Banco de México on Aug. 28 reduced its forecast for economic growth in Mexico in 2019 to a range of 0.2% to 0.7% down from a previous projection of between 0.8% and 1.8%.
For 2020, Banxico sees GDP expanding between 1.5% and 2.5%, down from an earlier forecast range of 1.7% to 2.7%.
In a report on the country's economic performance in the second quarter, the central bank noted that final data on the period, which revealed that Mexico's GDP stagnated, "indicates a deeper weakness of the components of domestic demand than previously estimated," along with an expected downturn in U.S. industrial production and oil production. The second quarter 0.0% GDP result follows a 0.2% contraction in the first three months of the year.
As a result, the regulator cut the GDP forecast for the fourth consecutive time. However, Banxico expects the current weak scenario could be partially offset by the government's stimulation efforts. "While it is anticipated that a recovery in the growth rate of the economy will be observed in the coming quarters, it is estimated that this will be gradual," the central bank said in the report.
The regulator said it expects inflation rates of 3.3% and 3.2% for the third and fourth quarters, respectively.
Earlier in August, Banxico lowered its benchmark interest rate by 25 basis points to 8.00%, partly due to slower economic activity.
