Tuesday, April 16, 2024

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Sri Lankan construction industry to register annual growth of 5.9%

The Sri Lankan construction industry is expected to register an average annual growth of 5.9% from 2024 to 2026, supported by investment in transport, renewable energy, housing, industrial zone, and tourism projects, finance  ministry sources   revealed .

The construction industry in Sri Lanka is expected to contract by 7% in real terms in 2022/2023 -down from GlobalData’s prior estimate of a 4.6% decline.

True to this finance ministry projection, Sri Lanka Purchasing Managers’ Index for Construction (PMI – Construction) computed by the Central Bank indicates an expansion in construction activities in February 2024, as reflected by the Total Activity Index,which recorded an index value of 57.1. 

Many firms attributed the growth in construction activities to the current conducive environment and the resumption of several temporarily suspended projects.

New Orders continued to increase for the second consecutive month, reflecting the improved demand conditions in the industry. 

The respondents mentioned that large-scale infrastructure projects, particularly foreign-funded ones, are also among the available tender opportunities. 

However, Employment remained contracted in February,yet at a slower rate than the previous month. 

Several survey respondents cautioned about the shortage of skilled and experienced construction workers.

 Further, Quantity of Purchases improved due to the increased pipeline projects. The price levels of construction materials denoted a downward adjustment during the month. Meanwhile, Suppliers’ Delivery Time further lengthened in February

The National Construction Association of Sri Lanka reported that activity in the construction industry had collapsed, with 90% of work across the country coming to a standstill, mainly due to the shortage of cement, iron, and other raw materials; this is expected to result in a possible loss of 75% of the industry’s workforce. 

The association also reported that more than 1,000 building material suppliers had suspended operations, amid the unavailability of construction materials. 

According to the Ministry of Finance, the total cement production in the country fell by 21.5% year-on-year (YoY) in 2023, while the total cement imports fell by 38.7% YoY over the same period.

To encourage foreign investment, the government appointed a committee to establish an investment promotion agency, by bringing the Board of Investment (BOI), the Export Development Board (EDB), and the Sri Lanka Export Credit Insurance Corporation (SLECIC) together onto one platform

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