MANILA, Philippines — The Philippine construction sector will rebound strongly this year as the government ramps up transport infrastructure, particularly rail and road development, according to Fitch Solutions Country Risk & Industry Research.
In a report, the Fitch unit noted a slew of construction activities and infra expenditures over the past months.
It said the Philippine construction sector grew by 25.7 percent year-on-year in real terms in the second quarter, one of the fastest growth rates in the country’s history.
“This is despite localized lockdowns across the market in recent months. We do stress that this is in large part due to low base effects from second quarter 2020 when the pandemic first hit, but signals a very strong recovery in the market in line with our initial expectations,” Fitch Solutions said.
It said the construction industry is expected to grow by 24.2 percent this year and 16.1 percent next year after slumping by 26 percent last year due to the impact of the pandemic.
The research arm of the Fitch Group expects weaker gross domestic product (GDP) growth in the second half of the year due to the containment measures amid increasing downside risks due to renewed resurgence of COVID infections.
“We have yet to factor this development into our forecasts as many projects have continued to register strong progress as of the time of writing, but the situation remains highly fluid and we may revise our forecasts downwards if necessary over the coming weeks,” it said.
Last month, Fitch Solutions slashed its projected GDP growth for the Philippines to 4.2 percent instead of 5.3 percent this year as the country continues to struggle to contain outbreaks and speed up the pace of COVID-19 vaccinations.
According to Fitch Solutions, infrastructure remains at the core of the Philippine government’s plans to revive the economy and would support its near-term growth outlook.
“We expect transport infrastructure, particularly rail and road development, to be the key driver of infrastructure and construction growth in the Philippines over the coming years. This will be supported by a robust pipeline of projects across all transport subsectors, which has continued to expand rapidly,” it said.
Under this year’s national budget, the Department of Public Works and Highways received the highest budget allocation increase to P695.7 billion, while the Department of Transportation got P87.9 billion.
For 2022, the government has allocated P1.18 trillion for its massive infrastructure buildup under the Build Build Build program, a key policy driving investments in the construction sector.
The government has identified 112 projects under the program and committed to boost the growth of the construction sector as the country’s economic growth is seen averaging six percent annually through 2030.
Article and Photo originally posted by Philippine Star last September 3, 2021 12:00am and written by Lawrence Agcaoili.
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