Fitch revises PHL construction industry’s growth outlook upward

Fitch Solutions Macro Research has revised its growth forecast for the Philippine construction industry upward, citing the country's "improving" bilateral ties with China.

According to a Fitch commentary, the agency revised its long-term growth rate forecast for the Philippine construction industry to 9.0 percent between 2019 and 2027, from the previous forecast of 8.8 percent.

"Growth of the construction industry in the Philippines will be boosted by improving bilateral ties with China," the commentary read.

Just last month, China and the Philippines inked 29 agreements, including cooperation on the Belt and Road Initiative, during Chinese President Xi Jinping's visit to Manila.

"We expect increased Chinese involvement in the road and railway sectors in particular, given China's expertise in the construction of such projects, which will help to drive growth," said Fitch.

The Philippines has so far finalized two loan agreements with China under the Duterte administration—including a $72.49-million soft loan provided for the Chico River Pump Irrigation facility of the National Irrigation Administration, and the New Centennial Water Source - Kaliwa Dam project.

The government plans to spend over P8 trillion in its Build, Build, Build program infrastructure projects until 2022, largely funded by government revenues from taxes.

However, Fitch flagged possible "downside risks," given the geopolitical tensions between the two countries.

"However, we don't rule out downside risks to this outlook given the history of geopolitical tensions between the two countries, which could resurface and hinder infrastructure cooperation," it said. — Jon Viktor D. Cabuenas/BM, GMA News