Experts expect the construction sector to bounce back as big ticket projects of public and private entities resume and government restriction eases.
“Big ticket projects of the government most especially in the Build Build Build are vital to the economic growth of the country as companies grapple with a two consecutive negative GDP brought by COVID-19 (new coronavirus disease 2019) pandemic,” said.
Piper Tan, construction analyst of stockbroker Philstocks Financial Inc.
“It will bounce back but the growth might not be as stellar as initially forecasted since the pandemic hits the world’s supply chain which I think is a major consideration for construction companies (due to) gridlocks in the supply chain,” he added.
Tan said projects that use a lot of imported construction materials could face delay.
“In addition to this, one disruptor to the construction sector is the uncertainties to some industries like travel and tourism and MICE (meetings, incentives, conference/conventions and exhibitions) will be greatly affected by this pandemic. We expect a L- shape recovery for these industries amid confidence of people towards public gatherings as these industries also have a huge demand for construction like hotels, conventions and airports, land ports and seaports,” he said.
Tan said construction will recover at the earliest in the third quarter of this year, growing at around 4 percent.
“Just like last year, the expectation of negative growth will be imminent since COVID-19 puts the economy not just the construction sector into a standstill,” he said.
Many are looking at the construction industry to take the lead in pushing the \ economy back on its feet following a 0.2 percent contraction in the economy in the first quarter as a result of the new COVID-19 pandemic.
Investment bank First Metro Investments Corp. said for the period, the sector’s output dropped 1.8 percent, contributing to the industry segment of the economy’s 3 percent contraction, its sharpest since the third quarter of 2009. The construction sector contributes about 21.1 percent of the industry segment.
The Philippine Statistics Authority ranked the construction sector as the fifth to shed the most number of workers for the period, at a labor reduction of 33.8 percent.
The dampened construction sector also led for cement companies to report lower first quarter earnings, with profits falling by a median rate of 23.2 percent, noted stockbroker Colfinancial.com.
Cement companies likewise reported weak operating result as measured by their earnings before interest tax depreciation and amortization, which dropped at a median rate of 12.1 percent.
Based on PSA 2017 Annual Survey of Philippine Business and Industry – Construction Sector, the construction sector is valued at P488.52 billion, with labor productivity at P546,379.
The sector paid an average annual salary of P255,093 per paid worker.
The construction sector is seen as one of the major beneficiaries in the projected revived infra spending of the government after the COVID-19 pandemic.