The political crisis in Honduras "expanded" the impact of the global recession on Honduras' economy, the Economic Commission for Latin America and the Caribbean (ECLAC) said Monday.
The Santiago-based ECLAC said that apart from the unstable political situation in the country, the military coup against ousted President Manuel Zelaya also had a negative impact on Honduras' economy, which is highly
dependent on external aid.
"Honduras is submerged in a deep political polarization, and strong restrictions on its economic growth are visible, which are the product of the events that occurred in 2009," the ECLAC said.
From June 28 when the coup broke out till Nov. 30, Honduras had lost more than 1.1 billion U.S. dollars in aid, according to the Honduran Social Forum on External Debt and Development.
The domestic political stalemate has also diverted the country's attention from revealing an anti-crisis plan against the backdrop of the
global financial crisis.
Given the grave economic situation of the nation, the ECLAC noted that the new government, led by President-elect Porfirio Lobo who has not been largely recognized by the international community, would face a very difficult situation.
According to the ECLAC, the gross domestic product (GDP) of Honduras is expected to end the year 2009 with a contraction of 3 percent, against the previously forecasted growth of 2.5 percent.
Meanwhile, the Central Bank of Honduras (BCH) projected a worse outcome, between minus 1 and minus 2 percent, explaining that the Honduran
economy as a whole had contracted by 3.2 percent from January to September.
Additionally, during that period, the country's economy had decreased 34.7 percent in terms of the construction sectors. These sectors suffered a "lack of financing and the reduction of the capital incomes through the direct foreign investments" that dropped by 40 percent, the BCH added.
"It reflects the negative effects of the world recession, and the uncertainty produced by the internal political crisis," the central bank
explained.
Moreover, "due to the drop of the incomes and the impossibility of getting external financing," the ECLAC said the internal debt has grown almost 80 percent.
Also, the lack of foreign investments and the 11 percent reduction of remittances contributed to a greater governmental deficit, which has risen from 2.4 percent of the GDP to 4.5 percent.
A drop in the imports of goods and services by 22 percent might also exacerbate the plight, while 650,000 people in the country are living in
extreme poverty.
As for next year, Honduras has projected negative growth, and its external debt of 3.6 billion dollars has become almost not payable.
Although the international community has promised Honduras a package of financial aid, Lobo stressed earlier this month that international aid worth at least 2 billion U.S. dollars would be at stake if the political crisis in his country was not solved.
The fund, according to the president-elect, was related to the aid programs of many countries and organizations, including the Central American
Bank for Economic Integration (CABEI) and the Inter-American Development Bank (IDB).