The Philippines construction sector is rapidly growing despite recession on account of the government initiatives to boost the development of infrastructure.
According to the Philippines Contractors Association (PCA), various strong initiatives taken by the government have enabled the Philippines construction sector to maintain its positive growth trend amid the global recession, as reported by Inquirer.
PCA reveals that the construction industry grew merely 7.6% in 2008 against the growth rate of 20% witnessed in 2007. Various indicators suggest a growth of around 0-7.6% during Q1 2009. Moreover, the trend in the industry has now changed, with the construction activities in the Philippines currently being led by the government while two years ago private sector was the leader.
The major driving force of the construction industry is the substantial spending by the Philippines government on the development of infrastructure. While the growth was being driven by the government-led projects in Q1, 2009, the construction projects of the middle-income housing remained strong for the private sector.
Another reason for growth in the Philippines construction industry is the construction material prices. The prices of majority of raw materials significantly slumped in 2008, and the steel prices are still very low.
The government of Philippines had announced a stimulus aid of P330 Billion for 2009 in order to create job opportunities by developing infrastructure amid recession. In addition, the government has tried to influence the cement prices by permitting the import of cement at zero tariffs.
Apart from the middle-income housing, the private sector is also actively engaged in the commercial construction, like construction of new shopping malls, though not like the previous two years ago. In fact, the trend has changed with respect to the distribution of the construction spending.
Meanwhile, the construction sector of the country is anticipated to observe some positive growth in 2009 or atleast will be able to avoid any decline. The anticipation doesn’t appear bad in the present economic scenario.
According to a Research Analyst at RNCOS, “Private construction companies in the Philippines need to shift their focus from luxury condominium projects to middle and low-end condominium projects to face the aftereffects of recession. The shift in strategy is inevitable as the government spending on infrastructure projects will not be able to drive growth in the industry for a longer period of time. ”
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