Pandemic slows down PH construction growth, says market analyst

The Philippine construction industry’s growth forecast has gone down to 3.6 percent this year from the previous projection of 5.8 percent, according to Fitch Solution’s report.

This was due to the slow down in the construction activity brought by the current public health crisis,

The construction industry in Luzon took a big hit when President Rodrigo Duterte ordered an enhanced community quarantine (ECQ) mid-March. This suspended public transportation and many business operations, as well as mandated everyone to stay at home.

The government extended the ECQ until May 15 in Metro Manila and some regions and provinces to further stop the spread of the coronavirus disease 2019 (COVID-19) in the country.

“Like many other countries around the world, the Philippines is currently in the midst of a battle against Covid-19, which has upended normal business activity and forced the government to implement drastic measures in order to contain the virus,” Fitch Solutions was quoted in a report.

“As a result, works on numerous construction projects across Luzon have been…halted, and hence, project timelines will be stretched and overall construction activity is expected to be reduced in 2020,” it added.

Certain projects will still have to deal with supply shortage, even if the quarantine was partially lifted, as some materials and equipment are sourced overseas.

“Projects will encounter delays in delivery due to logistical challenges and shortages in supply due to disrupted business activity,” it said.

Fitch Solutions expected the infrastructure sector to perform better this year, on the back of works in the transport, energy and utilities sectors.

“Similar to projects in the buildings sector, work on infrastructure projects in Luzon have also been halted due to the ECQ, hence dragging growth of the sector,” Fitch Solutions said.

“The approval of the Department of Transportation’s request to lift restrictions on certain projects, including utility relocation works, works across 13 rail projects [and] as rail replacement works on MRT-3 (Metro Rail Transit Line 3 ) in Metro Manila will provide a small boost to growth, but not enough for it to match 2019 levels,” it added.