Construction seen remaining Sri Lanka growth driver
ECONOMYNEXT – Sri Lanka’s booming construction sector will remain a key driver of economic growth with government and private investment on building infrastructure, economists say.
Nishan De Mel, Director of Verité Research, a think-tank, said construction along with imports had helped expand economic growth in the post-war period.
The construction sector compensates when imports growth declines owing to government policy changes, he told a forum on the economic outlook held by Asia Securities in collaboration with Verité Research.
The construction sector’s contribution was significant being around eight percent of gross domestic product.
“The construction sector will remain a key growth driver,” said Kanishka Perera, Head of Research of Asia Securities.
Construction sector growth slowed down in 2015 but will continue to grow strongly as the island needs to improve infrastructure, especially transport, to improve labour mobility, with more investments being made on roads.
A new report by Asia Securities and Verité Research said the construction sector has grown by 19 percent a year during the 2012-2014.
Although fiscal constraints will result in a decline in public funded infrastructure projects, the new government has indicated that it will proceed with some of the large projects already in its pipeline, it said.
And recent policy statements made by the government indicates a greater involvement of the private sector in infrastructure development, it said.
Saman Kelegama, Executive Director of the Institute of Policy Studies, said unfinished foreign-funded construction projects like the ‘Port City’ and ‘Megapolis’ projects will help support growth along with private sector investment in tourism and real estate.
(Colombo/January 21, 2016)