviate poverty.

Decrease in overseas investment 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 Milken Institute’s 2025 Global Opportunity Index (GOI) ranks Honduras last in Latin America in terms of investment attraction, underscoring the need to improve aspects such as legal certainty, infrastructure, and political stability. The reduction in FDI limits the financing of productive projects and infrastructure essential for growth.

Therefore, the increase in unemployment and the decrease in foreign direct investment in Honduras throughout 2024 and 2025 indicate an atmosphere of unpredictability that impacts economic and social stability. Implementing cohesive and synchronized strategies will be essential to enhance the nation’s economic outlook and job opportunities.

In order to change this scenario, it is deemed crucial to develop policies that boost investor trust, enhance infrastructure, and ensure safety. Cooperation among the government, private sector, and civil society is vital to tackle existing economic and employment issues and to stimulate more robust and fair growth.