Mexico central bank takes gloomier view of economy in 2021

MEXICO CITY (Reuters) - Mexico's central bank revised down its outlook for 2021 economic growth in a quarterly report published on Wednesday, but also tempered its most pessimistic views about growth this year despite the damage being done by the coronavirus pandemic.

The Bank of Mexico, known as Banxico, said the economy could grow between 0.6% and 5.3% next year, after shrinking between 8.7% and 9.3% in 2020.

"There is still a high degree of uncertainty about the future evolution of both domestic and global activity, this is reflected in the breadth of the growth interval," said Banxico.

It also provided a single central baseline scenario of an 8.9% contraction this year, 3.3% growth in 2021 and a 2.6% expansion in 2022.

"The baseline scenario assumes a gradual recovery, taking place at a moderate pace throughout the forecast horizon," said Banxico.

The forecasts reflect a gradual recovery of the global economy, caution on the part of consumers and investors, and an uneven recovery among sectors.

In its previous quarterly report Banxico saw the economy expanding between 1.3% and 5.6% in 2021, and contracting between 8.8% and 12.8% this year.

Banxico said Mexico could lose between 700,000 and 850,000 jobs in 2020 and create between 150,000 and 500,000 jobs next year, a forecast of fewer losses this year and more job creation in 2021.

On consumer prices, Banxico forecast annual headline inflation at 3.6% in the fourth quarter this year and at 3.3% in the fourth quarter 2021.

Future monetary policy "will depend on the evolution of the factors that affect headline and core inflation, their foreseen trajectories within the forecast horizon and their expectations," the bank said.

At its Nov. 12 monetary policy meeting, Banxico unexpectedly kept its benchmark interest rate unchanged at 4.25%, citing the need for a "pause" to weigh inflationary pressures.

(Reporting by Anthony Esposito; Editing by Frank Jack Daniel and Grant McCool)