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Mexico will grow 3.7% in 2015

Mexico will grow 3.7% in 2015

Posted by Ricardo Vázquez on September 08, 2014

Mexico's government has lowered its growth forecast for 2015 to 3.7 percent, down from 4.7 percent in April, Finance Secretary Luis Videgaray said.

In presenting the 4.6-trillion-peso ($352.9-billion) budget plan for 2015 to lower-house lawmakers, Videgaray said Friday that the government is expecting gross domestic product growth of 3.7 percent, an inflation rate of 3 percent, an exchange rate of 13 pesos to the dollar and a average price of $82 per barrel of crude oil next year.

He also asked the legislators to approve a 1 percent budget deficit for 2015.

President Enrique Peña Nieto's administration "is not proposing - as previously announced - any new taxes; it's not proposing increasing existing duties nor easing any part of the fiscal regimen for the benefit of taxpayers," he added.

The government is maintaining its forecast for 2.7 percent growth in 2014 despite economic weakness in the year's first half, when the economy expanded just 1.7 percent compared to the first six months of 2013, according to Videgaray, who said Mexico's economy will have "greater dynamism" next year due to an increase in investment and exports.

Public-sector investment will climb to 839.65 billion pesos ($64.3 billion), according to the finance secretary, who said that counter-cyclical stimulus will boost economic activity.

He said non-oil tax revenue will climb in 2015 to a record-high 10.7 percent of GDP and help maintain investment spending at "historically high" levels despite a projected 7.1 pecent drop in oil revenues due to lower output of crude and gas and an expected lower average price per barrel on international markets.

Mexico's crude production has fallen by roughly 30 percent from a high of 3.3 million barrels per day in 2004 due to a sharp drop in output at offshore Cantarell, formerly Mexico's most productive field, and a lack of investment by state-owned Petroleos Mexicanos, the country's largest taxpayer.

Last year's historic energy overhaul is aimed at reversing that decline by allowing private companies to develop crude reserves for the first time since 1938.

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