Economic Survey of Latin America and the Caribbean 1986

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In 1986 the evolution of the Latin American economy was marked by contradictory changes. While the main variables used to measure domestic economic performance showed some improvement, the situation of the external sector worsened considerably. Thus, although the rate of economic growth picked up and unemployment and inflation slackened, the terms of trade worsened, the trade surplus fell and the balance-of-payments deficit increased sharply.




The international crisis has been having a severe impact on the Honduran economy for several years now. Despite the economic policy applied and relatively broad external financing, there has been no success in adjusting the economy, much less reactivating it. On the contrary, to a certain degree, this policy —chiefly oriented toward softening financial imbalances— has been partially responsible for a slow down in productive activity and investment in some branches, heightening unemployment. The degree of well-being of the population has deteriorated severely during the past five years, and poverty and the concentration of income have increased. The fiscal deficit has been considerable and difficult to master, since it is due, on the one hand, to the growing cost of debt servicing, defense and public security, and, on the other, to the difficulties exprienced by the public sector in a period of stupendous unemployment, in reducing its spending on remunerations, which constitute a substantial share of public expenditure. Moreover, in spite of the restrictions imposed by the trade and exchange rate policies, the external gap has been wide.


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