What's Powering Philippine GDP Growth? Construction is at a 20 Year High

Construction, both Public and Private, is definitely firing on all cylinders. For the entire 2018, Construction Gross Value as a Percentage of GDP reached 13.47% - the highest it's ever been since 1990, some 28 years ago.

Cumulative Construction Overhang, which measures how far Construction GV is above its historical trend, is now at 6.52% of GDP, more than what it was from 1990 to 2000, the previous boom years.

Private Construction as a Percentage of GDP is at an acute high - 9.62%. The cumulative overhang is even more acute - 5.31% in 2018.

Public Construction is only beginning to break out of its doldrums. Public Construction GV reached 3.85% of GDP, just slightly above the previous high of 3.81% in 1998 - in the height of the Asian Financial Crisis.

As a result, the Cumulative Overhang in Public Construction is much much more muted, only 0.55% of GDP, still way below the ratio from 1998 to 2002.

Public Construction, namely infrastructure, has room to grow. Public infrastructure begets private infrastructure,  and power Private Construction to new highs.

Philippine Public Construction as a % of GDP is at a 20 Year High! - As of September 30, 2018

Philippine House Prices are Still Accelerating! - As of December 31, 2018

Despite the gloomy global macroeconomic environment for emerging markets, Philippine House Prices continued to accelerate in the fourth quarter of 2018. The Philippine House Price Index (culled from data from Colliers International Philippines on Luxury 3BR Condominiums in the Makati CBD), accelerated by 5.00% alone in the fourth quarter of 2018. This is the fastest quarter-on-quarter growth since the second quarter of 2013, when prices rose by 6.92% over the previous quarter. The index now stands at 278.21, almost three times more than its base of 100.00 since the fourth quarter of 2004. The index is also 97 percentage points higher than its inflation adjusted basis.

Source: Colliers International Philippines