Construction Bias in Sri Lanka’s Recent Growth

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A new office building coming up off Union Place in Colombo, Sri Lanka. Image by author, April 2014.

As we near the 5 year mark since the end of the war in 2009, I’ve been reflecting on Sri Lanka’s economic journey since then. A discernible trend in post-war growth is that it has been led largely by growth in what economists’ call the ‘domestic non-tradable sector’ – construction, domestic transport, utilities and wholesale and retail trade. These are products that aren’t internationally traded (i.e., exported) and for which valuable foreign exchange is earned to support a country’s import bill and foreign debt payments.

Within these non-tradables, the construction boom is especially notable, whether it’s the high-rises, new office buildings and apartment blocks in the city, or the hotels, roads and highways outside it. The role of construction in recent GDP growth also no doubt is reflective of the domineering role of the ongoing public sector infrastructure development drive.  Manufacturing has not been a notable driver of recent growth. While construction’s share of GDP rose from 6.65% in 2009 to 8.70% in 2013, manufacturing’s share of GDP has even slightly declined from 17.45% in 2009 to 17.10% in in 2013.

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