Stagnant construction sector to take hit amid economic crisis

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The construction sector output in 2022 is expected to be affected by weak consumer confidence amid the escalating economic crisis in the country,

Majority of construction projects – both residential and commercial have come to a standstill as of mid-January 2022, due to cement shortages and the increasing price of cement.

According to Millennium Housing Developers Chairman, U. Harshith Dharmadasa and Deputy Chairman Victor R. Ramanan, after January 2022, the severe foreign exchange crisis prompted the Government to impose strict import control measures leading to the shortage of raw materials required to produce construction materials domestically resulting in the short supply of key materials such as cement, steel, and tiles, as well as the rapid price increases.

The total quantity of cement production and cement imports fell marginally by 0.8 per cent YoY in 2021.

The Sri Lankan construction industry, which is one of the biggest contributors to GDP and employment generators on the island, was valued at USD 12.3 billion.

The construction sector is projected to grow at an average annual growth rate of more than five per cent from the period 2023 to 2026.

The credit to the private sector granted by Licensed Commercial Banks (LCBs) for construction activities, including personal housing construction activities since December 2021 recorded a growth, denoting an increased availability of funds for construction activities.

The output of the residential construction market in Sri Lanka is expected to be supported by the Government’s focus on providing homes for middle-income families, whilst the construction market growth is anticipated to be fuelled by investments in transport, housing, and renewable energy projects, coupled with government policies to promote manufacturing and exports.

By Mario Andree