Mexican Finance Minister Luis Videgaray on Wednesday supported his administration’s recently adjusted Mexico economic growth forecast for 2014, saying things are picking up, helped by indications of a strengthening economy in the United States.
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Videgaray says the gross domestic product forecast of 2.7 percent indicates a faster growth rate for the rest of 2014, after an adjusted 1.1 percent GDP figure in the first quarter.
A month ago the administration slashed its estimate for yearly growth in 2014 from 3.9 percent, and a week ago the central bank slashed its benchmark premium rate to a record low in an offer to help boost economic activity.
“There hasn’t been any information after we made the forecast that implies a need for a change. In fact, the most recent figures out of the Mexican economy, job creation, industrial production, retail sales, point towards a recovery and are quite consistent with the 2.7 percent forecast,” he said after speaking with investors in New York.
On Wednesday, Mexico reported manufacturing in April climbed by the most in over a year as assembling and development grew.
The central bank, on June 6, brought down the benchmark premium rate by 50 basis points to 3.00 percent, a development that stunned economists who estimated no change in economic policy for Latin America’s No. 2 economy.
Videgaray would not remark on what he thought the central bank would do next, indicating rather Banco de Mexico’s communique stating it didn’t aim to further cut premium rates.
The rough winter in the United States, which is Mexico’s top trading partner for 80 percent of its exports, hindered growth in the first quarter in both countries, Videgaray said.
The U.s. economy contracted 1 percent in the initial three months of the year because of disturbance created by a long extended period of extreme winter storms.
“But it will pickup. It is already picking up. The latest figures for the U.S. economy look better than they did in the early months of the year and we expect that trend to continue,” Videgaray said.
“We are very much linked to the cycle in the U.S. and it looks as if we are gradually entering into a better cycle.”