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Economic Survey of Latin America and the Caribbean 2007-2008

Macroeconomic Policy and Volatility

image of Economic Survey of Latin America and the Caribbean 2007-2008

The Economic Survey is one of ECLAC's flagship publications, and has been issued since 1948. This new edition covers the region's economic performance in 2007 and the first semester of 2008, and suggests growth estimates for this year.

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Honduras

In 2007 the Honduran economy grew by 6.3% and per capita GDP by 4.2%, which means that the past four years have seen average growth rates of 6.2% for GDP and 4.1% for per capita GDP. This performance is mainly due to the effects of family remittances (22% of GDP) on private consumption, as well as the boom in private construction driven by the expansion of bank credit. Inflation edged up and annual price variation stood at 8.9% (5.3% in 2006), partly due to supply factors. The inflation target of between 4% and 6% was therefore not met. The central government deficit widened from 1.1% of GDP in 2006 to 2.3% in 2007, while the trade deficit grew to an unprecedented 26.5% of GDP. This trade gap, along with the factor payments deficit, was only partially covered by family remittances and grants. As a result, the balance-of-payments current account posted a deficit of 10% of GDP (the highest level since 1994).

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