The construction sector of Maldives is vital sector of the economy and
has been a key driver of economic growth. However, after witnessing
a strong period of growth, the construction sector registered a marked
turnaround in 2009, and since then the growth of the sector has remained
weak and rather volatile. This paper analyses the recent developments
in the construction sector of Maldives and examines the key problems
and challenges faced by the sector. The analysis indicates that both
demand and supply side factors have contributed to the slowdown.
On the demand side, the main factor constraining growth has been the
scaling down of public infrastructure projects, while sluggish growth in
resort construction has also contributed to the recent slowdown. On the
supply side, difficulties in access to bank credit, payment delays, shortage
of skilled labour and fluctuations in raw material prices have all raised
construction costs leading to project delays and cost overruns.