By Anthony Harrup
MEXICO CITY--The Bank of Mexico on Wednesday lowered its estimate for economic growth in 2017, citing risks that the incoming administration of U.S. President-elect Donald Trump could affect trade and investment between Mexico and the U.S.
In its quarterly inflation report, the central bank said it expects gross domestic product to expand between 1.5% and 2.5% next year, down from its previous forecast of 2%-3%.
Downside risks to growth include the possibility of the new U.S. administration adopting measures that obstruct the functioning of shared production chains between Mexico and the U.S., the bank said. Continued volatility in international markets that could restrict financing and foreign investment, and a deterioration of business and consumer confidence could also affect growth.
The bank noted uncertainty as to what the eventual U.S. position will be regarding relations with Mexico.
Its estimate for growth in 2016 was little changed at 1.8% to 2.3%, and it is forecasting growth of 2.2% to 3.2% in 2018. The National Statistics Institute said earlier Wednesday that the economy expanded 2.3% in the first nine months of this year, compared with the same period of 2015.
The central bank has raised interest rates by two percentage points this year in response to a weaker peso and the risk it poses for inflation, which the bank now expects to be above its 3% target in 2017 but within the 2%-4% target range.
On Nov. 17, the central bank raised its overnight interest rate target to 5.25% from 4.75% after the election of Donald Trump sent the peso to new lows against the dollar amid investor concerns about the possible impact on trade and investment.
Write to Anthony Harrup at email@example.com
(END) Dow Jones Newswires
November 23, 2016 14:11 ET (19:11 GMT)
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