(Adds Finance Ministry's comments, background details)
MEXICO CITY, March 31 Mexico's finance ministry
on Friday cut its 2017 growth outlook for Latin America's no. 2
economy, flagging uncertainty over U.S. policy, and said it saw
inflation ending the year nearly a full percentage point above
the central bank's target range.
It expects the economy to grow between 1.3 and 2.3 percent
in 2017 and then rebound to expand 2.0-3.0 percent in 2018. The
ministry had previously projected gross domestic product (GDP)
growth of 2.0-3.0 percent in 2017 and 2.5-3.5 percent for 2018.
"Although weakness in global growth has started to
dissipate, uncertainty about the new U.S. government's policy
direction poses downside risks for the Mexican economy," the
The finance ministry also said it saw annual inflation
ending 2017 at 4.9 percent, above the central bank's target
range, before subsiding to 3.0 percent by year-end 2018.
Mexico's central bank raised its benchmark interest rate for
the fifth time in a row on Thursday, taking borrowing costs to
an eight-year high to anchor inflation expectations. But
policymakers slowed the pace of hikes on the back of a rally in
The finance ministry projected the peso would end 2017 at 19
per dollar and 19.1 per dollar in 2018.
It sees a fiscal deficit of 2.4 of projected gross domestic
product this year and a deficit of 2.0 percent for 2018.
After running primary budget deficits since 2009, the
government said it would post a primary surplus of 0.5 percent
of GDP next year.
Total public sector borrowing requirements will amount to
2.5 percent of GDP in 2018, the finance ministry estimated, 0.4
percentage points lower than its 2017 level.
Mexico's central bank said on Wednesday it had transferred
321.7 billion pesos ($17 billion) of its 2016 surplus to the
federal government, which will help the country pay down debt
(Reporting by Anthony Esposito and Veronica Gomez; Editing by