Construction's slow growth

Published: Wednesday September 10, 2008

The local construction sector is facing slow growth, yet the prices of raw materials are extremely high, say industry insiders.

Modern economists have created the term "stagflation" to describe such situations where industries or entire economies experience slow, subdued growth, yet must deal with high prices or an overall inflated economy.

The "building boom" which swept the country within the last four years is slowing down, said president of the Trinidad and Tobago Contractors Association Mikey Joseph.

Speaking to the Business Express last week he said he forsees a gradual decline in the number of projects happening in both the public and private sector.

Within the last two weeks over 100 workers have been retrenched from the Home Construction Limited group of companies (HCL).

HCL is one of the larger construction firms in the country.

As a result of the retrenchment many questions were raised about a pending decline in the heavy workloads which local construction professionals have had on their plates recently.

During the recent building boom (which many economists said was aided by the government's desire to build new buildings, roadways and bridges at lightening speed) locals saw the prices of raw construction materials increase significantly.

The average man complained about his inability to complete his house construction and expansion work. But with many of the big projects (such as the building of the Brian Lara Stadium, the University of Trinidad and Tobago Complex and several highways and by-passes) already contracted out and catered for, expansion works have been reaching a plateau.

Joseph, however does not see the slowdown solving the problem of high prices or ensuring that prices for raw materials would go down right away.

He said, "Prices will have to drop eventually once things do slow down, but I don't see it as automatic or overnight."

Joseph said the slowdown was inevitable as the fast paced expansion could not go on forever.

Much of the construction which has been taking place has been attributed to the government's drive to push the country to developed nation status by the year 2020.

Economists and construction professionals alike have critiqued the Government's fast paced expansion saying it is both overcrowding the business sector and sucking all the necessary resources (workers and raw material) while pumping too much money into an already inflated economy.

Minister in the Ministry of Finance, Mariano Browne said recently that at present Government spending accounts for at least 30 per cent of GDP.


Source: Trinidad Express Newspapers
http://www.trinidadexpress.com/index.pl/article_business_mag?id=161373847