Bank of Mexico Sticks to 2016 Growth Outlook, Trims 2017 Forecast

5/26/16 Wall Street Journal 

Agustin_Carstens

MEXICO CITY—The Bank of Mexico said Wednesday that it still expects the country’s economy to grow between 2% and 3% this year, but lowered its growth forecast slightly for 2017.

In its quarterly inflation report, the central bank forecast gross domestic product would expand between 2.3% and 3.3% in 2017, less than its previous estimate of 2.5% to 3.5%. The economy grew 2.5% in 2015 and expanded 2.6% in the first quarter of this year.

The main reason for the 2017 change is the lower outlook for U.S. industrial production, which is a driver of Mexican output, Bank of Mexico Gov. Agustín Carstens said at a news conference.

Growth could be better if private consumption in Mexico continues to gain strength, or the economy sees favorable effects from overhauls in areas such as energy, telecommunications and the financial sector. On the other hand, a slowdown in the global economy, and particularly the U.S., and more complex international financial conditions restricting investment could lead to lower growth than expected, the bank said.

The central bank still expects the inflation rate, currently at 2.5%, to remain below its 3% target in coming months, possibly rising temporarily above that level toward the end of the year.

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