MEXICO CITY: Mexico cut its 2013 growth forecast for the fourth time this year on Thursday, blaming weak global economic activity, an ailing construction industry and destructive hurricanes.
The finance ministry said Latin America's second biggest economy would expand by 1.3 percent this year, down from a previous outlook of 1.7 percent.
The government of President Enrique Pena Nieto has progressively downgraded its growth forecast this year from a high of 3.5 percent, as the economy sputtered in the first half of the year.
The economy grew by 3.9 percent in 2012.
Deputy Finance Minister Fernando Aportela said the latest downgrade is due to "weak global economic activity" and "transitory factors" such as the weak performance of the construction sector and the damage caused by hurricanes Manuel and Ingrid.
The finance ministry said in a statement that the Mexican economy had "solid foundations" and was accelerating in the second half of the year.
The ministry expects the global economy to improve in the last quarter of the year, notably the US industrial sector, which it said would boost external demand.
The central bank slashed its main interest rate last month, the third cut this year, in a bid to stimulate the economy.
The INEGI national statistics agency said separately that the economy expanded by 0.84 percent in the third quarter compared to the previous three months after contracting in the second quarter.
This meant that Mexico avoided recession, which is marked by economic contraction in two consecutive quarters.
On an annual comparison, the economy grew by 1.3 percent in the third quarter, better than the government's forecast of 1.0 percent due to good performances in farming and services, INEGI said.
The statistics institute said the construction sector contracted by 6.9 percent in the third quarter while the mining industry fell 1.8 percent.
The country's three top homebuilders, Homex, Urbi and Geo, have endured a difficult year, amassing huge debts as a policy of building in suburbs backfired, with more than 100,000 homes left empty.
But Aportela said the problem "is not an issue for the industry in general" and that he expects it to bounce back soon.
The government has also warned that the destruction brought by Manuel and Ingrid in September would cut growth by 0.1 percentage points.
Faten Boukhchana, Latin America economist for French investment bank Natixis, said the "Mexican economy has performed poorly since the start of the year" with average growth of 1.2 percent.
"Nevertheless, a gradual recovery is expected for the months to come," he said, pointing to greater growth in the neighboring United States, more public spending and recently approved reforms.
Pena Nieto has launched a structural reform drive since taking office in December last year that his government hopes will bring growth exceeding 5.0 percent in coming years.
He has pushed through Congress legislation to increase the government's weak tax haul and open up the telecommunications sector.
The centrist president has also presented a controversial plan to open the state-controlled energy sector to foreign investment.
Jonathan Heath, an economic consultant, said the government's forecast was cautious. He said the economy could expand by 1.5 percent this year.
"They possibly made this prediction to avoid being criticized as too optimistic," Heath said.
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