PHL construction growth seen among world’s leaders -- BMI
THE PHILIPPINES is expected to emerge as one of the fastest-growing construction markets over the next five years, analysts at BMI Research said, amid fresh funding from Asian neighbors that will propel the government’s aggressive infrastructure push.
The construction sector is expected to grow by an average of 11.2% from 2017 to 2021, making the country a top-five market globally, according to the Fitch Group unit.
“The Philippines’ construction market is set to benefit from President Rodrigo R. Duterte’s heavy prioritization of infrastructure development, as well as funding support from China and Japan,” the report read.
Myanmar is expected to lead global construction growth with an average 13.5% expansion as the country strives to catch up on underinvestment in infrastructure following the end of military rule in 2015, the research unit said. This is followed by Ethiopia (13.2%), Qatar (12.1%), and Pakistan (11.8%).
“Although these elevated growth levels to some degree represent growth from a low base -- these construction markets are some of the smallest globally in nominal value terms -- we note the high value of projects in the pipeline is also pivotal to their rapid expansion,” the report read.
However, analysts set apart Qatar from the group, saying that the drive to build additional transportation and commercial establishments are part of the country’s preparations for hosting the FIFA 2022 World Cup.
In April, economic managers announced plans to spend P8.4 trillion on infrastructure projects between now and 2022 in order to plug connectivity gaps and help sustain the economy’s growth momentum.
Some 61 big-ticket projects have been identified under the “Dutertenomics” agenda, which will be implemented by the Department of Public Works and Highways, the Department of Transportation, and the Bases Conversion and Development Authority, according to the government’s infrastructure portal.
The government will be counting on Public-Private Partnership deals to fund these projects, along with state borrowing and additional revenue from the comprehensive tax reform program being discussed in Congress, as well as from grants and financing deals signed with China and Japan.
Mr. Duterte’s visit in Beijing last year yielded $24 billion worth of investment pledges, followed by an $8.7-billion aid package from Japanese Prime Minister Shinzo Abe last January.
BMI expects Philippine construction activity to surge by 12.49% this year, growing by roughly 10% annually until 2021.
With increased state spending, the government seeks to spur economic growth to a high of 7-8% by 2022, while also improving the ease of doing business and attracting more foreign investment.