Remittances as Honduras' macroeconomic shock absorber

Banco Central de Honduras tracks family remittances as one of its core external-sector indicators, and the numbers show why: inflows have grown from a modest share of GDP in the 1990s to a sum now equivalent to a substantial share of national output in most recent years, overwhelmingly originating from Hondurans working in the United States. The central bank's own published series show remittances growing by double digits in most recent years even as other parts of the external accounts, such as goods exports, have grown far more slowly or stagnated, making remittance flows the single largest source of foreign currency entering the country. That dependence shapes the long-run growth and current-account charts directly: consumption financed by remittances has been a steadier source of GDP growth than domestic investment or exports through most boom-and-bust cycles, and slowdowns in US labor markets or shifts in immigration policy show up in Honduran household income and import demand with only a short lag. The flip side is a persistent structural current-account deficit in goods trade that remittances, rather than export competitiveness, are what keep from tipping into a balance-of-payments crisis.