Honduras: 2003 Trade Overview

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