By: Staff Writer
Colombo (LNW): The construction industry’s outlook for the next three months is positive, mainly due to the gradual recovery in the economy and the expected increase in project work according to the Central Bank’s Purchasing Managers’ Index (PMI) for Construction Industry – October 2023.
However, the firms are concerned about the upward tendency in energy-related costs and the impact of the upcoming tax revisions, said the Central Bank which compiles the Index.
It said the Total Activity Index reached the neutral threshold of 50.0 in October 2023 after twenty consecutive months of contraction.
“Several respondents mentioned that some of the suspended Government-funded projects recommenced at a limited scale during the month.
However, the industry operates with a low level of available work since most of the ongoing projects are in their final stages,” CBSL said.
New orders declined at a slower pace in October compared to the previous month. Many respondents had observed a gradual increase in sizable tender opportunities, mostly scheduled to be commenced in the first half of next year.
Employment remained contracted since the companies operate with limited staff under current circumstances. Further, quantity of purchases declined, yet at a slower pace during the month.
Moreover, several respondents highlighted the pressure emanated from the increase in energy-related expenses. In the meantime, suppliers’ delivery time slightly lengthened during the month.
The Budget 2024 is being presented at a critical time for our country. The country is still battling with the unprecedented economic crisis which had a profound negative impact on our economy.
However, the situation has been slowly, but steadily improving as a result of the progressive and active role played by the current Government in winning support from the IMF to help us in tiding over the crisis and the progress made in negotiating with creditors to restructure the loans.
While this has eased the hardship to some extent, a lot remains to be done. While the country can see a light at the end of the tunnel, we are still not out of the woods.
The Budget 2024 needs to consolidate on the painful gains made by the country in the last one year and pave the way for continuing the painful restructuring that we need to tread to overcome the crisis.
While the Government needs to begin focusing on long-term strategic and structural development challenges, the country faces insurmountable challenges in loan restructuring and repayments.
Reducing the trade deficit and balance of payments will have to be a major focus in the upcoming budget. More than ever, we have to focus on catalysing investment and improving our productive capacity.