Nov. 17 (Bloomberg) -- Mexico's finance ministry may report the slowest economic growth in five years as a global slump hits Latin America's second-largest economy.

Gross domestic product, the broadest measure of a country's production of goods and services, probably expanded 1.3 percent in the third quarter, according to the median estimate of 10 economists surveyed by Bloomberg. The finance ministry will report the data on Nov. 21 at 3:30 p.m. New York time.

Growth of 1.3 percent would be the lowest since at least 2003. The slowdown in the U.S. economy is weakening demand for Mexican exports, 80 percent of which go to the country's northern neighbor, while a reduction in remittances from Mexicans living abroad is hurting retail spending, said Pedro Tuesta, an economist at research firm 4Cast Inc. in New York.

Mexico ``is showing all the strains of the U.S. economy,'' Tuesta said in an interview. ``The fourth quarter may be better than the third, but only marginally.''

A slumping economy will probably curb inflation in 2009, giving the central bank more room to cut interest rates in a bid to spur growth, Tuesta said. Mexico reported annual inflation of 5.78 percent in October, a seven-year high.

``They are looking at very weak demand next year,'' said Tuesta, who predicts Mexico's economy will expand 0.5 percent in 2009. ``They are hoping that will reduce pressure on prices.''

Peso, Stocks, Bonds

Yields on the government's benchmark 10 percent bond due in 2024 rose 77 basis points last week, or 0.77 percentage point, to 9.8 percent. The bond's price fell 6.61 centavos to 101.56 centavos per peso, according to Banco Santander SA.

The peso weakened 2 percent last week on concern that global economies are heading toward a recession, cooling demand for emerging-market assets. The currency closed at 13.0613 per dollar on Nov. 14, from 12.8018 on Nov. 7.

Mexico's benchmark Bolsa index fell 1.5 percent last week to 19,562.14, the second straight weekly decline. Cemex SAB, the biggest cement maker in the Americas, dropped 23 percent to 6.80 pesos as UBS AG and BBVA reduced estimates on concern over the company's debt. Cemex said Nov. 11 it is working with five banks ``in a global effort'' to refinance debt.

The following is a list of events in Mexico next week:

Event Date Forecast September Industrial Production Nov. 19 -0.5% October Unemployment Rate Nov. 20 4.21% Third-Quarter GDP Nov. 21 +1.3%

To contact the reporters on this story: Hugh Collins in Mexico City at Hcollins8@bloomberg.net;

Last Updated: November 17, 2008 01:00 EST