October 11, 2013 / 4:52 PM / 4 years ago

Mexico risks 'extreme situation' without U.S. debt deal-ministry

2 Min Read

MEXICO CITY, Oct 11 (Reuters) - Mexico's slowing economy could face an "extreme situation" if the United States fails to raise its debt ceiling, the finance ministry's chief economist was quoted as saying on Friday.

The U.S. Congress has so far failed to seal a deal to raise the government's borrowing cap, which is set to expire on Oct. 17. Treasury officials have said hitting that limit and defaulting on government obligations could cause lasting harm to the United States' international reputation.

"Mexico, as part of a group of nations, would be ... in an extreme situation if the debt ceiling is not resolved," Ernesto Revilla, head of the finance ministry's economic planning unit, told Mexican newspaper El Universal.

The United States is Mexico's top trading partner, the destination of about 80 percent of Mexican exports.

The paper cited Revilla as saying the Mexican government was waiting for third quarter Mexican GDP data due in November before considering any revision to its growth forecasts, but that the ministry was ready to act if need be.

Mexico's economy has stumbled this year amid slack U.S. demand for local exports and a drop in domestic construction.

Following Mexico's shock economic contraction in the second quarter and devastating floods last month, the government has repeatedly cut back its growth forecast and now expects gross domestic product to expand by around 1.7 percent this year.

Latin America's No. 2 economy grew 3.8 percent in 2012.

Mexican Finance Minister Luis Videgaray on Tuesday urged the United States to reach an agreement on raising its debt ceiling, saying a failure to do so could seriously damage financial markets and the global economy.

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