Mexico central bank cuts growth forecast after Trump win

Mexico central bank cuts growth forecast after Trump win

MEXICO CITY - Mexico's central bank slashed its economic growth forecast on Wednesday following market upheaval over Donald Trump's victory in the US presidential election.

Mexico's central bank lowered its economic growth projections to a range of 1.8-2.3 percent in 2016 and 1.5-2.5 percent in 2017

Shortly after the finance ministry maintained its own outlook, the bank said it lowered its projections to a range of 1.8-2.3 percent in 2016 and 1.5-2.5 percent in 2017.

The central bank had previously forecast growth of 1.7-2.5 percent this year and 2.0-3.0 percent in 2017.

"The panorama for the world economy has become more complicated as a result of the electoral process in the United States and its result, among other factors," the bank said in its quarterly report.

The report cited the volatility in the financial markets, including a sharp depreciation of the national currency, which broke the 20 peso per dollar barrier after Trump's triumph.

Markets have been nervous about the Republican billionaire's decision to renegotiate the North American Free Trade Agreement (NAFTA) with Mexico and Canada and his threat to impose trade tariffs.

Trump has also threatened to restrict billions of dollars in remittances that Mexican immigrants send back home in order to strongarm the government into financing a massive wall across the two nations' border.

"The result of the electoral process in the United States increased the risk of the design of policies that obstruct external trade and foreign investment in our country," the central bank said.

Last week, the bank raised its key rate by 50 basis points to 5.25 percent to keep inflation in check.

Deputy Finance Minister Vanessa Rubio was more optimistic, saying just two hours before the bank's announcement that the government maintains its growth forecasts at 2.0-2.6 percent this year and 2.0-3.0 percent in 2017.

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