Honduras’ economy has seen moderate growth in recent years, with GDP increasing by 3.6% in 2024 according to figures from the World Bank – although a slowdown to 2.8% is predicted for 2025, stemming from global political uncertainties, a reduction in exports and fewer remittances from the US.
Myriad multinational companies – including more than 200 US businesses – operate in Honduras, thanks to its wealth of natural resources, rich agricultural sector and strategic location, but recent reforms introduced as part of President Xiomara Castro’s plans to strengthen the role of the state in the economy have caused challenges for investors, dampening the M&A market.
This includes the April 2022 repeal of the law on hourly employment, limiting flexible working (which has particularly affected companies in the service sector); May 2022 changes to laws relating to energy investments; the April 2022 repeal of the law establishing special economic zones (ZEDEs), leaving the status of these zones in doubt; and Honduras’ withdrawal from the International Centre for Settlement of Investment Disputes (ICSID), effective in August 2024, after claims amounting to billions of dollars were brought against the state by foreign investors.
Banking and corporate transactions have also been limited by the Central Bank of Honduras’ strict processes governing the sale of US dollars, leading to a shortage.
In the dispute resolution sphere, the trend towards mediation, conciliation and arbitration has continued apace, as companies seek to avoid the lengthy litigation process. However, an electronic case management system is being rolled out, aimed at increasing transparency and reducing delays in the court system.
While activity in the energy sector has been limited, in the infrastructure space, the World Bank recently announced a $187m investment in the development of the road transport network in northern Honduras, including the repair of the highway connecting La Ceiba and Puerto Castilla, which was severely damaged by Tropical Storm Sara in November 2024, while the Central American Bank for Economic Integration (CABEI) recently approved a $606m investment in road improvements.
In the legal market, regional heavyweights Aguilar Castillo Love, Arias and Consortium Legal are key players, along with other prominent Central American outfits including BLP, Alta Melara & Asociados, GarciaBodan, Lexincorp, Mayora & Mayora, S.C. and Central Law. International firms Dentons and ECIJA also have a growing presence in the market.
Among the notable domestic firms are full-service practices Gufa Law and López Rodezno & Asociados, as well as a number of boutiques, including litigation-focused Galeano & Garcia and IP specialists Bufete Casco, Bufete Durón, Bufete Mejía & Asociados and Casco & Casco.