The construction industry forms an important part of any economy, and development of the construction industry could be of high significance for economic development. The construction industry includes the production of construction objects, consumption of resources, investment that contribute to the creation of employment places and also to the economic development of Sri Lanka. The aim of the research is to analyse the development trends of the construction industry and its interconnection with economic development in Sri Lanka. Particular focus of the research is placed on interconnection between the construction industry and economic development. Historical analysis, logical access and other methods have been used in the research. The analysis includes theoretical and practical aspects: actual tendencies and historical overview.