Caribbean & Central America - October 2011 (ISSN 1741-4458)

The International Monetary Fund (IMF) has reduced its 2011 GDP forecast for Honduras to 3.6% year-on-year, citing the deteriorating global outlook. Following its latest (September) visit, the fund expressed support for the 50 basis point increase in the monetary policy rate which, it said, should help keep end-year inflation within the target range.  Consumer prices averaged 7.1% annually to August, up from 4.7% in calendar 2010. With the fiscal deficit forecast above target at 3.1% of GDP, the authorities appear to be targeting a gradual devaluation, with the lempira at NHL18.9/US$ on 4 October.  Net international reserves were down at US$2.5bn at end September as a result, barely over three months of imports.

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