Coronavirus now seen shrinking Honduran economy up to 8%

TEGUCIGALPA, July 31 (Reuters) - The Honduran central bank said on Friday that it expects the country’s economy to contract at a record rate this year, shrinking by up to 8% according to its latest downward revision.

As is the case across the globe, coronavirus lockdowns are fingered as the primary culprit for the grim forecast.

The potentially record-breaking contraction of 7-8% is seen pushing even more Hondurans into the ranks of the poor, reaching 62% of the population by the end of 2020.

About 9.3 million people live in Honduras, Central America’s second most populous nation after Guatemala.

In May, the central bank forecast economic contraction this year of between 2.9% and 3.9%. The bank previously had been expecting modest growth. Last year, the Honduran economy grew by 2.7%.

Bank chief Wilfredo Cerrato said on Friday during a virtual presentation that the previous record contraction took place in 1954 when the Honduran economy shrunk 6.4% in the aftermath of paralyzing banana plantation labor unrest led by striking workers demanding better conditions from the U.S. companies that then dominated the sector.

To date, the Honduran government has reported more than 41,000 coronavirus infections as well as some 1,300 confirmed deaths attributed to the respiratory disease caused by the virus.

Reporting by Gustavo Palencia; Writing by David Alire Garcia Editing by Leslie Adler