In this article, we take a look at the 5 least developed countries in Latin America. If you want to check out our detailed analysis of the Central and South American economic outlook, go directly to the 15 Least Developed Countries in Latin America.
5. El Salvador
HDI Ranking: 5
GDP Per Capita Ranking: 5
Average Ranking: 5
El Salvador is located in Central America, and is one of the least developed countries in Latin America. The country suffers from corruption, economic mismanagement, violence, income inequality and lack of investment and poor infrastructure.
The economy is also not diversified enough, with the country largely depending on services and remittances. Apart from that, 41% of the country’s economy is informal, accounting for $35 billion of GDP in PPP.
Further, El Salvador is one of the worst countries in the world when it comes to wealth distribution, which, along with the aftermath of civil war, has contributed to the low economic growth, as seen in the country for the past 40 years.
4. Guatemala
HDI Ranking: 3
GDP Per Capita Ranking: 6
Average Ranking: 4.5
Guatemala’s history of political instability and civil war has contributed to the impoverished situation in the country. This has also resulted in low investment in infrastructure, putting Guatemala on the 115th position out of 167 countries on the Logistics Performance Index.
3. Nicaragua
HDI Ranking: 4
GDP Per Capita Ranking: 2
Average Ranking: 3
Nicaragua is one of the least developed countries in Latin America. It is ranked 108th on the Logistics Performance Index, indicating poor infrastructure. In addition, the country faces several economic challenges, including low agricultural output, limited access to foreign investment and high levels of debt.
2. Honduras
HDI Ranking: 2
GDP Per Capita Ranking: 3
Average Ranking: 2.5
Honduras has a GDP per Capita of $2,772 as of 2021. Poverty is widespread in the country. According to the World Bank estimates, nearly half of the Honduran population lives in poverty, while 25.2% live in extreme poverty. These figures are based on the pre-pandemic estimates.
The pandemic-years only further exacerbated the situation in the country. Moreover, Honduras ranks 106th on the Logistics Performance Index, which shows the poor state of infrastructure. However, the country has recently taken initiatives to boost economic growth and reduce poverty through labor and market reforms, which of course, will take time to reflect results.
1. Haiti
HDI Ranking: 1
GDP Per Capita Ranking: 1
Average Ranking: 1
Haiti has the lowest GDP per Capita in Latin America as of 2021, at $1,830. Haiti’s underdevelopment is the result of income inequality, corruption, political instability and lack of access to quality education and healthcare, among other factors. Haiti’s economy is also largely informal, comprising 55% of the country’s GDP.
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