Honduras' 2009 political crisis compounds the global recession

Honduras entered 2009 already bracing for the fallout of the global financial crisis, which was cutting into the remittances, export demand and foreign investment the economy relied on, when a political crisis in June 2009 removed President Manuel Zelaya from office and triggered months of internal unrest and international isolation. Banco Central de Honduras' own annual report for 2009 describes it as a year in which the bank's usual review of economic performance had to account for the impact of both shocks landing at once, compounding each other rather than simply adding up. The economy contracted by an estimated 2.1% that year, as the global trade slowdown reduced demand for Honduran exports and foreign direct investment, while the political crisis triggered a suspension of budget support from several bilateral and multilateral donors and clouded the business climate domestically. The combination made 2009 one of the sharpest single-year contractions in Honduras' modern economic history, distinct from the more typical pattern of slow, remittance-cushioned growth that characterizes most other years in the country's post-1990 data, and it took until the early 2010s for growth to fully recover to its pre-crisis trend.