By Michael O'Boyle
MEXICO CITY, Sept 24 A slowdown in Mexico's
economy, which contracted in the second quarter, is temporary,
Central Bank Governor Agustin Carstens said on Tuesday,
forecasting growth would recover to levels of around 3 percent
Mexico's central bank unexpectedly lowered borrowing costs
earlier this month to counter a slump in growth, and many
analysts expect a further cut in October after some of the worst
storm damage in decades buffeted the economy.
After growth contracted in the second quarter - the first
quarterly shrinkage in four years - the government slashed its
growth outlook to 1.8 percent this year from a previous 3.1
percent estimate. That was before the storms hit.
"It has without doubt been a complicated first half of the
year," Carstens told a business forum organized by Forbes.
"We're temporarily in a hole, and I expect we will resume
In August, the central bank cut its 2013 growth outlook to 2
to 3 percent from a previous estimate of 3 to 4 percent.
However, inflation has been cooling and has stabilized,
Mexico's annual inflation rate eased in the first half of
September to its slowest pace in eight months, government data
showed on Tuesday, giving policymakers more room to again cut
interest rates to counter an economic slowdown.
Inflation in the 12 months to mid-September slowed to 3.46
percent from 3.54 percent in the year through mid-August, the
third mid-month reading in a row below the central bank's 4
Tame inflation and weak growth prompted Mexico's central
bank to unexpectedly cut its benchmark interest rate to 3.75
percent earlier this month.