MEXICO CITY, Feb 20, 2025 (BSS/AFP) - Mexico's economy is forecast to grow by 0.6 percent this year, much less than previously expected, the central bank said Wednesday, warning of uncertainty over US trade policy.

The Bank of Mexico slashed its prediction for gross domestic product (GDP) growth in 2025 from an earlier figure of 1.2 percent.

The downgrade came after Mexico's economy -- the second-largest in Latin America -- suffered its first contraction in three years in the fourth quarter of 2024.

GDP shrank by 0.6 percent in the three months to December from the previous quarter, according to a preliminary official estimate.

The Mexican economy "could slow down further in 2025," the Bank of Mexico said in a quarterly report.

"High uncertainty prevails regarding the policies that the new US administration could implement and their potential scope that they could have," it said, alluding to President Donald Trump's threatened tariffs.

In 2026, the central bank expects Mexican economic growth to rebound to 1.8 percent.