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BCN-16
MEXICO-ECONOMY-FORECAST
Mexico cuts economic forecast for AMLO’s first year
MEXICO CITY, Nov 29, 2018 (BSS/AFP) – Mexico’s central bank cut its
economic growth forecast for 2019 on Wednesday, citing uncertainty over the
policies that leftist President-elect Andres Manuel Lopez Obrador will
pursue.
In its quarterly report on the state of Latin America’s second-largest
economy, after Brazil, the Bank of Mexico predicted growth of 1.7 to 2.7
percent next year, down from 1.8 to 2.8 percent in its previous forecast.
The bank cited concerns about “economic activity and the country’s
capacity to generate an environment of confidence and certainty that will
promote investment.”
Lopez Obrador, widely known as AMLO, begins his six-year term on Saturday.
The anti-establishment leftist has vowed sweeping change to fight poverty
and corruption — though he has also sought to soothe markets by promising
fiscal discipline and business-friendly policies.
That message has failed to fully calm jitters.
The Mexican stock market and peso have plunged multiple times since his
landslide election win on July 1.
On Monday, stocks lost 4.1 percent to close at their lowest level since
2014 after a lawmaker allied with Lopez Obrador proposed putting pension
funds under state control.
Stocks and the currency also tumbled after Lopez Obrador canceled
construction of a new $13-billion airport for Mexico City — a project
strongly supported by the business community — following a referendum on the
issue that was marred by irregularities.
After that market rout, the central bank raised its key interest rate by
0.25 point to eight percent, near its all-time high of 8.25 percent, also
citing uncertainty over Lopez Obrador’s policies.
The president-elect and his pick for finance minister, respected economist
Carlos Urzua, have both sought to calm fears of a radical turn.
“We’re going to make investors trust us. Those who invest in companies, in
stocks, in the financial market, will have their investments assured and
obtain good returns,” Lopez Obrador said Tuesday, promising to impose no new
taxes and pursue fiscally conservative policies.
Market attention is now focused on Lopez Obrador’s first budget, which he
must send to Congress by December 15.
Mexico’s economy grew 0.8 percent in the third quarter, and the central
bank forecasts growth of two to 2.4 percent for 2018.
BSS/AFP/HR/0945