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Mexico Growth Forecasts Rise in July Cenbank Poll
 Jason Lange - Reuters
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August 02, 2010
Mexico City - Growth forecasts for the Mexican economy rose for the ninth straight month in July, with analysts predicting an acceleration in private investment and job creation, a poll conducted by the central bank showed.
The better outlook contrasted with a more pessimistic view on the U.S. economy, where a slowdown is already dragging on estimates for growth in Mexico's manufacturing sector, according to the poll released on Monday.
Mexican economic growth forecasts for 2010 rose to 4.5 percent from 4.4 percent a month earlier, in the poll of 31 financial institutions and consultancies carried out between July 20 and July 29.
At the same time, the average forecast for the year's inflation rate dropped for the fourth straight month to 4.59 percent from 4.66 percent in the previous month's poll.
While most economists expected higher numbers of people added to payrolls this year than during the previous poll, they also forecast inflation-adjusted salaries would fall during the second half of the year.
Mexico is slowly recovering from its deepest economic contraction since 1932, and recent economic data has pointed to a slowdown in the pace of growth as the U.S. economy loses steam.
The poll results give the central bank less reason to worry about inflation, and could strengthen the case for leaving interest rates low into next year.
Mexico slashed interest rates in early 2009 to help its economy resist a sharp slowdown in U.S. demand for its exports as the global financial crisis took hold. The Mexican economy shrank 6.5 percent in 2009.
While Brazil, Chile and Peru have hiked interest rates this year to cool their economies which were quicker to rebound, Mexico is not expected to tighten the money supply until around the second quarter of next year.
Analysts expect the U.S. economy, which absorbs 80 percent of Mexico's exports, to expand 3.0 percent in 2010. The previous poll had an average forecast of 3.1 percent.
Output at Mexican factories slipped in May for the fifth time in six months, hit by weak demand in the United States, according to a trend reading calculated by the national statistics institute.
Analysts expectations of growth in private sector investment this year rose to 4.5 percent from 4.1 percent.
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