A REBOUND in public construction is expected to provide a much-needed boost to Philippine economic growth in the second half after weak infrastructure spending dragged on the economy in the first six months of the year, a Budget department official said.
Budget Assistant Secretary Romeo Balanquit said he expected public construction to become a significant contributor to economic growth beginning in the third quarter as government agencies accelerate the use of infrastructure funds released in recent months.
“I am really very confident that third quarter public construction would be really contributory now to the GDP,” Balanquit told reporters on Friday.
His outlook comes after public construction contracted by 32.4 percent year-on-year in the second quarter, contributing to a 14.8-percent decline in overall construction and a 9.2-percent contraction in gross capital formation, or investment.
The sharp decline in construction was a major drag on the Philippine economy, which grew by only 2.3 percent in the April-to-June period.
The second-quarter result followed growth of 2.8 percent in the first quarter and brought first-half economic growth to just 2.6 percent — below the government’s 3.5- to 4.5-percent target.
Balanquit said the government was expecting infrastructure spending to improve significantly in the third and fourth quarters, partly because of the low base created by last year’s slowdown.
“Definitely, public construction will no longer be down by 30 percent by the third quarter,” he said.
He said the government had already released substantial infrastructure funds, but these had yet to translate fully into actual spending and economic activity.
“There are a lot of [funds] that we released in the months of May and June,” Balanquit said.
He added that the year-on-year comparison itself should provide a boost to public construction growth in the third and fourth quarters because infrastructure activity was unusually weak during the same periods last year.
The slowdown last year followed the government’s decision to scrutinize infrastructure projects amid allegations surrounding flood-control spending.
Public construction activity weakened sharply as a result, creating what Balanquit described as a favorable base effect for the second half of 2026.
“So now, the comparison, even if you don’t do anything, it means you have growth in the third quarter and fourth quarter,” he said.
Balanquit also said the expected rebound would not rely solely on base effects as infrastructure funds released during the second quarter and July would have flowed into actual project implementation.
This combination of a low base and faster utilization of released funds could provide a substantial lift to construction activity in the second half.
“If we are going for, let’s say, the high end [of] 4.5 [percent], we need to be seeing GDP growth by around six percent in the second half,” he said.
This is ambitious but achievable, Balanguit claimed.
“Clearly we have to go beyond 4.5 in the second half.”
