MANILA: The Philippines construction sector is likely to rebound strongly this year, driven by transport infrastructure, particularly rail and road development, says think tank Fitch Solutions.
The local construction industry is seen to grow by 24.2% this 2021 and 16.1% in 2022, outpacing the growth of the overall economy.
Downside risks remain, however, due to the resurgence of Covid-19 infections from the more contagious Delta variant and heightened containment measures, which may temper the sector’s recovery this second semester, Fitch Solutions said in a recent report.
The construction sector grew by 25.7% year-on-year in real terms in the second quarter, posting one of the highest construction growth rates in its history, albeit this was largely due to the low base seen in the same period last year when lockdown protocols in the country were at their tightest.
Nonetheless, Fitch Solutions said this signified a very strong market recovery as this had been achieved despite localised lockdowns across the market in recent months.
“We stress that infrastructure remains at the core of the Philippine government’s plans to revive the economy, and will support our near-term growth outlook,” it said.
In the 2021 national budget, the allocation for the Department of Public Works and Highways increased by 61.3% to 696 billion pesos (RM58bil) or 15.4% of the 4.5 trillion pesos (RM374bil) budget.
The Department of Transportation’s budget also rose by 4.4% to 88 billion pesos (RM7bil). Fitch Solutions noted that as of end-July, government expenditures linked to these two departments had already reached 427 billion pesos (RM35bil) and 32 billion pesos (RM2.63bil), respectively.
This budget is expected to continue increasing in 2022, with 1.2 trillion pesos (RM98bil) proposed for infrastructure and the “build, build, build” programme, which Fitch Solutions expects to remain a key policy driving investments in the construction sector.The Duterte administration has approved 80% of its flagship infrastructure projects under the “build, build, build” programme, to revitalise the pandemic-stricken economy. —The Philippine Daily Inquirer/ANN