By Enrico Dela Cruz and Neil Jerome Morales
MANILA (Reuters) - The Philippine economy fell into recession for the first time in 29 years with a record slump in the second quarter, as strict lockdown measures ravaged economic activity and prompted the government to sharply cut its GDP forecast for 2020.
Official data showed on Thursday gross domestic product tumbling 16.5% in April-June from a year earlier - the biggest slump since comparable GDP data was first recorded in 1981 - after falling a revised 0.7% in the first quarter.
The drop was far bigger than the 9% contraction forecast in a Reuters poll of economists and made the Philippines the second country in Southeast Asia, after Singapore, to fall into recession amid the coronavirus pandemic.
Domestic demand and business investment were severely hit, data from the Philippine Statistics Authority showed, while the government was now forecasting the biggest annual drop in GDP since 1985 this year. It reimposed restrictions in and around Manila this week to fight a rise in coronavirus cases.
"The Philippine economy crash-landed into recession with the Q2 GDP meltdown showcasing the destructive impact of lockdowns on the consumption-dependent economy," said ING senior economist Nicholas Antonio Mapa.
Seasonally adjusted GDP fell 15.2% in the second quarter from the first three months of the year, while the government sharply downgraded its 2020 growth forecast.
The Philippines was among Asia's fastest-growing economies before the pandemic, but now the government expects its GDP to shrink 5.5% this year - the biggest annual drop in 35 years - from a previous forecast for a 2.0-3.4% decline. The government sees the economy rebounding in 2021 and 2022.
The government has allocated some 655 billion pesos ($13.35 billion) to help people face the pandemic and 59 billion pesos to improve the healthcare system, but this has done little to ease the pain of a population facing record-high unemployment.
Jomar Santos, who used to earn 350 pesos ($7.14) a day delivering school supplies to stores in Caloocan city, has been at home since the lockdown resumed on Tuesday for the next two weeks and worries about his wife and one-year old child.
"It's really very hard. No work, no food to eat," said the 23-year-old Jomar Santos.
"There's nothing we can do except to bear it. That's better than me and my family getting sick."
The stock market largely shrugged off the data and rose 1.2%, having already underperformed its regional peers this year. The local currency closed slightly firmer at 49.05 to the dollar from Wednesday's 49.075.