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Honduras: For the state, the struggle continues

Tuesday, March 12, 2013

In Central America, Honduras is the country which most closely approximates a failed state, in which case it's impressive that the private sector shows positive signs.

The government, almost bankrupt, is unable to pay the salaries of school teachers, while drug gangs control entire areas of the country, violence is rampant, and corruption pervades the security forces.

The homicide rate is the highest in the world, about twice as high as the average of Central America, where other countries are showing considerable improvement, including both El Salvador and Guatemala, where the murder rate was significantly reduced last year, compared to 2011.

Hopes were high in 2010, with the resolution of the crisis which followed the ouster of President Manuel Zelaya, but even the current president, Porfirio Lobo, has admitted that the reasons for optimism were exaggerated.

In this context, the performance of the private sector has been impressive, including that of Honduras' maquiladoras - export-oriented assembly plants - which last year earned profits of $81 million, an increase of 16 percent over 2011, on total shipments of $3.5 billion.

The City Mall in Tegucigalpa, which has 280 stores in 130,000 square meters, is the latest of several new shopping centers, whose earnings benefit from $3 billion in remittances sent last year by Honduran migrants.

The national economy meanwhile grew by 3.3%, which is not negligible, given the difficult environment in which firms operate.