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Philippine Economy Contracts For First Time Since 1998

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The Philippine economy contracted for the first time since 1998 as coronavirus containment measures weighed heavily on investment and shipments, official data showed Thursday.

Gross domestic product fell 0.2 percent on a yearly basis in the first quarter, in contrast to fourth quarter's revised 6.7 percent expansion, the Philippine Statistics Authority reported.

This was the first decline since the fourth quarter of 1998. GDP was expected to grow 3.1 percent.

On a quarterly basis, the economy shrank 5.1 percent in the first quarter.

The contraction in the first quarter suggests that the lockdown is having a severe impact on economic activity and that growth is likely to be even worse than feared in 2020, Alex Holmes, an economist at Capital Economics, said.

The expenditure side of GDP showed that gross capital formation plunged 18.3 percent.

Exports and imports decreased 3.0 percent and 9.0 percent, respectively. Meanwhile, household consumption and government expenditure posted positive growths of 0.2 percent and 7.1 percent, respectively.

Containing the spread of the virus and saving hundreds of thousands of lives through the imposition of enhanced community quarantine has come at a great cost to the Philippine economy, Acting Economic Planning Secretary Karl Chua reportedly said.

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