In brief

Political challenges will remain high as the president, Xiomara Castro of the leftist Partido Libertad y Refundación (Libre), begins the second half of her term. Although tensions between the executive and legislative branches have subsided to some extent, stiff opposition in Congress will hinder Ms Castro's efforts to deliver on key campaign promises. Moreover, the president has made it clear that she will maintain a confrontational stance with the political opposition and the private sector, which will sustain risks of a constitutional crisis or a fall into authoritarianism.

Despite political turbulence, a resilient US economy and Honduras's new lending agreement with the IMF (which will engender some degree of fiscal consolidation) are containing macroeconomic risks. Indeed, we only forecast a slight economic slowdown in 2024. Nevertheless, the government's unfriendly stance towards the private sector will remain a constraint on the business environment.