Tale of Two Cities: Poverty Increases as Honduras Rebounds from Recession

The contrast between small town Copan Ruinas and the big city of Tegucigalpa is quite stark.  After small town life, I joke that you can get anything in Tegucigalpa, because in Copan Ruinas you can get nothing.   Except maybe fresh produce. 

Tegucigalpa, located in a valley between mountains in the central part of Honduras, is upscale and trendy.   The people dress smartly, the homes are luxurious and everywhere you see expensive new  SUV's. The affluence is even more evident in the malls.  Tegucigalpa has at least six to eight malls  with high end merchandise in most of them.   They are comparable to anything in the U.S.  In fact, even middle class American would find some stores too expensive.

"The New Tegus is in City Mall."



A look at GDP statistics (1) helps explain the abundance of wealth seen in Tegucigalpa. In 2008 GDP growth was 4.2%.  The following year 2009 Honduras was in recession with negative growth of -2.1%.   But, consistently, since then, the GDP has grown +2.8% in 2010, +3.6% in 2011 and +3.5% in 2012.  Honduras has clearly come out of the recession. 
But Tegucigalpa, like Honduras, is a tale of two cities: one wealthy and the other extremely poor.

According to INE (Instituto Nacional de Estadísticas), poverty is increasing to alarming proportions.  According to INE, 60% of Hondurans live below poverty in 2010.   In 2012, the percentage of poor jumped to 65%.  
How do we reconcile these different trends?

If the national output, and, therefore, income, is increasing, but more Hondurans than ever are poor, it can only mean one thing:  income and wealth are becoming more concentrated in the hands of a few.

A similar pattern in occurring in the US, but here the extent of poverty is overwhelming.   

In Honduras, there are ten families that control many large businesses and influence the government. They also provide patronage for their supporters.  Here in Tegucigalpa, the political center of the country, and San Pedro, the commercial center, are where many of these people live and where they spend that money. That is why you can get anything that you want  in Tegucigalpa
 ... provided that you have the money.

(1) Source: International Monetary Fund (IMF)

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