Sri Lanka’s construction sector revives after nearly three years
August 03, Colombo (LNW):After a hiatus of nearly three years, Sri Lanka’s construction sector is showing signs of revival, with State-funded projects resuming activity that had been temporarily halted due to a shortage of both foreign currency and local funding amid the economic crisis.
At the onset of the economic crisis in 2020, the then government decided to suspend almost all construction projects and decided to redirect such money into providing relief to the mostly affected sections of the population from the economic crisis.
As construction requires a large amount of imported items, the limited foreign currency available in the country also put a prolonged damper on the industry.
Previously stalled projects, which were partially funded through bilateral agreements, are set to resume following the successful completion of the debt restructuring process.
It has been underscored the importance of this external debt restructuring in rejuvenating the sector which is vital for restarting halted projects.
“The bilateral debt restructuring is expected to inject nearly US $2.5 billion into the market, potentially boosting GDP by 3%,” Central Bank emphasised.
This financial influx is anticipated to provide essential liquidity, allowing large-scale infrastructure projects to proceed and stimulating economic growth.
The bilateral debt restructuring is expected to inject nearly $2.5 billion into the market, potentially boosting GDP by 3%,” Joshua emphasised.
Condominium projects in Colombo and surrounding areas are performing well, with many projects such as Trizen and Havelock City nearing full occupancy.
All pending government payments to contractors had been settled. The commencement of significant projects, including a large warehouse for Michelin is evident, even amid economic challenges.
According to Sri Lanka Purchasing Managers’ Index for Construction (PMI –Construction) reached 59.5 in June 2024, recording its highest indexvalue in thirty consecutive survey rounds.
Most of the respondents highlighted that the industry is mainly driven by projects funded by multilateral agencies, particularly related to road rehabilitation and water distribution, Central Bank’s PMI indicated.
New orders increased at a higher rate in June, indicating a positive outlook for future industry activity. However, Employment remained contracted during the month, yet at a slower rate compared to the previous month.
Meanwhile, the Quantity of Purchases increased with the accelerated demand for input materials. Further, many respondents mentioned that the price levels of most of the construction materials are in a decliningtrend.
In the meantime, Suppliers’ Delivery Time further lengthened in June The expectations for construction activities for the upcoming threemonths remain positive due to the gradual increase in project availability, it added. .However, many firms are cautious about the potential uncertainty associated with the upcoming presidential election period , Central Bank highlighted
