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Mexico's economic growth slows to 0.4% in Q4, preliminary data shows

Jan 31 (Reuters) - Mexico's economic growth slowed in the fourth quarter amid tighter monetary conditions in Latin America's second-largest economy, but still ended 2022 in positive territory, preliminary data from the national statistics agency showed on Tuesday.

Gross domestic product (GDP) rose 0.4% in the fourth quarter compared to the previous three-month period, down from a 1% growth in the previous quarter but slightly above an estimated 0.3% increase from economists polled by Reuters.

The data suggested that the Mexican economy held up better than its Latin American peers towards the end of last year, Capital Economics' senior emerging markets economist Jason Tuvey said, despite being in the midst of a slowdown expected to worsen in the coming quarters.

In the full year of 2022, growth reached 3%, statistics agency INEGI said, also slowing down from the 5% advance recorded in 2021.

The economic expansion comes even as the central bank pursues an aggressive tightening cycle to tame high inflation, hiking its key lending rate by 650 basis points to 10.50% during the current cycle started in mid-2021 and with further tightening expected ahead.

Deputy Finance Minister Gabriel Yorio had already stated in a press conference on Monday that Mexico's economy likely grew between 2.9% and 3% in 2022, echoing estimates from private sector analysts.

INEGI said the fourth quarter growth was boosted by primary activities including farming, fishing and forestry, which grew 2% from the previous quarter, while the secondary and tertiary sectors posted smaller increases of 0.4% and 0.2% respectively.

The latest data marked Mexico's fourth consecutive quarter of growth considering INEGI's preliminary figures, Refinitiv data showed.

Year-over-year, the local economy grew for the seventh quarter in a row with a 3.5% expansion in the October-December quarter, matching economists' forecasts.

"Overall, this is a soft report - despite beating expectations - consistent with our overall story of slowing economic growth in Mexico, as COVID reopening demand fades and the hit from high inflation and tighter financial conditions intensifies," said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics.

The statistics agency is scheduled to publish final GDP data for the fourth quarter on Feb. 24. (Reporting by Gabriel Araujo in Sao Paulo; Editing by Steven Grattan)

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