The International Monetary Fund lowered its 2013 growth forecast for Mexico from 2.9 percent to 1.2 percent, citing a drop in government spending and lower demand from the United States in the first half of the year.

In its "World Economic Outlook" report, released Tuesday, the IMF said, however, that Latin America's second-largest economy could expand by around 3 percent next year "as manufacturing picks up on the back of a recovery in U.S. demand, public spending regains momentum, and ongoing structural reforms begin to bear fruit."

Planned overhauls of Mexico's telecommunications, banking and energy sectors, as well as the nation's tax code, should enable Mexico to grow annually at a clip of between 3.5 percent and 4 percent, the Washington-based organization said.

The IMF also lowered its growth outlook for Latin America and the Caribbean to 2.7 percent in 2013 and 3.1 percent next year, down from a July forecast of 3 percent and 3.4 percent growth, respectively.

In its report, the IMF recommends the region's governments continue to take steps to consolidate competitiveness, increase productivity and bolster savings and investment. EFE