This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 TEGUCIGALPA 002435 
 
SIPDIS 
 
STATE FOR WHA/CEN, WHA/EPSC, AND EB 
STATE PASS TO USAID AND USTR 
TREASURY FOR DDOUGLASS 
LABOR FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EINV EFIN HO
SUBJECT: Honduras: 2003 Trade Overview 
 
 
¶1.  SUMMARY: Post submits its annual trade overview for 
Honduras for the year 2003, based on the official economic 
statistics released by the GOH in the fall of 2004.  This 
cable contains information on imports, exports and the trade 
deficit; information on macroeconomic, monetary and 
financial developments will follow septel.  Unless cited 
otherwise, all figures are from the Central Bank of 
Honduras' annual report. 
 
¶2.  Honduras' trade deficit increased in 2003, both in real 
terms and as a share of GDP, as a 6 percent increase in the 
value of exports was offset by an 8 percent increase in the 
value of imports.  Value added from the maquila sector grew 
by 15 percent and remains the largest source of Honduran 
export income, accounting for 26 percent of all export 
earnings.  Among exports of goods, revenues from coffee were 
up slightly, while shrimp replaced bananas as Honduras' 
second most profitable export commodity.  The import bill 
was swelled largely by increased purchases of machinery and 
rising fuel costs.  END SUMMARY. 
 
¶3.  Honduras' trade deficit increased by 13.7 percent in 
2003, from USD 1,187 million to USD 1,350 million.  Exports 
by value (both goods and services) increased by 5.5 percent, 
while imports by value increased by 8.1 percent.  As a share 
of GDP, the trade deficit increased only slightly, from 18.5 
percent to 20.1 percent. 
 
TRADE DEFICIT AS PERCENT OF GDP 
------------------------------- 
         Total        Total       Trade     As Percent 
Year    Exports      Imports     Deficit      of GDP 
 
1998    2,504.1      3,119.8       615.7       12.2 
1999    2,310.9      3,288.7       977.8       18.0 
2000    2,600.7      3,593.2       992.6       16.7 
2001    2,510.7      3,742.2     1,231.6       19.4 
2002    2,570.6      3,757.9     1,187.4       18.5 
2003    2,711.1      4,060.9     1,349.9       20.1 
 
Note: Trade figures in 2003 USD millions. 
 
¶4.  Earnings from goods exports (which does not include 
maquila sector exports) were practically unchanged in 2003, 
rising by only 0.8 percent, to USD 1,332.3 million.  Roughly 
45 percent of Honduran goods exports go to the United 
States, down slightly from 2002. 
 
EXPORTS OF GOODS (FOB, IN USD MILLIONS) 
--------------------------------------- 
                                   To U.S. as Pct. 
           Total        To U.S.       of Total 
 
1996      1,316.0        612.4          46.5 
1997      1,445.7        666.2          46.1 
1998      1,532.8        626.3          40.9 
1999      1,164.4        457.4          39.3 
2000      1,380.0        534.1          38.7 
2001      1,324.5        571.4          43.1 
2002      1,321.2        616.5          46.7 
2003      1,332.3        595.3          44.7 
 
EXPORTS OF GOODS BY DESTINATION 
------------------------------- 
                       1999    2000    2001    2002    2003 
                       ----    ----    ----    ----    ---- 
United States           39%     39%     43%     47%     45% 
Central America         22%     19%     25%     22%     23% 
Other Latin America      8%     10%      8%      7%      9% 
Europe                  23%     25%     20%     21%     22% 
Rest of World            8%      7%      5%      3%      2% 
 
Note: Figures do not include maquila exports (maquila value- 
added is counted as a service). 
 
¶5.  Coffee remains Honduras' most important export product, 
accounting for 13.8 percent of goods export earnings.  While 
the volume of coffee exported fell by 10.5 percent in 2003, 
a rise in the world price compensated for this decrease, 
meaning that revenues were virtually unchanged (a small 
increase of 0.5 percent, up to USD 183.3 million).  Prices 
and revenues are still well below historical levels. 
 
COFFEE EXPORTS 
-------------- 
Year     Volume in      Price       Revenue 
        100 lb bags      USD     (USD million) 
 
1998       3,039       141.44        429.8 
1999       2,591        98.84        256.1 
2000       3,787        89.63        339.4 
2001       3,119        51.52        160.7 
2002       3,536        51.61        182.5 
2003       3,163        57.96        183.3 
¶6.  Shrimp replaced bananas as the country's second most 
important export product in 2003, with revenues growing by 
17.3 percent to USD 158.8 million.  The amount of sea-caught 
shrimp exported fell sharply in 2003, by 52 percent, as 
Honduras was decertified from being allowed to export shrimp 
to the United States for much of the 2003 season (due to its 
failure to adequately follow U.S. environmental regulations 
regarding sea turtles), and was only recertified in 
December.  However, the 27 percent increase in revenues from 
farmed shrimp more than compensated for the loss in revenues 
from sea-caught shrimp.  In years past, between 80 and 90 
percent of Honduran shrimp exports have been farmed shrimp 
rather than sea-caught shrimp; in 2003, farmed shrimp 
accounted for 95 percent of the value of shrimp exports. 
 
SHRIMP EXPORTS 
-------------- 
           FARMED SHRIMP         CAUGHT SHRIMP 
Year    Volume      Revenue    Volume     Revenue 
        in kgs       USD m     in kgs      USD m 
 
1998    10,037       135.9      1,549       21.0 
1999     9,200       127.4      1,620       22.4 
2000     8,250       122.7      2,222       33.0 
2001     9,966       140.3      1,456       20.5 
2002    12,046       119.5      1,600       15.9 
2003    16,522       151.2        834        7.6 
 
¶7.  While the volume of bananas exported rose by 4 percent 
in 2003, a reduction in price led to a sharp fall in export 
earnings, from USD 172.4 million in 2002 to USD 132.7 
million in 2003, a 23 percent drop.  Apart from 1999 when 
Hurricane Mitch largely destroyed the year's banana crop, 
this marks the first year in recent memory that coffee and 
bananas have not been the two most important Honduran export 
goods. 
 
BANANA EXPORTS 
-------------- 
Year       Volume       Avg. Unit       Revenue 
        (40 lb. box)    Price(USD)   (USD million) 
 
1998       28,234          7.78          219.6 
1999        6,750          5.64           38.1 
2000       20,686          6.01          124.2 
2001       25,487          8.01          204.2 
2002       23,453          7.35          172.4 
2003       24,389          5.44          132.7 
 
¶8.  Honduras' fastest growing export product, and fifth most 
important overall, is African palm oil, exports of which 
grew by 88 percent, though export earnings grew by only 77 
percent, due to a small drop in price.  Sugar exports and 
export revenues fell for the second straight year, to 53,603 
metric tons and USD 11.3 million, respectively.  Export 
revenues from pineapples, melons, soap and tobacco rose, 
while revenues from lobster and wood manufactures fell. 
 
AFRICAN PALM EXPORTS 
-------------------- 
Year       Volume       Price        Revenue 
           in kgs      per kg     (USD million) 
 
1999        21,380       0.62          13.4 
2000        27,000       0.60          16.2 
2001        35,205       0.73          25.7 
2002        57,212       0.53          30.3 
2003       107,790       0.50          53.9 
 
SUGAR EXPORTS 
------------- 
Year      Volume        Price        Revenue 
          in kgs       per kg     (USD million) 
 
1998      21,033        0.48          10.2 
1999      10,509        0.50           5.3 
2000      25,499        0.31           7.8 
2001     160,083        0.19          30.4 
2002      94,289        0.18          17.2 
2003      53,603        0.21          11.3 
 
¶9.  The mining sector showed declining export volumes in 
2003, resulting in export earnings from Honduras' top three 
mineral exports - gold, zinc, and silver - falling, even as 
world prices rose. 
GOLD EXPORTS 
------------ 
Year      Volume in      Price per         Revenue 
        '000 Troy Oz.     Troy Oz.      (USD Million) 
 
1998         0              --                -- 
1999         0              --                -- 
2000        24            260.32             6.2 
2001       244            261.68            63.8 
2002       265            303.89            80.5 
2003       187            356.00            66.6 
 
ZINC EXPORTS 
-------------- 
Year      Volume in      Price per         Revenue 
           pounds          pound        (USD Million) 
 
1998       85,659           0.42             36.3 
1999       94,786           0.53             50.2 
2000       97,396           0.56             54.5 
2001      101,334           0.38             38.5 
2002       93,557           0.31             29.0 
2003       79,899           0.34             27.2 
 
SILVER EXPORTS 
-------------- 
Year      Volume in      Price per         Revenue 
        '000 Troy Oz.     Troy Oz.      (USD Million) 
 
1998      1,525            5.14              7.8 
1999      1,085            4.94              5.4 
2000      1,733            4.77              8.3 
2001      1,846            4.26              7.9 
2002      1,814            4.39              8.0 
2003        897            4.82              4.3 
 
¶10.  In sharp contrast to the near-zero growth in exports of 
Honduran goods, value added from the maquila sector (counted 
by the GOH as a service export) increased by 15 percent in 
2003, to over USD 700 million.  The maquila sector, 
therefore, accounted for greater earnings than the combined 
exports of Honduras' top eight export commodities (coffee, 
shrimp, bananas, gold, palm oil, melons, soap, and lobster.) 
 
MAQUILA SECTOR - VALUE ADDED 
---------------------------- 
                          Percent Growth 
Year    USD millions    Over Previous Year 
 
1999        538.5              18.4 
2000        575.4               6.9 
2001        560.8              -2.5 
2002        612.8               9.3 
2003        704.7              15.0 
 
¶11.  The value of Honduran goods imports rose by 9.9 percent 
in 2003, from USD 2.98 million to USD 3.26 million.  Imports 
of machinery and other industrial equipment, the largest 
category of imports by value, rose by 16.3 percent to USD 
559 million.  Imports of fuels and lubricants, the second 
largest category, rose by 25.6 percent in value terms, to 
USD 519 million.  The share of Honduran imports of U.S. 
origin was practically unchanged at 37.5 percent. 
 
IMPORTS (CIF, in USD Millions) 
------------------------------ 
                                   From U.S. as 
Year     Total        From U.S.    Pct of Total 
 
1996     1,840.0         857.6         46.6 
1997     2,148.6       1,033.0         48.0 
1998     2,534.8       1,177.3         46.4 
1999     2,676.1       1,182.7         44.1 
2000     2,854.6       1,220.2         42.7 
2001     2,983.9       1,097.9         37.3 
2002     2,981.1       1,104.6         37.1 
2003     3,275.6       1,227.3         37.5 
 
IMPORTS OF GOODS BY ORIGIN 
-------------------------- 
                       1999    2000    2001    2002    2003 
                       ----    ----    ----    ----    ---- 
United States           44%     43%     37%     37%     37% 
Central America         20%     21%     20%     20%     20% 
Other Latin America     21%     23%     26%     28%     24% 
Europe                   8%      6%      8%      6%      8% 
Rest of World            7%      7%      8%      8%     10% 
 
Note: Figures do not include imported inputs for the maquila 
sector. 
 
Palmer