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Mexico central bank cuts economic growth forecast into the red
[MEXICO CITY] Mexico's central bank cuts its growth forecast for 2019 Wednesday to a range of -0.2 to 0.2 per cent, its first acknowledgement that Latin America's second-largest economy could end the year in the red.
It was the latest bad economic news for leftist President Andres Manuel Lopez Obrador, who will mark one year in office Sunday and had promised to deliver growth of two percent this year.
The central bank has been steadily reducing its growth outlook. Its previous forecast, published in August, was for growth of 0.2 to 0.7 per cent this year.
It also slashed its forecast for 2020 Wednesday, from a range of between 1.5 and 2.5 per cent to between 0.8 and 1.8 per cent. For 2021, it predicted growth of 1.3 to 2.3 per cent.
That makes it look increasingly difficult for Lopez Obrador to deliver on another promise: average economic growth of four percent across his six-year term, which ends in 2024.
"The most recent information shows (economic) weakness of greater magnitude and duration than previously forecast," the Bank of Mexico said in its quarterly report on the health of the economy.
"There is a high degree of uncertainty on these forecasts, given that the Mexican economy will continue to face a complex environment during the period in question."
The downward revision came two days after news broke that Mexico fell into recession starting in the third quarter of 2018 and registered three straight quarters of 0.1-per cent economic contractions, according to updated figures from the national statistics institute.
The economy emerged from recession - defined as two or more consecutive quarters of contraction - in the third quarter of 2019, when it stagnated, according to the revised figures.
Lopez Obrador took office in December 2018 vowing to "transform" Mexico.
But he has clashed with the business community on a number of key issues, notably by canceling construction of a new US$13 billion airport for Mexico City that was one-third complete and replacing it with a rival project.
The government launched a US$43-billion infrastructure investment plan on Tuesday, seeking to kick-start the economy, which is second in size only to Brazil's in Latin America.