The Bank of Mexico on Wednesday lowered its estimate for economic growth this year largely because of the impact two deadly earthquakes in September had on activity in the third quarter, especially on oil production.
In its quarterly inflation report, the central bank said it expects gross domestic product to expand between 1.8% and 2.3% this year, compared with its previous forecast of 2% to 2.5%. The impact from the earthquakes appears to be moderate and temporary, the bank said in keeping its 2018 growth forecast at 2%-3%.
Mexico suffered two major earthquakes in September that left 471 people dead and damaged thousands of homes, schools and other buildings in Mexico City and nine other states.
At the end of October, the National Statistics Institute reported a 0.2% contraction in third-quarter GDP from the second quarter, the first decline in four years as the earthquakes led to lost working days and a drop in oil production.
The Bank of Mexico expects inflation, which is currently running above target at 6.4%, will start to ease toward the end of this year and reach the 3% target in the fourth quarter of 2018. Previously, the bank had expected to reach the target in the third quarter of next year.
Despite the lower growth outlook, the bank increased its estimate for formal job creation this year following a strong labor market performance in the first three quarters, and reduced its estimate for the current-account deficit to 1.7% of GDP from the earlier 2.2%.
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(END) Dow Jones Newswires
November 22, 2017 14:51 ET (19:51 GMT)