World Economy

Mexico Again Lowers GDP Forecast

Mexico Again Lowers GDP ForecastMexico Again Lowers GDP Forecast

Mexico is lowering its economic growth forecast for 2016, citing what it calls “adverse” international conditions including sluggish industrial production in the United States, AP reported. The Treasury Department is now predicting GDP expansion of 2.2% and 3.2% this year. That’s down from its previous forecast of 2.6% to 3.6%. Deputy Treasury Secretary Fernando Aportela said that Mexico’s economy is also being hurt by volatility in financial markets and low prices for oil, a key export. Nearly 80% of Mexican exports go to the United States. Mexico’s central bank also lowered its growth forecast recently, to between 2% and 3%. The Mexican peso has been the worst performing emerging market currency against the dollar in 2016, falling 6.5% since the start of the year, raising concerns it is undervalued. This has led to an increased possibility that the Bank of Mexico will intervene to strengthen the peso or raise interest rates to support it, according to analysis from Banco Bilbao Vizcaya Argentaria S.A.’s Ociel Hernandez Zamudio et al.