Transportation developments to push construction growth in the Philippines


Transport infrastructure is expected as the key driver for the Philippine construction sector growth, Fitch Solutions said Thursday.

In a commentary, the research unit of the Fitch Group said the Philippine construction industry is expected to grow by 24.2 percent year on year this year, and by 16.1 percent in 2022.

“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,” it said.

Fitch Solutions added transport projects dominate pipeline construction projects.

Of the total value of ongoing projects, 33 percent are rail projects and 22 percent are airport development, while roads and bridges share 18 percent.

“(President Rodrigo) Duterte’s ‘Build, Build, Build’ program will remain a key policy driving investments in the construction sector, while the progress on the execution of projects will have a heavy influence on the growth of the sector over the short term,” Fitch Solutions said.

It added that strong fiscal support is also evident in the government’s national budget.

The proposed budget for the Department of Transportation (DOTr) next year rose to PHP151.3 billion from PHP87.9 billion this year.

Of the said budget, PHP110.9 billion will go to rail projects, PHP13.9 billion for land public transportation, PHP1.7 billion for aviation infrastructure, and PHP720 million for maritime infrastructure.

“The Philippines construction sector grew by 25.7 percent year-on-year in real terms in (the) second quarter of 2021, marking one of the highest construction growth rates in its 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 (the) second quarter of 2020 when the pandemic first hit, but signals a very strong recovery in the market in line with our initial expectations,” Fitch Solutions said.

However, the rising Delta variant cases in the country pose a downside risk to the sector.

Fitch Solutions forecasted that the construction sector’s growth will weaken during the second half of the year.


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