Mexico Economy Recovering With Inflation Easing, Carstens Says

Mexico’s economy is showing signs of strengthening after disappointing early this year and inflation has passed its peak, said central bank Governor Agustin Carstens.

Increasing exports and government spending will help reactivate an economy that has already seen improved consumer confidence, Carstens told the Senate in Mexico City. After climbing to an eight-month high of 4.48 percent in January following a tax increase, inflation slowed to a “suitable zone” at 3.89 percent in the first half of March, he said.

“In the latest figures we’ve seen much more clearly a reactivation” in the economy, Carstens said. “We think the convergence of inflation to our 3 percent objective will happen very quickly next year” as gasoline price increases are pegged to the broader inflation, he said.

Banco de Mexico forecasts the economy will expand 3 percent to 4 percent this year, rebounding from 1.1 percent growth last year that was the lowest since the 2009 recession. Carstens said the bank will review its forecasts and economic data in preparing its first-quarter inflation report.

The consumer confidence index rose to 88.8 in March from 84.5 the month earlier, the national statistics agency reported on its website today.

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