WRAPUP 1-Mexican economy grows less than expected in February

* Economy expanded 3.42 percent in February year-on-year

* Service sector contracts
(Recasts; adds finance ministry comments, byline)

By Patrick Rucker and Luis Rojas Mena

MEXICO CITY, April 27 (BestGrowthStock) – Mexico’s economy expanded
less than expected in February because of a decline in the
service sector, although the finance ministry said consumer
spending would bounce back in the second half of the year.

The economy grew 3.42 percent from a year earlier
(MXIGDP=ECI: ), the national statistics agency said on Tuesday.
Activity in the service sector, however, fell 0.33 percent from
the previous month.

The U.S. recession hit Mexico last year as exports
collapsed and the economy shrank 6.5 percent.

While Mexico’s economy started growing again around mid-
2009 on renewed demand for Mexican-made cars, televisions and
refrigerators, consumer spending in Mexico has remained weak
and the economy is not expected to recover fully until next
year.

Moreover, last year’s recession pushed Mexico to cut public
spending and raise taxes this year, and many economists think
the higher taxes will dull consumer demand throughout the
year.

The government forecasts economic growth of 4.1 percent
this year.

“We expect that consumer demand and private investment will
have accelerated in the second half of the year,” Miguel
Messmacher, the finance ministry’s chief economist, told
Reuters.

“(Both) will accelerate in the coming months and in the
second half of the year will be in full stride,” he said.

Analysts had forecast economic growth of 3.6 percent in
February compared with a year earlier, according to a Reuters
poll.

The economy grew 0.46 percent from January.

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(Writing by Jason Lange; Editing by Dan Grebler)

WRAPUP 1-Mexican economy grows less than expected in February