The Philippine economy continued to limp in the second quarter, hobbled by sluggish growth in the agriculture and services sectors and a likely contraction in the industry, the latest forecast of the National Economic and Development Authority showed Thursday.

Dennis Arroyo, NEDA Director for National Planning and Policy Staff, told reporters that the agency projected gross domestic product in the second quarter to have shrunk as much as 0.1 percent or expanded up to 0.9 percent from a year earlier.

The economy expanded 0.4 percent in the first quarter from a year earlier, and grew 4.2% in the second quarter of 2008.

The government is set to release second-quarter GDP data on Aug. 27.

Arroyo said the services sector is expected to have grown between 1.7 percent and 2.2 percent in the second quarter, while agriculture likely expanded between 0.4 percent and 1.4 percent. Industry is projected to have contracted between 1.3% and 2.9% in the second quarter despite the government's increased infrastructure spending. Industry comprises manufacturing, construction, mining and utilities.

In the second quarter of 2008, services expanded 4 percent, agriculture was up 4 percent, while industry gained 4 percent.

Arroyo said the government is sticking to its downgraded 0.8 percent -1.8 percent growth target for GDP this year in view of preliminary indications.

"We expect the economy to bottom out in the second quarter," Arroyo said. "Just going through the indicators, the third quarter will be better than the second quarter."

NEDA also expects campaign spending ahead of the elections in May next year to provide the economy a boost. In 2007, election spending contributed around 0.34 percentage point to GDP growth.

Arroyo said although second-quarter economic performance may be slower compared to the year-earlier period, "that is par for the course" amid a global slowdown.

In the first quarter, GDP contracted 2.3 percent from the previous quarter, putting it on the edge of a technical recession, which is defined as two consecutive quarter-on-quarter contractions.