Mexico's economy may shrink 7.5 percent this year, the country's central bank, Bank of Mexico, said in its quarterly inflation report Wednesday.
The new estimate comes a day after the National Statistics Agency (Inegi) reported that the economy may have slipped by over 11 percent in May, according to a preliminary indicator.
The report said Mexico's Gross Domestic Product （GDP）, which is measured quarterly, shrank 8 percent during the first quarter, adding that Mexico might only grow 2.5 percent next year.
"The world financial crisis has exposed Mexico's economic weaknesses," the report said. "The contraction of our economy has been very severe and larger than many other nations."
One of the Mexican economy's weaknesses is its heavy dependence on the U.S. economy. Investors lose confidence in the Mexican government's capability to handle financial affairs when oil prices fall and the government lack new equipment, best technologies and working practices, the report said.
"Even so, it is also important to recognize that Mexico has shown a substantial ability to resist the world financial crisis," the report said, noting that the government had avoided balance-of-payments crises seen in 1994 to 1995 and in 1981 when oil prices fell.
The report also estimated that Mexico might lose 735,000 officially registered jobs during 2009, and might regain only 200,000 in the following year. Only around half of Mexico's jobs are fully registered with the Mexican Social Security Agency.
The report did not alter inflation estimates for this year or next.
The central bank said inflation was no more than 4.5 percent in the second quarter and would be no more than 5.25 percent in the third quarter, while in the first quarter of 2010, it would be no more than 4.25 percent./.