Construction still a big growth driver
By Michelle Remo
Philippine Daily Inquirer
First Posted 05:17:00 12/04/2008
Filed Under: Construction & Property, House building
The construction sector, boosted by increased government spending on infrastructure and an expected rise in private-sector investment in housing and business process outsourcing facilities, will remain a major growth driver of the economy next year and maintain its double-digit growth, the National Economic and Development Authority (NEDA) said Wednesday.
“Construction will continue to be strong, especially next year when all these investments come in,” Dennis Arroyo, NEDA director for policy and planning, said at a news briefing.
Construction grew 21.3 percent in the third quarter, accelerating from a 17.8 percent pace in the same period last year, according to data from the National Statistical Coordination Board, an agency attached to the NEDA.
Arroyo said the growth in the construction sector was brought about by rising demand for housing, especially with the recent move of the government-run housing mutual fund Pag-IBIG to cut its interest rate on housing loans from a high of 12 percent a year to six percent.
“Housing has a very large multiplier effect, at 16.6 times,” Arroyo said. This means an investment of P1.00 in the housing sector yields P16.60 in income, he said. “For this reason, investments in housing substantially help boost the economy.”
The housing sector also benefits from continued growth in money remittances from overseas Filipino workers (OFWs), and the remittances are expected to remain robust next year, Arroyo added.
Despite the crisis in the United States and some European countries, OFWs are not expected to decrease, he said. If there will be layoffs in Western advanced economies, they will be offset by increasing demand for Filipino workers in the Middle East, he added.
Another contributor to what Arroyo called a construction boom is increasing demand for office space by business process outsourcing companies.
Arroyo said he agreed with projections that by the second quarter of 2009, more US-based and European firms would outsource some of their operations to countries like the Philippines to cut down on their operational costs. Edited by INQUIRER.net
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