Honduras faces rising unemployment and foreign capital flight

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 jobless rate and the drop in foreign direct investment underscore structural challenges needing urgent intervention. This scenario necessitates enacting strategies to encourage the creation of formal employment and enhance the investment climate to support enduring economic development and lessen the susceptibility of groups including youth and women.

Increasing joblessness and labor conditions in Honduras

The Honduran Council of Private Enterprise (COHEP) reported that by the close of 2024, the unemployment rate had climbed to 7.2%, exacerbating the employment crisis. This situation particularly impacts women and youth, who encounter more challenges in securing formal and steady employment. Additionally, over 1.6 million individuals experience underemployment, highlighting that a large segment of the population works in situations that fail to satisfy their financial requirements.

Furthermore, close to a million young individuals encounter obstacles when trying to access the formal job market, which restricts their chances for career growth. Informal jobs remain a significant issue, as 37% of the workforce aged 15-29 is engaged in informal employment, indicating job instability and the absence of social benefits.

These conditions not only affect workers’ quality of life, but also limit economic growth and the country’s ability to attract investment. Job insecurity and market uncertainty can hinder economic recovery and poverty reduction.

Decrease in international investment and economic forecast

In 2024, Honduras experienced a decrease in foreign direct investment. By September of that year, FDI reached $590.7 million, marking a drop of $172.5 million compared to the same period the year before. This reduction indicates a climate that creates uncertainty for investors, impacting the influx of capital needed 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.

As a result, the increase in unemployment and the decrease in foreign direct investment in Honduras throughout 2024 and 2025 indicate a scenario of uncertainty impacting both economic and social stability. Implementing inclusive and well-coordinated policies will be vital for enhancing the nation’s economic and job outlook.

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.