2020.08.0606:41:00UTC+00Philippine GDP Falls At Fastest Pace Since 1981

The Philippine economy entered a recession in the second quarter after the gross domestic product contracted at the fastest pace since 1981 as the lockdown to contain the spread of the coronavirus weighed on economic activity causing millions of job losses.

Gross domestic product fell 16.5 percent on a yearly basis in the second quarter, bigger than the 0.7 percent drop in the first quarter. This was the second consecutive contraction.

The latest fall was the biggest since 1981 and also bigger than economists' forecast of 9 percent.

On a quarterly basis, GDP was down 15.2 percent versus a 5.7 percent drop in the first quarter.

The government forecast the economy to contract 5.5 percent in 2020 compared to the previous projection of 2 to 3.4 percent decline.

A failure to contain the virus, continued restrictions to movement and inadequate policy support mean that the country is also likely to experience one of the region's slowest recoveries, Alex Holmes, an economist at Capital Economics, said.

The expenditure-side breakdown showed that household consumption plunged 15.5 percent on year, while government spending advanced 22.1 percent.

At the same time, gross fixed capital formation logged a sharp decrease of 53.5 percent. Exports and imports were down 37 percent and 40 percent, respectively.

On the production side, all sectors except farm output shrank from the last year. Manufacturing contracted 21.3 percent and construction output fell 33.5 percent. Transportation and storage dropped 59.2 percent, while agriculture, forestry, and fishing posted 1.6 percent. Industry and services both decreased by 22.9 percent and 15.8 percent, respectively.