Caribbean & Central America - April 2013 (ISSN 1741-4458)

Inflation & unemployment: The index of consumer prices was 5.6% year-on-year in March and 2.1% on an accumulated basis in the first quarter. The official rate of urban area unemployment was 5.6% in 2012, an improvement on the 2011 figure of 6.8% in 2011. However that masks severe underemployment. The total number of unemployed Honduras is 1.8m, up from 1.1m when the current government took office in January 2010.

BG Group deal: On 9 April, environment & natural resources minister, Rigoberto Cuellar, announced the preliminary approval of a 10-year oil and gas contract with British Gas (BG) Group. The exploration and production contract covers a 35,000-km² tract off the Caribbean coast, near the border with Nicaragua. No investment figures or potential reserves for the project were disclosed. The deal must also be approved by congress and the attorney general’s office. If approved in full, the contract would be the first of its kind for Honduras, which has never reported commercial-scale oil and gas deposits. In October 2012 the vice-president and minister of the presidency, María Antonieta Guillén de Bográn, said that Norway’s Statoil and Spain’s Repsol had also expressed an interest in potential exploration in Honduran Caribbean waters.  Currently Honduras relies heavily on fuel imports.

• Trade

Honduras’s merchandise exports, inclusive of the maquila sector, rose 1.7% year-on-year to reach US$7.9bn in 2012, according to latest central bank data. Imports rose by the same percentage to reach US$11.2bn, meaning a merchandise trade deficit of US$3.25bn. The current account deficit was US$1.74bn, or a sharp 9.5% of GDP in 2012, the bank said on 12 April. In the financial account, Foreign Direct Investment (FDI) was US$1.05bn in 2012. Net international reserves were US$3.0bn as of 15 April. Supportive of exports, the Lempira continues its gradual depreciation, trading at HNL20.21/US$ on 12 April.