Foreign investment in Honduras in 2025: why is it declining?

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 unemployment figures and the drop in foreign direct investment underline fundamental issues that need urgent resolution. This scenario necessitates the introduction of strategies that encourage the generation of formal employment and enhance the investment landscape to support long-term economic development and lessen the fragility of groups such as youths 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.

Moreover, close to a million young individuals encounter obstacles when trying to access the official job market, which restricts their possibilities for career advancement. Informal employment remains a consistent issue, as 37% of workers aged 15-29 are in informal jobs, highlighting instability in employment and the absence of 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.

Decline in foreign investment and economic outlook

During 2024, foreign direct investment in Honduras showed a downward trend. As of September of that year, FDI stood at $590.7 million, representing a reduction of $172.5 million compared to the same period in the previous year. This decline reflects an environment that generates uncertainty among investors, affecting the inflow of capital necessary for economic development.

The Milken Institute’s Global Opportunity Index 2025 places Honduras at the bottom of the list for Latin America regarding investment appeal, highlighting the necessity to enhance areas like legal assurance, infrastructure, and political stability. The decline in FDI hampers funding for crucial development and infrastructure projects.

Thus, rising unemployment and falling foreign direct investment in Honduras during 2024 and 2025 reflect a context of uncertainty that affects economic and social stability. The adoption of comprehensive and coordinated policies will be crucial to improving the country’s economic and employment prospects.

To change this scenario, it is seen as crucial to establish strategies that boost investor trust, enhance infrastructure, and ensure safety. Cooperation among the government, businesses, and civil society is vital to tackle present economic and employment issues and encourage stronger and fairer growth.