* Cenbank sees economic growth of 3-4 pct in 2012, 2013
* Carstens says rates could fall if global economy slows
* Inflation seen falling below 4 pct by year-end
By Michael O'Boyle and Patrick Rucker
MEXICO CITY, Feb 15 Weak global
growth will crimp Mexico's economy during the next two years,
making key economic reforms even more pressing, its central bank
chief said on Wednesday.
The Banco de Mexico forecast Latin America's
second-largest economy would grow at a sluggish 3 to 4 percent
this year and next and said risks were to the downside.
Debt troubles in Europe and the United States could
suppress demand for Mexico's exports in the coming years and
lawmakers have failed to jump-start the economy with key
economic reforms amid political infighting over the last 15
While major emerging market economies have averaged
growth of more than 6 percent over the last 10 years, Mexico has
struggled to keep its average rate above 2 percent.
"Mexico could be growing more and creating more jobs if
efforts were doubled in passing structural reforms, which are
really needed since growth in advanced economies is not going to
be very fast in the coming years," Banco de Mexico governor
Agustin Carstens told a news conference.
Mexico's rebound in 2010 from a deep recession lost
steam last year. Meanwhile, the chances of passing long-debated
energy, labor and tax reforms in the short-term are low as
political parties jockey ahead of national elections in
The central bank's first growth forecasts for 2013 put
Mexico well below the 5.9 percent average the International
Monetary Fund expects for emerging market economies in 2013, and
also below the Latin American average.
In their quarterly inflation report, policymakers also
predicted a spike in inflation would be temporary and said
inflation would remain between 3-4 percent through the end of
INFLATION IN CHECK?
Inflation, which pierced the central bank's 4 percent
ceiling in January for the first time in more than a year,
should dip back below 4 percent before the end of 2012, Carstens
said. The balance of risks to inflation is seen neutral.
"Inflation expectations are very well anchored," he said.
Deutsche Bank economist Fernando Losada said the report
cemented his expectation for no change to the current 4.5
percent interest rate through 2012, and interest rate swaps show
markets expect no change either.
But Nomura Securities analyst Benito Berber said he
thought the central bank was too optimistic about the inflation
outlook and expected inflation to exceed 4 percent for much of
"I don't think Banxico makes a convincing case for
annual inflation to be between 3 and 4
percent, I think that's very unlikely," Berber said.
Carstens said while Mexico could cut rates if the
external environment worsened, policymakers were also monitoring
inflation risks closely.
While Brazil and Chile have cut interest rates, Mexican
central bankers have been split over the outlook for inflation
as they brace for slower economic growth ahead.
Policymakers at their last meeting in January were
unanimous in holding rates but minutes from the meeting
released early this month showed growing disagreement over
The central bank said its local growth outlook could
improve if data shows better-than-expected U.S. growth, or on a
resolution of European debt worries.
Economists see growth slowing from a median estimated 3.98
percent in 2011 to 3.20 pct in 2012, according to a Feb. 8 poll
Growth figures for the last quarter of 2011, due on
Thursday, are expected to show a deceleration.