UPDATE 2-Mexican economy slows sharply in 3rd quarter

* Mexico 3rd qtr GDP +0.7 pct vs forecast +1.2 pct

* Mexico 3rd qtr GDP +5.3 pct yr/yr vs forecast +5.7 pct

* Sept economic activity +5.0 pct yr/yr vs poll +5.2 pct

* Likely eases pressure on central bank to raise rates
(Adds quotes from economists)

MEXICO CITY, Nov 22 (BestGrowthStock) – Mexico’s economy slowed
sharply in the third quarter as cooling U.S. demand for Mexican
exports dragged on factories, possibly giving policymakers more
room to keep interest rates on hold next year.

Latin America’s second largest economy grew 0.7 percent during the July-September period (MXGDPQ=ECI: ), data from the national statistics institute showed on Monday.

That was below analysts’ forecasts and a substantial
downshift from the 2.3 percent growth registered in the
previous quarter – a revision from the 3.2 percent expansion
originally reported.

Many analysts predict Mexico’s central bank will hold rates
at 4.5 percent into 2011 as the economy makes a slow recovery
from its worst recession since the 1930s.

“(The central bank) will feel limited pressure to start
normalizing rates next year amid a moderated pace of economic
expansion,” Barclays Capital economist Jimena Zuniga wrote in a
research note.

Mexico is limping back from a punishing downturn that saw
the economy contract 6.5 percent in 2009.

The economy is more tied to the United States than
most other Latin American countries and has lagged regional peer Brazil in recovering from recession.

Mexico’s finance ministry says the economy should expand by
4.8 percent this year while Central Bank Governor Agustin
Carstens has said Latin America’s second-largest economy will
grow around 5.0 percent.

Early this month, economists said they expect a 2011 growth
rate of 3.52 percent.

The industrial sector, which includes oil production and
manufacturing, grew 0.9 percent during the third quarter, about
half the rate of expansion clocked in the previous period.

In annual terms, the economy grew 5.3 percent in the third
quarter (MXGDPY=ECI: ), which was below the 5.7 percent increase
forecast by analysts.

The agency said in a separate report the economy shrank
0.31 percent in September from the previous month (MXIGAE=ECI: ).
The report showed growth of 5.0 percent in September from a
year earlier (MXIGDP=ECI: ), below the 5.2 percent reading
expected by analysts.
(Reporting by Jason Lange, Patrick Rucker and Luis Rojas
Mena; Editing by Andrew Hay)

UPDATE 2-Mexican economy slows sharply in 3rd quarter