The central bank of Mexico (Banxico) on Wednesday downgraded its growth forecasts for 2020 and 2021, citing slower than expected recovery in domestic demand and U.S. industrial activity.

Gross domestic product (GDP) is now expected to expand between 0.5 and 1.5 percent this year, less than the 0.8 to 1.8 percent previously forecast, according to the bank's report on last year's fourth quarter results.

Banxico lowered its 2021 growth forecast to between 1.1 and 2.1 percent, from the previous 1.3 to 2.3 percent.

In 2019, Mexico's GDP shrank 0.1 percent, marking the first contraction in a decade, mainly due to a slowdown in global economic growth.

The central bank's governor Alejandro Diaz de Leon cited "marked uncertainty" for the downgrade.

"Worsening trade tensions" in the medium term and "a slowing down in global trade and the world economy" in the short term were among the risks facing Mexico, he said.

However, he added, the final ratification of the United States-Mexico-Canada Agreement (USMCA) could help grow the economy if it generates greater than expected investment. 

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