Recent data for Mexico shows that the economy remained weak in the April to June period, due to both internal and external factors. Yet, the second quarter contraction suggests that downside risks to the economy have increased, Bank of Mexico noticed in a statement. The Central Bank also said it expects the recovery of the economy in the second half of 2013, although at a slower pace than previously anticipated.
Annual inflation rate fell in the first half of August to around 3.5 percent. Yet, recent contraction of the economy together with future structural reforms come as downside risks to the inflation rate. As upside risks, Bank of Mexico cited the increasing volatility in international financial markets and their effects on the Peso exchange rate.