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Philippine Economy Contracts At Fastest Pace Since 1946

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The Philippine economy shrank the most on record in the whole year of 2020 as lockdown restrictions continued to weigh on all sectors, especially trade and tourism.

Gross domestic product logged an annual fall of 8.3 percent in the fourth quarter, but slower than the 11.4 percent decline posted in the third quarter, the Philippine Statistics Authority reported Thursday.

This was also slower than the economists' forecast of -8.5 percent. GDP has been falling over the last four quarters.

Consequently, GDP for the whole year of 2020 declined 9.5 percent, which was the worst on record.

The recovery is likely to lose more momentum in the coming quarters, Alex Holmes, an economist at Capital Economics, said. Output is unlikely to regain its pre-crisis level until the end of 2021.

However, on a quarterly basis, GDP advanced 5.6 percent in the fourth quarter, data showed.

On the production-side, major contributors to the annual fall were construction, other services and accommodation and food services. Construction registered a sharp fall of 25.3 percent and other services plunged 45.2 percent, and accommodation and food service activities decreased 42.7 percent.

At the same time, services and industry posted an annual decline of 8.4 percent, and 9.9 percent, respectively. Farm output was down 2.5 percent.

On the expenditure side, only government final consumption expenditure posted positive growth in the fourth quarter, up 4.4 percent.

Household spending decreased 7.2 percent and gross capital formation was down 29.0 percent. Exports and imports fell 10.5 percent and 18.8 percent, respectively.

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