(Updates with Carstens quotes, context throughout)
By Noe Torres
MEXICO CITY, Nov 12 (Reuters) - Mexico’s Central Bank will adjust its annual growth forecast next week, Gov. Agustin Carstens said on Wednesday, though many analysts have already scaled back their own expectations and have voiced worry about flaring violence in the country.
Carstens said the main risks facing Mexico included low interest rates abroad and falling oil prices, but said the economy was functioning well and added that stress tests showed the banking system is solid.
“The Bank of Mexico will adjust its expected growth rate next week,” Carstens said, but gave no hint as to the scope of the change.
The bank already revised down its growth forecast for the year in August to between 2.0 percent and 2.8 percent from a previous range of 2.3 percent to 3.3 percent.
The IMF expects Mexico’s economy to grow by 2.4 percent this year as expansion picks up after a harsh winter in the United States crimped American demand for Mexican factory exports and the construction sector sagged in early 2014.
Mexico’s economy expanded by a sluggish 1.4 percent in 2013.
“We have seen a sustained recovery for several quarters, but there is also a risk that domestic economic activity could weaken in part if global growth weakens due to risks from low interest rates,” Carstens said.
“That could prompt some Mexican companies ... to leverage more than they should because low rates could prompt banks to take more risks,” he added.
Carstens said that concern voiced by analysts over a flaring of drug gang violence in recent weeks and months was “notorious.”
President Enrique Pena Nieto’s government is grappling with its biggest crisis after the abduction and apparent massacre of 43 trainee teachers in southwest Mexico some six weeks ago.
The incident has triggered massive protests and undermined Pena Nieto’s efforts to keep public focus on a series of reforms that aim to open up Mexico’s economy. (Reporting by Mexico Newsroom; Editing by Simon Gardner and Chris Reese)