MEXICO-ECONOMY/PESO Mexico cuts growth forecast as peso takes a hit

Record ID: 143343

  • Title: MEXICO-ECONOMY/PESO Mexico cuts growth forecast as peso takes a hit
  • Date: 20th August 2015
  • Summary: OFF THE COAST OF VERACRUZ, MEXICO (FILE) (REUTERS) VARIOUS OF AERIAL VIEW OF OIL RIG EQUIPMENT ON RIG VARIOUS OF EMPLOYEES WORKING AT RIG MORE OF EQUIPMENT ON RIG
  • Embargoed: 4th September 2015 13:00
  • Keywords:
  • Location: Mexico
  • Country: Mexico
  • Topics: General
  • Reuters ID: LVAE3TW6K7UP6RRA2WBCXV35JAMF
  • Aspect Ratio: 16:9
  • Story Text: Mexico trimmed its 2015 growth forecast on Thursday (August 20) as it grapples with falling oil output and patchy export demand from the United States, though the economy ticked up in the second quarter on the strongest expansion of the service sector in a year.
    The Finance Ministry trimmed its growth outlook for this year to a range of 2.0 percent to 2.8 percent from a previous forecast of 2.2 percent to 3.2 percent, after data showed industrial output was flat in the second quarter.
    But growth in services ticked up to 0.9 percent from 0.7 percent in the prior quarter, its fastest pace since the second quarter of 2014.
    The flat industrial output in Mexico, which includes factory and crude oil production, reflected uneven exports to the United States and sinking oil production at ailing state oil giant Pemex .
    Deputy Finance Minister Fernando Aportela said that external factors are to blame for the shortfall.
    "It's basically been external factors, those with complex and volatile outlook are what we're monitoring. However, without a doubt the issue that I mentioned, the production of petroleum, has an effect on the growth figure of 0.4% which is what we're estimating today. But it is shows what we have seen in the reduction of production at the (oil rig) platform during the months of January to April. We have seen a stabilisation on the platform in the months of June and July of around 2.6 million barrels daily," said Aportela.
    Earlier this month, Mexico's central bank also cut its 2015 growth forecast to between 1.7 percent to 2.5 percent.
    Defending the growth figures, Aportela said Mexico stands above its Latin American counterparts with the region's number one economy Brazil forecast to be in recession.
    "What we're seeing is growth of 2.2% during the second quarter. When compared to other Latin American economies, without considering Mexico we see average growth in the second quarter is 0%. As has been mentioned Brazil has a negative figure, we're above Chile, we're above Argentina. That is to say that we have rates of growth which are important. We also have a growth rate of 2.2%, it will be at the same time that we have a negative growth rate in industrial production in the United States of 2%," he added.
    On an annual basis, gross domestic product grew 2.2 percent in the second quarter from the same period in 2014 below an upwardly revised 2.6 percent expansion in the prior period. Analysts polled by Reuters saw a 2.1 percent expansion.
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