‘Violence Costs Honduras 10% of Annual GDP’

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Honduras’ record level of violent crime is costing the Central American country 10 percent of its gross domestic product (GDP) every year, according to a World Bank representative.

Speaking at a March 28 forum on community initiatives to prevent violence and crime entitled “Building Safe Communities,” World Bank Country Manager Giuseppe Zampaglione presented some alarming statistics about the economic toll that crime takes on the Honduran economy.

According to Zampaglione, the average cost of crime-related violence in Central America is around 7.7 percent of the region’s GDP. In Honduras, the cost is even higher, amounting to an estimated 10 percent of GDP. The World Bank official also claimed that the violence costs the Honduran private sector some four percent of its potential profits annually.

InSight Crime Analysis

Honduras has seen the number of homicides increase by more than double since 2005, and the UN Global Study on Homicide put the country’s homicide rate at 82.1 per 100,000, the highest in the world. The violence is compounded by police corruption, drug trafficking and political repression. While the methodology behind Zampaglione’s calculations is unclear, the figures are a reminder that this violence has harmful economic as well as social effects.

Despite the soaring cost of crime to the economy, Honduran business groups have obstinately rejected a proposal by President Porfirio Lobo to create a “security tax” intended to fund efforts against organized crime in the country. If Zampaglione’s statistics are correct, it may well be worth their while to reverse their stance and support such a tax. In the long run the increased revenue to Honduran security forces could create a more stable business environment, while at the same time diminishing the need to pay for private security.

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