(Bloomberg) -- Mexico cut its growth forecast for this year, a week after a similar move by the central bank, citing declines in oil output and U.S. industrial production.
Gross domestic product will expand 2 percent to 2.8 percent this year, down from a May forecast of 2.2 percent to 3.2 percent, Deputy Finance Minister Fernando Aportela said at a news conference Thursday in Mexico City.
The economy grew 2.2 percent in the second quarter from a year earlier, the national statistics institute said Thursday. While that beat the 2.1 percent median forecast of 24 economists surveyed by Bloomberg, it’s down from 2.6 percent in the previous three months and at the low end of the full-year range the government projected three months ago. GDP advanced 0.5 percent from the previous quarter in April through June.
Oil output has continued to slide this year amid budget cuts and a series of accidents at Petroleos Mexicanos, defying a government forecast for the state-owned oil company to reverse a 10-year slide in output. Manufacturing exports excluding autos fell 1.9 percent in the second quarter as industrial production stalled in the U.S., which buys 80 percent of Mexico’s exports.
While weak growth and low inflation point to leaving interest rates on hold, the central bank has said rate decisions will depend on how markets and the peso, which hit a record low Thursday, react as the Federal Reserve prepares an eventual increase in U.S. borrowing costs.
The peso dropped 0.5 percent to 16.6995 per dollar at 10:52 a.m. in Mexico City.
To contact the reporters on this story: Brendan Case in Mexico City at email@example.com; Eric Martin in Mexico City at firstname.lastname@example.org; to contact the editors responsible for this story: Vivianne Rodrigues at email@example.com Philip Sanders.
Copyright 2016 Bloomberg News.
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