Bank of Mexico Lowers Growth Estimates for 2015 Anthony Harrup - Dow Jones | |
go to original May 21, 2015 |
The Bank of Mexico has lowered its forecast for economic growth in 2015, citing a drop in the country's oil production and more modest expectations for the U.S. economy.
In its quarterly inflation report, the central bank said it expects gross domestic product to expand by 2% to 3% this year, down from the 2.5%-3.5% estimate it had three months ago. For 2016, the central bank estimates GDP will grow between 2.5% and 3.5%, down from 2.9%-3.9% previously.
"Some of the downside risks for economic growth in Mexico noted in the previous report have come about. In particular, oil production has continued falling and there's great uncertainty about its future evolution," the bank said.
U.S. economic activity was negatively affected by weather in the first quarter, and the stronger dollar has led to downward revisions in estimates for full-year U.S. growth, it added.
State oil company Petróleos Mexicanos produced 2.3 million barrels a day of crude oil in the first quarter, down from around 2.5 million barrels a day in the same period a year earlier.
While private consumption has picked up in early 2015, along with gains in employment and wages, industrial production was weaker than expected in the first quarter, growing 1.4% compared with 2.4% in the fourth quarter.
The government has cut this year's budget by about $8 billion and expects to reduce spending by a similar amount in 2016 to address the impact of lower oil prices on budget revenue and expectations of more-difficult financing conditions ahead. Half of this year's spending cuts will be made by Pemex.
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