Philippine construction market growth to stay ‘robust’ in 2020 — Fitch unit
MANILA, Philippines — The Philippines’ construction sector is expected to expand at a quicker pace in 2020 than last year, boosted by heightened government spending and big-ticket infrastructure projects that are funded by foreign assistance and private capital.
In a bid to supercharge economic growth, the Duterte administration plans to spend trillions of pesos to upgrade the country’s outdated roads, ports and railways through the ambitious program called “Build, Build, Build”.
In a research note sent to reporters Friday, Fitch Solutions said they expect the country’s construction market to expand in 2020 by 9.4%, in real terms. This means the Philippines will remain one of the fastest growing construction markets in the region, it added.
The Fitch unit said President Rodrigo Duterte’s infrastructure program will remain a driver of investments in the construction sector, while the pace of project execution will heavily influence growth of the sector over the short-term.
“Within the infrastructure sector, rail projects are expected to spearhead growth in 2020,” Fitch Solutions said.
“While not all projects in the pipeline are expected to break ground and contribute to the country’s construction sector GDP this year, we highlight the rail sector as an important contributor of short-term construction sector growth, with several projects in the National Capital Region progressing well,” it added.
In 2019, GDP growth averaged 5.9%, missing the government's 6%-6.5% goal for the year. The Philippine Statistics Authority said construction was among the main drivers of growth in the final three months of 2019.
But Fitch Solutions said a downside risk to its outlook is the ability of the Philippine government to attract enough foreign direct investments, development assistance from other countries and quality bids to implement projects in the "Build, Build, Build" pipeline.
“Failure to do so will once again result in a lack of progress and will be a downside risk for construction sector growth,” the Fitch unit said.
READ: Private sector to play a larger role in Philippines’ urgent infra needs amid fiscal constraints
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