Workers are seen in a construction site in Manila. — PHILIPPINE STAR/RUSSELL PALMA

THE construction industry and a few others will grow rapidly over the next decade on expectations of robust economic expansion, S&P Global Market Intelligence Asia-Pacific Chief Economist Rajiv Biswas said.

Speaking at a FinTech Alliance meeting on Monday, Mr. Biswas said: “There’s going to be very rapid growth in a number of sectors in the economy, notably in the construction sector (due to the) rapid growth of the Philippines expected in the next decade,” Mr. Biswas said.

He said Philippine gross domestic product (GDP) will double by 2030, putting the country on track to become a $1-trillion economy by 2033.

“One of the fastest-growing sectors will be construction, but many other sectors including electronics (and) automotive will be growing strongly. The pharmaceuticals industry will also be showing rapid growth,” he said.

Speaking to BusinessWorld by phone, Colliers Philippines Associate Director for Research Joey Roi H. Bondoc said his firm is bullish on the growth of the construction sector over the next 10 years.

“In our view, what will really drive the growth in the construction sector in the Philippines is the development of more offices, residential projects such as condominiums and (detached houses), malls, and hotels,” he said.

Infrastructure projects will also boost growth in the public construction sector, even if these projects take around five to seven years to be completed, Mr. Bondoc said.

However, elevated inflation and high interest rates will continue to be a challenge in the near term.

“If we will have geopolitical tensions between China, Taiwan, and US, and the ongoing Russia-Ukraine crisis, or any other political turmoil that will likely erupt moving forward, that will have a significant impact on global supply chains, and that will again have an adverse impact on prices of construction materials,” he said.  

Inflation hit a 14-year high of 8.7% in January, before easing to 6.6% in April. Still, April marked the 13th straight month that inflation breached the central bank’s 2-4% target range.

The Philippine Statistics Authority reported that inflation in product categories like furnishings and household equipment rose to 6.1% in April, from 2.6% a year earlier.

“Disruptions in the global supply chain will raise the prices of construction materials, and these elevated prices will likely slow the growth of private construction here in the Philippines,” Mr. Bondoc said.

High interest rates will also have a “detrimental impact” on the industry, making it more expensive to borrow money to finance projects and mortgages.

“On the commercial side, if these hikes continue again, we’ll likely see a tempered appetite in terms of completion of new projects across the Philippines. As it is, we see developers slowing down in terms of launches,” Mr. Bondoc added.

The central bank has raised borrowing costs by 425 basis points since May last year. Earlier this month, it paused its policy tightening cycle due to easing inflation.

According to S&P’s Mr. Biswas, the medium-term outlook for the electronics industry remains strong even though it has faced challenges in the last 12 months.

Rapid technological development in electronics and increased demand due to the digital transformation of the global economy are driving growth in the industry, he said.

Mr. Biswas said the services sector will grow at a faster rate in the next 10 years, notably financial services and the information technology-business process outsourcing (IT-BPO) industry.

He said the IT-BPO industry has become “one of the most dynamic” in the Philippines. The industry is also expected to contribute significantly to economic output and support employment growth.

“There’s a lot of room for great optimism about the future prospects for the services sector in Philippine economy,” Mr. Biswas said.

“The Philippines is going to be one of the fastest-growing emerging markets in the next decade and will become an increasingly big focus for global multinationals, both in the manufacturing sector and in the services economy,” he added. — Keisha B. Ta-asan