UPDATE 1-Mexico's economy grew about 0.8 pct in fourth quarter

Thu Jan 30, 2014 11:53pm EST

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MEXICO CITY Jan 30 (Reuters) - Mexico's economy likely grew by 0.8 percent in the fourth quarter, the finance ministry said on Thursday, as growing demand for Mexican goods and higher government spending continued to buoy Latin America's No. 2 economy after a sharp slowdown earlier in the second quarter.

Growth in the fourth quarter was just shy of the 0.84 percent reached in the third quarter.

Mexican President Enrique Pena Nieto passed a batch of reforms aimed at boosting growth including an overhaul of state oil giant Pemex but a sagging construction sector and weak government spending fueled a second-quarter contraction.

The central bank, which cut interest rates three times last year to spur the economy, has said growth will rebound this year to about 3 percent to 4 percent, as the reform benefits kick in.

The central bank is expected to keep rates on hold at a record low of 3.5 percent in a monetary policy decision to be announced on Friday.

The government also said the economy likely grew about 1.5 percent on an annual basis in the fourth quarter, above the 1.3 percent annualized rate notched in the prior three months.

The finance ministry said growth likely reached 1.3 percent last year, the same figure as its earlier forecast, but well below the 3.8 percent expansion notched in 2012.

Meanwhile, Mexico's public sector ran a December fiscal deficit of 112.4 billion pesos ($8.43 billion).

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