Sri Lanka cement imports surge in May, production up
ECONOMYNEXT – Sri Lanka’s cement imports have surged in May 2018 and domestic production has also picked up slightly ending steep contraction seen in the first quarter, which may point to a recovery in the construction sector.
Cement imports surged 56 percent from a year earlier to 633,000 metric tonnes in May 2018, taking the total imports in the first five months to 2.3 million metric tonnes up 1.5 percent from a year earlier.
Domestic production grew 0.5 percent to 220,000 metric tonnes in May though the 5-month total 1.18 million tonnes was still down 2.6 percent.
Total imports and production was almost unchanged at 3.42 million metric tonnes up to May.
Up to April domestic production was down 3.3 percent to 898,000 tonnes and imports were down 8 percent to 2.56 million tonnes.
Negative cement sales points to a contraction in the construction sector. In the first quarter construction output contracted 4.9 percent according to the statistics office. However the construction sector was heading for a bubble after money printing in 2015 and 2016, which was slowed by tighter policy.
Sri Lanka’s economy has slowed amid foreign reserve collections, which tend to contract resources available for domestic credit and investment. In March after the central bank stopped permanently sterilizing interventions, the monetary authority lost its ability to build forex reserves, except by depreciating the currency.
But a falling exchange rate also kills spending power, impoverishing people, and reduces the investment that can be made from a given amount of rupee denominated capital, in addition to creating labour unrest. (Colombo/Aug23/2018)