MEXICO CITY (Reuters) – Mexican growth likely slumped in the first quarter on weaker manufacturing, anemic domestic demand, and a fall in oil production, which is expected to push the government to cut its 2015 growth forecast.
Mexico’s economy likely grew 0.3 percent in the first quarter compared the prior three months, according to a Reuters poll, well below the 0.7 percent expansion in the October to December period.
On an annual basis, gross domestic product (GDP) likely grew 2.4 percent in the first quarter from the same period in 2014, below the 2.6 percent pace reached in the fourth quarter.
Mexico’s central bank lowered its 2015 growth outlook earlier this week to a range of 2 to 3 percent, flagging a drop in domestic oil output and still sluggish consumer demand.
The finance ministry is expected to dial back its forecast of a 3.2 to 4.2 percent expansion after the data. Economists are expecting the economy to grow less than 2.9 percent this year.
Sinking oil prices and a slump in Mexican oil output have dampened growth prospects this year despite a landmark opening of the energy sector in 2013 aimed at drawing private investment.
The federal government, which relies on oil revenues to fund about one-third of its outlays, clipped spending this year. Meanwhile, domestic demand has remained muted after being hit by tax hikes last year.
Manufactured exports, usually a bright spot in the economy, have wobbled after dismal growth in the United States in the first three months of the year. Close to 80 percent of Mexican exports head to its northern neighbor.
GDP data will be released at 8:00 am local time (9 a.m. EDT) on Thursday May 21.
(Reporting by Miguel Gutierrez and Jean Luis Arce; Editing by Meredith Mazzilli)