Honduras: Gains reversed since US-backed coup

Xiomara Castro de Zelaya at the closing rally for the LIBRE party ahead of the November 24 general elections., which was founded

A new paper from the Washington-based Center for Economic and Policy Research examined Honduras’ economy and found that much of the economic and social progress experienced from 2006–2009, when left-wing president Manuel Zelaya was in power, have been reversed in the years since.

Zelaya was overthrown in an elite-backed military coup in June 2009. The coup was condemned by most of the Americas, but not the United States, which refused to cut ties to the coup regime.

The paper, “Honduras Since the Coup: Economic and Social Outcomes” by researchers Jake Johnston and Stephan Lefebvre, shows that economic inequality in Honduras has risen dramatically since 2010. Poverty has worsened, and unemployment and underemployment have risen, with many more workers receiving less than the minimum wage.

Some of the decline was initially due to the global recession that began in 2008, but much of it is a result of policy choices, including cutting social spending.

“This paper shows that there were important economic and social gains under the Zelaya administration that were cut short by the 2009 coup d’etat,” research associate and paper co-author Jake Johnston said.

“Unfortunately, these gains have largely been reversed in the years since, partly due to policy choices of the current government.”

The paper’s key findings include:
* In the two years after the coup, Honduras had the most rapid rise in inequality in Latin America and now stands as the country with the most unequal distribution of income in the region. One hundred percent of all real income gains in 2010 and 2011 went to the wealthiest 10% of Hondurans.

* Social spending, including on education and health care, rose as a percent of GDP from 2006-2008. Under the Lobo administration, social spending has been steadily cut even as total spending has risen as a percent of GDP.

* Poverty and extreme poverty rates decreased by 7.7% and 20.9% respectively during the Zelaya administration. From 2010-2012, the poverty rate rose by 13.2%. The extreme poverty rate rose by 26.3%.

* Unemployment and especially underemployment has worsened from 2010-2012. The number of people working full-time but not receiving the minimum wage has gone from 28.8% of the labour force in 2008 to 43.6% last year. The number of involuntary part-time workers and those unemployed has increased from 6.8% in 2008 to 14.1% last year.

General elections are scheduled in Honduras for November 24, amid a climate of violent repression that has largely targeted the left-wing Freedom and Refoundation (LIBRE) party. LIBRE candidate for president is Xiomara Castro de Zelaya, the wife of the deposed president.

[The report can be read at Center for Economic and Policy Research.]

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