Impact of economic decisions on building construction material prices in Sri Lanka

Abstract

The economic crisis had a substantial impact on the Sri Lankan construction sector. The economic crisis was characterised by several economic problems, including currency devaluation, high inflation, and rising debt levels. Building construction materials prices have also increased drastically during the economic downturn period. These increases in the price of building materials were attributed to several economic factors including inflation rate increases, local currency devaluation and changes in government decisions and regulations, to name a few. Hence, the main aim of this research is to assess the impact of economic decisions on building construction material prices in Sri Lanka during the last 10 years. The mixed research approach was followed to achieve the aim of the study. A comprehensive literature review followed by a market survey to find building materials price data and fifteen semi-structured interviews were carried out with construction industry professionals during the empirical investigation. The collected data was analysed through materials price data analysis and code-based content analysis using NVivo. The findings revealed inflation rate, interest rate, and foreign exchange rate as the key macroeconomic factors that influence the price determination of building materials, while other economic factors and decisions also affect the building material prices in Sri Lanka. Further, this study proposed possible strategies and mitigation measures to minimise the impacts. Construction industry stakeholders can use the research findings to implement the appropriate strategies to minimise the building material price escalation impacts.