Substantial cuts to government spending announced by Mexico’s new finance minister José Meade in the 2017 budget reinforce our view that GDP growth will be weaker than the consensus expects next year. The cuts fall unevenly on state-owned oil company Pemex. That should insulate consumers from the worst of the effects, but it risks deepening the downturn in mining and preventing the current account deficit, which has emerged as a key vulnerability, from narrowing.
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