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Mexico central bank cuts 2019 growth forecast

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Mexico City (AFP)

Mexico's central bank on Wednesday cut its forecast for the growth of Latin America's second-largest economy -- the latest bad business news for leftist President Andres Manuel Lopez Obrador.

The Bank of Mexico slashed its 2019 growth forecast by three-tenths of a percentage point, to a range of 0.8 to 1.8 percent.

The news came after the economy shrank 0.2 percent in the first quarter of the year, taking economic analysts by surprise and triggering talk of a possible recession.

Central bank chief Alejandro Diaz de Leon said even though the shrinkage had been caused by "transitory factors," it would have an impact on growth for the year.

Still, "we expect the economy to return to the path of growth in the coming quarters, supported by positive conditions for both internal and external demand," he said.

Lopez Obrador, an anti-establishment populist who swept to office last year in a landslide election victory, has vowed economic growth of two percent this year and an average of four percent for his term, which ends in 2024.

But the economy threatens to be his Achilles heel.

He has triggered backlash in the business world with some of his policies, including a controversial decision to cancel a $13 billion Mexico City airport project that was already one-third complete.

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