| | |  Business News 
Mexico Inflation Outlook Falls, Growth Up in Poll
 Patrick Rucker - Reuters
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September 01, 2010
Mexico City - Analysts pared their forecasts for Mexican inflation this year and slightly raised their 2010 growth outlook as economic weakness in the United States is seen spreading to its southern neighbor.
The Mexican economy has for months limped away from a deep recession but its fate is closely tied to that of the United States which absorbs roughly 80 percent of Mexican exports and where consumers are still reluctant to spend.
The consensus inflation forecast for 2010 fell to 4.43 percent in the latest monthly poll of economists conducted by the central bank and released on Wednesday.
The July poll forecast an inflation rate of 4.59 percent.
Economists saw the economy growing 4.6 percent this year, up from 4.5 percent growth forecast in July.
The Mexican economy shrank 6.5 percent in 2009 and while analysts have now raised their expectations for 2010 growth nine times they still expect the recovery will be slow.
Mexico last year faced its deepest economic contraction since 1932 and policymakers slashed interest rates in early 2009 to help its economy resist a sharp slowdown.
While Brazil, Chile and Peru have hiked interest rates this year to cool their economies, Mexico is not expected to tighten the money supply until around the second quarter of next year.
Mexico's annual inflation rate slowed for the fourth straight month in July and this, combined with the analysts' outlook, relaxes any pressure the central bank might feel to increase lending rates.
While analysts tapped down their expectations for consumer prices this year, they also lowered their outlook for 2011 inflation to 3.82 percent from 3.90 percent.
In a separate report, the central bank said that the amount of cash sent home by Mexicans living abroad rose 1.84 percent in July compared with the same month last year.
The official government outlook is for growth of 4.1 percent this year, although the finance minister has said that could be raised to something closer to 5 percent. The central bank has said it sees inflation between 4.75 and 5.25 percent.
(Editing by James Dalgleish)
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