In 1995, the Honduran economy rebounded from the severe recession experienced in 1994. Honduras also received abundant rainfall which replenished the nation's dams and enabled the country to generate adequate hydroelectric energy, thus avoiding the drought-related power cuts which adversely affected economic performance in 1994. High inflation in 1996, combined with a depreciating Lempira, has caused a sharp increase in the amount of U.S.-dollar denominated savings done by Hondurans in 1996. The major challenge facing the Reina Government in 1997, an election year, will be to continue economic stabilization measures and thus provide the successor government with a stable economy when it takes office.
Productivity remains low.
Many basic problems face the economy, including rapid population growth, high unemployment, inflation, a lack of basic services, a large and inefficient public sector, and the dependence of the export sector mostly on coffee and bananas, which are subject to sharp price fluctuations.