COLOMBO: Sri Lanka’s cement production rose 19.7 metric tonnes to 1.041 million tonnes in the first five months of 2016 and imports rose 18.4 percent to 1.888 million metric tonnes, official data shows, which is usually indicative of a construction sector recovery.
Up to May 2016, production and imports rose by 465,000 tonnes, up 18.9 percent from a year earlier to 2,928 million tonnes. In the first five month of 2015, domestic production and imports rose only 4.4 percent from a year earlier or 103,000 tonnes to 2.463 million tonnes.
Cement imports and production is a key indicator of construction activity, although changes in single months may be variable due to the timing of imports and some projects.
Sri Lanka’s Tokyo Cement, which operates grinding and packing plants, said there was a recovery in demand in the household sector. In 2015, several state projects were halted following elections, which have since been given the go-ahead.
Sri Lanka’s interest rates have been low in 2015, allowing people to borrow and invest in areas like houses; prices of goods were also stable, with a strong currency.
The government, however, increased state salaries and printed tens of billions of rupees after a bad budget in 2015, delivering a Keynesian-style stimulus to de-stabilise the economy, which sent the rupee plunging from 131 to 147 to the US dollar, pushing costs and inflation up. Interest rates are now more in line with the budget deficit, which has also narrowed following higher inflation and economic activity.
