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Aug. 5, 2020, 11:35 p.m. EDT

Philippine economy shrank sharply in Q2

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By Kosaku Narioka

The Philippine economy shrank sharply in the second quarter, as it was hit hard by the coronavirus pandemic.

Gross domestic product fell 16.5% from a year earlier following a 0.7% decline in the first quarter, data from the Philippine Statistics Authority showed Thursday. The result missed the median forecast of 8.5% contraction in a poll of economists by The Wall Street Journal.

From the previous quarter, gross domestic product dropped 15.2% on a seasonally adjusted basis.

The pandemic and the lockdown to contain the spread of the virus negatively affected a broad range of economic activities.

Service sector output, which includes trade of goods and typically makes up more than half of the economy, fell 15.8% from a year earlier in the April-June period.

The industry sector, including manufacturing and construction, contracted 22.9%, while the agriculture sector expanded 1.6%, the data showed.

The economy deteriorated sharply despite recent policy stimulus. Bangko Sentral ng Pilipinas in late June cut its benchmark overnight borrowing rate by 50 basis points to 2.25%, following an unscheduled move in April to slash the rate by 50 basis points.

Government data on Wednesday showed the country's consumer-price index in July rose 2.7% from a year earlier, accelerating from a 2.5% increase in June and a 2.1% rise in May, a sign of improvement after the pandemic weighed on prices earlier this year. Inflation remains within the central bank's 2%-4% target range.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

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