19 September 2022 06:22 am Views - 1506
Total cement usage in the country has plunged 19 percent in the six months to June 2022 reflecting the depth of the contraction in construction activities and thereby the impact on the
Cement usage consisting of both domestic production and imports is a close proxy for the construction and economic activities in the country as construction accounts for a tenth of the country’s Gross Domestic Product (GDP).
Sri Lanka’s economy contracted 8.4 percent in the second quarter of 2022.
Construction has been shrinking in the last three quarters consecutively rendering hundreds of thousands of people out of jobs as it remains one of the largest employers in the country.
The data available through June showed that the total cement usage has plunged by as much as 47.9 percent in the month alone to 302,000 metric tonnes from the same month last year as June marked the month where a large swath of the economy came to a near standstill due to acute fuel shortages.
In the six months through June, the total cement usage has fallen by 19 percent to 2,855,000 metric tonnes.
Reflecting the severe foreign exchange shortage facing the country, the cement imports plummeted 84 percent to just 35,000 metric tonnes in June from a year ago, bringing the first six months imports to 1,010,000 metric tonnes, down 26.2 percent.
Steep fall in the rupee also raised prices of cement by manyfold within a couple of months sharply slowing construction activities across the country.
Soaring interest rates have also contributed heavily to slow down construction activities as liquidity fizzled out for builders.
Meanwhile, the government has also suspended almost all major infrastructure projects plunging many builders into severe liquidity crises as unsettled bills by the government amount to Rs.130 billion.
On the other hand, builders are estimated to owe the banking sector whopping Rs.200 billion.
Meanwhile, the domestic cement production fell by 26.5 percent to 268,000 metric tonnes in June with the total six-month decline logged at 14.5 percent to 1,845,000 metric tonnes.