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Fitch lowers Mexico's GDP outlook, cautions against anti-trade sentiments in US

Fitch Ratingslowered its growth forecast for Mexico in 2016 and 2017, warning that the economycould suffer further if the U.S. pushes through with post-election protectionistpolicies.

Fitch now expectsMexico's economy to grow 2.0% in 2016 and 2.6% in 2017, down from their previousestimates of 2.4% and 2.8%, respectively. The revision is driven by a lower-than-expectedgrowth in the second quarter, when GDP narrowed 0.2% compared to the same quartera year ago. Weakening was observed in the areas of supplies, mining, constructionand manufacturing, with the latter particularly affected by a weak performance ofthe U.S. industrial sector.

The rating agency,however, sees the economy recovering by 2017 and 2018, due to a rise in oil prices,a competitive currency exchange rate as well as a boost in investment from structuralreforms. The strengths help support growth despite some impairment from a restrictivefiscal strategy, Fitch noted.

On the flipside, an accelerated reduction in oil production, increased international volatilityand the declining performance of the U.S. industrial sectors all pose risks in Mexico'sgrowth forecast, Fitch added.