UPDATE 1-Mexican central bank cuts economic outlook, sees virtually no growth in 2019

(Adds details from report)

MEXICO CITY, Aug 28 (Reuters) - Mexico’s central bank on Wednesday slashed its economic outlook for this year to forecast virtually no growth, citing slack conditions that will persist for longer than expected after the country narrowly avoided entering a recession.

The Bank of Mexico (Banxico) cut its forecast to predict growth will range between 0.2% and 0.7% in 2019, down from an earlier prediction of between 0.8% and 1.8%.

Mexico registered no growth in the second quarter from the prior three months, when the economy contracted.

Although Banxico expects the economy to pick up, it said in its latest quarterly report it sees recovery as gradual.

For 2020, Banxico expects the economy to grow between 1.5% and 2.5%, down from a previous estimate of 1.7% to 2.7%.

Growth risks to the local economy include ongoing global trade disputes, the threat of U.S. measures against Mexico and the possibility the credit ratings for sovereign debt and struggling state oil firm Pemex deteriorate further.

Banxico also cut its inflation forecast for the end of 2019 to 3.2% from 3.7%, while maintaining its end-2020 outlook at 3%.

However, it noted that core inflation, any depreciation of the peso, and U.S. tariff threats could still put upward pressure on prices.

Banxico also said it was important that the 2020 federal budget generate confidence, and for Mexico to strengthen rule of law, battle corruption and respect private property.

The finance ministry is scheduled to send the 2020 budget to Congress by Sept. 8. (Reporting by Anthony Esposito and Mexico City Newsroom Editing by Chizu Nomiyama and Chris Reese)