The Philippines’ ambitious plan to roll out more big-ticket infrastructure projects through the “Build, Build, Build” program will shield the domestic economy from a global slowdown partly caused by trade tensions between the US and China, UK-based Oxford Economics said.
“Partly in response to the slowdown in global momentum, governments across the region are ramping up infrastructure investment. The Philippines, Vietnam and Indonesia have the strongest outlook, with their governments committing a total of $500 billion over the next four years in funding for much-needed transport and logistics projects,” Oxford Economics economist April Skinner said in a report titled “Southeast Asia construction in the trade war firing line.”
For Oxford Economics, the three Asean countries are “expected to see strong growth in total construction work done, despite uncertainty surrounding the US-China trade war.”
“The average growth rate for construction work done in these three economies is expected to accelerate in the near term, and average 19 percent year-on-year over 2019-2023 (against 11 percent year-on-year in 2019). Underpinning this is continued strong growth in domestic demand and a healthy pipeline of government-funded infrastructure projects,” Oxford Economics added.
Among 12 Asian countries—which also includes China, Hong Kong, India, , Japan, Singapore, South Korea, Taiwan, Thailand, Malaysia, Indonesia and Vietnam—the Philippines was ranked by Oxford Economics as the least vulnerable to the US-China trade war.
The vulnerability was measured in consideration of five factors—business environment, demographics, domestic demand, exposure to trade, and infrastructure pipelines.
The Philippines was the cellar dweller (12th) in business environment, but ranked higher in the four other areas: Second in demographics, fourth in domestic demand, first in exposure to trade (or vulnerability to the near-term downturn in trade), and second in infrastructure pipeline.
“Indonesia, Philippines and Vietnam top the list of countries in the region for infrastructure spending targets to 2024… In Indonesia and the Philippines, there has been a significant emphasis on transport projects improving linkages between regions and economic zones such as the $3.4-billion Simpang Indralaya-Muara and Enim-Lubuk Linggau Toll Road and the $730-million Metro Manila Skyway, while Vietnam is undertaking large energy investments in projects such as the $3.7-billion LNG Import Terminal, along with expansions to its transport network including the $3.5-billion Can Tho City Rail line,” Oxford Economics noted.
“These projects will contribute to a rapid increase in civil engineering construction over the forecast period, with average annual growth of 22 percent year-on-year for Indonesia, 20 percent year-on-year for the Philippines and 14 percent year-on-year for Vietnam projected over 2019-2023,” according to Oxford Economics. /gsg
Via | Ben O. de Vera