* Finance ministry steady budget deficit through 2010

* Forecast underscores woes driving Mexico to IMF (Recasts; adds peso quote, background on IMF credit line)

By Miguel Angel Gutierrez

MEXICO CITY, April 2 (Reuters) - Mexico's economy will contract 2.8 percent this year as exports tumble, the government said in a report underscoring the deep troubles that led it to seek help from the International Monetary Fund.

In a report sent to Congress late on Wednesday, the government also said Mexico could run a budget deficit next year to fight back against recession.

Mexican factories that make everything from cars to vacuum cleaner parts are reeling from a fall in orders from the United States, where the economy has contracted sharply in recent months.

"Due to the adjustment in estimates for U.S. growth ... it is deemed convenient to lower Mexico's growth forecast," the finance ministry said in the report.

The forecast was much bleaker than a previous outlook for a 1 percent contraction in 2009 and was roughly in line with private-sector views as the economic crisis deepens.

The report said the government will likely run a federal budget deficit for the second year in a row. It predicted the shortfall could reach 1.8 percent of gross domestic product next year, the same level as planned for 2009 as the state pumps money into the sputtering economy.