• Expects conditions to persist longer

Participants in the construction sector said they remain buoyant over the rising opportunities for tenders for new development projects in the country as the economy is now equipped with both foreign currency and rupee liquidity.

However, they cited the breakneck competition in the market and also the easing prices for construction sector materials which could reactivate more activities in the sector which was in a prolonged decline for two years.

“Most respondents were confident that the increasing trend in tender opportunities will continue in the upcoming months,” said the construction sector Purchasing Managers’ Index (PMI) for April.  

“Moreover, the participatory firms widely highlighted the intense competition in the market”, the statement released by the Central Bank added.

The PMI dedicated for construction sector activities unsurprisingly contracted due to the seasonality as the long holidays for the New Year temporarily closed construction sites for extended periods.

The manufacturing and services sector PMI released middle of last month for April gave a harbinger for what could be expected for construction sector as these PMIs also came weaker than in March due to the same reasons.
The construction sector has been in a continual expansion for many months due to the availability of affordable credit, softening in prices of many construction sector materials and also the ready availability of materials due to the excess liquidity levels in the domestic foreign exchange market.

Sri Lankan economy shifted gears for a fresh growth cycle starting from the second half of last year due to the normalising monetary policy and normality in foreign inflows from tourism and remittances.

However, the fiscal policy, the leading element of driving the country’s construction sector has been 
extremely constrained.

The construction sector and thereby the economy could have turned a corner during 2022 itself if not for the blunders of the Central Bank and the government over their handling of the monetary and fiscal policies after falling for the baits of the International Monetary Fund.

The construction sector participants continued to remain optimistic over the next three months’ performance, “mainly due to the increase in new construction projects”, the statement said.