MEXICO CITY, May 17 (Reuters) – Mexico’s annual growth
slumped sharply at the start of 2013 to its weakest in three
years despite unexpected strength in the services sector,
backing expectations of a further interest rate cut later in
2013.
Figures on Friday showed that although Latin America’s
second-biggest economy escaped an expected contraction in the
first quarter, annual growth dived to its lowest since a deep
recession in 2009.
Separate data showed economic activity in March contracted
by the most in over three years as well.
Mexico’s economy grew 0.45 percent in the first quarter
compared with the final quarter of last year, the
national statistics agency said, outdoing forecasts in a Reuters
poll for a 0.05 percent contraction. The figure was below a
downwardly revised 0.67 percent growth rate notched the prior
quarter.
But growth compared to a year earlier came in
at just 0.80 percent, falling short of expectations for a 1.25
percent expansion in a Reuters poll and below year-on-year
growth in the previous quarter of 3.2 percent.
Growth was crimped due to economic weakness in the United
States. Early Easter holidays reduced working days in the first
quarter, compared with the year-earlier quarter, since Easter
fell in April in 2012.
In addition, Mexican public sector expenditure ebbed, common
at the beginning of a new presidential administration.
Mexico’s central bank has already cut benchmark interest
rates to a record low 4 percent and is expected to cut further
later this year once a spike in inflation subsides. Slowing
growth bolsters the case for lower rates.
“There is a possibility of an interest rate cut, provided it
is combined with (the right) monetary conditions … and that
depends on whether the exchange rate continues to appreciate or
not,” said Sergio Martin, an economist at HSBC in Mexico City.
Mexico’s peso, which is up more than 4 percent this
year, slipped to a more than three-week low and yields on
Mexican interest rate swaps edged down as the market
reinforced bets on at least another 25 basis point cut.

The larger-than-expected GDP increase in the first quarter
versus the final quarter of last year was driven by strong
growth in services such as media and real estate, up 1.48
percent in the quarter, while activity in the primary sector –
encompassing agriculture, forestry and fisheries — fell,
adjusting for seasonal factors.
“There is no doubt that … you are looking at annual growth
around 3 percent if you are an optimist,” said Rafael de la
Fuente an economist at UBS in Stamford Connecticut.
The government has said it expects growth of around 3.5
percent this year, down from 3.9 percent in 2012.

MEXICO CITY (Reuters) – Mexico is planning to launch derivatives rules this year in sync with its northern neighbor but is concerned an overly tough regime could push trades into the United States where they are subject to less oversight, Mexico’s chief bank regulator said.

U.S. regulators are hammering out a raft of new rules aimed at boosting transparency in the swaps market after risky derivatives trading helped fuel the 2007-2009 financial crisis and led to multi-billion dollar taxpayer bailouts.

MEXICO CITY, May 10 (Reuters) – Mexican industrial output
dropped by the most in more than three years in March and
central bankers pointed to downside risks to economic growth,
backing bets on another interest rate cut.

Data on Friday showed industrial output fell 4.9 percent in
March from a year earlier, pulled down by Easter holidays
cutting into production and confirming expectations that
Mexico’s growth slowed sharply in the first quarter.

MEXICO CITY, May 8 (Reuters) – Mexico’s government on
Wednesday presented a financial sector reform to jumpstart
lending and make it easier for banks to collect on bad loans in
a bid to boost credit in Latin America’s No. 2 economy.

The proposal, which touches on competition to Basel capital
standards, is part of a raft of measures designed to ramp up
growth in Latin America’s second biggest economy.

MEXICO CITY, May 8 (Reuters) – Mexico’s government on
Wednesday presented a financial reform bill to jump-start
lending and make it easier for banks to collect on bad loans in
a bid to boost credit in Latin America’s No. 2 economy.

The reform targets the conservative policies of Mexico’s
banks, which boast high capital levels but lend much less than
their counterparts in other countries.

MEXICO CITY (Reuters) – Mexico’s main opposition parties said on Tuesday they would resume talks on sweeping reforms with the government, lifting a cloud over a cross-party pact that is the axis of President Enrique Pena Nieto’s economic agenda.

Opposition leaders said they had agreed on new measures with President Enrique Pena Nieto’s ruling Institutional Revolutionary Party (PRI) to preserve the pact, which is aimed at fueling growth in Latin America’s no. 2 economy.

By Alexandra Alper and Michael O‘Boyle

(Reuters) – Mexico’s government wants to boost lending by making it easier for banks to collect on guarantees for bad loans and by giving powers to regulators to punish firms that do not lend enough, according to a draft copy of the banking reforms seen by Reuters.

The proposal, which comprises more than 800 pages and touches on everything from money laundering to Basel capital standards, is due to be announced next week as part of a raft of measures designed to ramp up growth in Latin America’s second biggest economy.

MEXICO CITY (Reuters) – Mexico’s government wants to boost lending by making it easier for banks to collect on guarantees for bad loans and by giving regulators new powers to punish firms that do not lend enough, according to a draft of a new banking reform.

The proposal, a copy of which was seen by Reuters, is due to be announced next week and is part of a raft of measures designed to ramp up growth in Latin America’s second largest economy.

MEXICO CITY, April 21 (Reuters) – Mexico’s government wants
to boost lending by making it easier for banks to collect on
guarantees for bad loans and by giving new powers to regulators
to punish firms that do not lend enough, according to a draft of
a new banking reform.

The proposal, a copy of which was seen by Reuters, is due to
be announced next week, and is part of a raft of measures
designed to ramp up growth in Latin America’s second biggest
economy.

MEXICO CITY (Reuters) – A company seeking to launch the largest showcase of Chinese goods in the Americas has sued Mexico’s beach resort city of Cancun to overcome a political impasse and break ground on the controversial $180 million project.

Dragon Mart Cancun, which aims to create an expo center for Chinese goods in one of the biggest destinations for U.S. tourists, filed the suit to force the city to decide whether to grant a building permit, Chief Executive Juan Carlos Lopez said.