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Fitch lowers Mexico growth perspective to 2 percent

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Staff Writer | October 10, 2016
The Fitch ratings agency lowered its 2016 growth forecast for Mexico from 2.4 percent to 2 percent.
Mexico central bank
LatAm   Lower growth than expected in the second quarter
In a note, Fitch explained that it reduced its GDP expectations after Mexico saw lower growth than expected in the second quarter.

The economy contracted by 0.2 percent from April to June, its first quarter of negative growth since Q2 2013.

The key sectors of mining, construction and manufacturing all suffered, the latter largely because of a drop in demand from the U.S., Mexico's main trading partner, Fitch pointed out.

The services sector fared better, largely due to a rise in private consumption, credit and foreign remittances from Mexicans living abroad.

Fitch also lowered its 2017 expectations for Mexico from 2.8 to 2.6 percent, while stating it hoped the country's fortunes would improve in 2017 and 2018.

"The rise in oil prices, a competitive exchange rate for the Mexican peso against the U.S. dollars and a boost to investment stemming from structural reforms will help growth, despite certain impairments arising from a restrictive fiscal strategy," read the note.

However, Fitch warned that Mexico's growth perspectives could suffer further, should the U.S. adopt a more protectionist outlook after the presidential elections in November.

Fitch's expectations for Mexico in 2016 is slightly lower than the IMF, which predicted a 2.1 percent growth for the country in 2016 this week.

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