Fitch Solutions eyes PH construction growth of 9.4% in 2020
Fitch Solutions Macro Research forecasts a 9.4 percent growth for the Philippines’ construction sector this 2020 and this is seen to be driven by public spending and foreign assistance as well as investments.
“Build, Build, Build will remain a key policy supporting growth of the infrastructure sector in the Philippines over the short-term,” the unit of Fitch Group said in a report dated January 30, 2020.
Despite the hurdles faced by the government’s infrastructure program in 2019 due partly to the delay in the approval of last year’s national budget, the report expects the country to remain among the fastest growing construction market in the region.
“We maintain an optimistic view on the execution of BBB-related projects, with the power and rail sectors expected to outperform,” it said.
Fitch Solutions said the government’s commitment to improve the country’s infrastructure can be seen through the large allocations for the major implementing agencies namely the Department of Public Works and Highways (DPWH) and the Department of Transportation (DOTr).
DPWH’s budget this year amounts to PHP534.3 billion, 15 percent higher than its PHP454 billion budget last year while DOTr’s allocation this year rose by 112 percent to PHP147 billion from PHP67.67 billion last year.
Among the projects that will be financed by the DPWH budget this year are road and water infrastructure while rail-related projects will benefit from DOTr’s budget.
“Besides allocations to DPWH and DOTr, a PHP36 billion allocation to the Department of Education for the construction of 8,000 classrooms and the repair and rehabilitation of existing educational facilities, and a PHP12.4 billion allocation to the Department of Agriculture for the construction of farm-to-market roads to facilitate the ﬂow of goods between production areas and demand centers, will provide a further boost to overall construction activity within the country in the coming years,” it said.
The report considers as downside risks to the sector the government’s ability to encourage more foreign direct investments (FDIs) and official development assistance (ODA) and the quality of bids to implement the various projects.
“Duterte’s ‘Build, Build, Build’ (‘BBB’) programme 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 growth of the sector over the short-term,” it added.