20 March 2023 12:01 am Views - 246
The once brisk construction sector fell to new lows in the final three months of last year, extending the contraction in the sector to its sixth straight quarter reflecting the extent of its struggle.
According to the latest sector-wise performance of the economy for the October – December 2022 period, the construction sub-sector contracted by 37.2 percent from the same period in the previous year.
This was an acceleration from the 33.2 percent de-growth recorded in 3Q22 when many thought the economy might have bottomed.
For the full year, the construction activity contracted by 20.9 percent.
The construction sector accounted for 8.0 percent of the total Gross Domestic Product in 2022. The real estate sub-sector accounted for 4.4 percent of the total fourth quarter GDP.
Meanwhile, the real estate activities which also capture ownership of dwelling fell by a steeper 21.8 percent in the fourth quarter, speeding from 4.8 percent in the third quarter.
The depth to which the construction sector has fallen indicates the number of people who have lost their livelihoods in the last three years – first due to the pandemic and then due to the economic crisis that followed.
Meanwhile, the government owes billions to the country’s construction sector for the work completed. The non-payment of outstanding payment owed to the construction industry has been a major issue for the survival particularly of the small and medium-sized contractors.
However, government has taken a policy decision to settle the outstanding payments owed to the construction industry from the capital allocations of 2023, which is approximately Rs.350 billion.
The outstanding payment towards the industry stood at Rs.200 billion. But, with a few payments it has come down to about Rs.175 billion and the government has begun to settle the outstanding payments as and when the money becomes available to the Finance Ministry.
Following an earlier decision, the government settled some of the payments with bonds of the tenure of two and a half years and 22.5 percent interest rate.