The economy of Honduras is based mostly on agriculture, which accounted for 22% of its gross domestic product (GDP) in 1999.

Leading export coffee ($340 million) accounted for 22% of total Honduran export revenues. Bananas, formerly the country’s second-largest export until being virtually wiped out by 1998′s Hurricane Mitch, recovered in 2000 to 57% of pre-Mitch levels.

Cultivated shrimp are another important export sector. Since the late 1970s, towns in the north began industrial production through maquiladoras, especially in San Pedro Sula and Puerto Cortés.

Honduras has extensive forest, marine, and mineral resources, although widespread slash and burn agricultural methods continue to destroy Honduran forests.

Honduras received significant debt relief in the aftermath of Hurricane Mitch, including the suspension bilateral debt service payments and bilateral debt reduction by the Paris Club—including the U.S. — worth over $400 million. In July 2000, Honduras reached its decision point under the Heavily Indebted Poor Countries Initiative (HIPC), qualifying the country for interim multilateral debt relief.

Lack of resources, lack of arable land, and a small domestic market continue to impede economic progress in Honduras. Most significantly, Honduras lacks abundant natural resources; only land appears to be plentiful and readily exploitable.

The presence of apparently extensive land is misleading because the nation’s rugged, mountainous terrain restricts large-scale agricultural production to narrow strips on the coasts and to a few fertile valleys.

Honduras’s manufacturing sector has not yet developed beyond simple textile and agricultural processing industries and assembly operations. The small domestic market and competition from more industrially advanced countries in the region have inhibited more complex industrialization.