Zimbabwe's recovery and growth prospects are bright says Gono

Governor Gideon Gono says Zimbabwe's recovery and growth prospects are bright but sees a need to deepen business and investor confidence.

The country's economy is estimated to have grown by 8,1% in 2010 on the back of improved performances across all sectors of the economy. Mining and agriculture recorded  significant growth,  47% and 34% respectively.

Presenting his monetary policy statement on Friday, Gono projected the mining industry and agriculture would continue underpinning the country's economic recovery with mining set to register 44% growth.

The Governor warned that the firming of the South African rand against the US dollar, coupled with the increase in international oil prices would continue to induce inflationary pressures in the economy.

"The second-round effects of the rise in fuel prices would be more pronounced as it is expected to cascade down to the other sectors of the economy," said Gono.

"Rising food prices on the world market have also stoked inflationary pressures in the economy.

"Resurging inflationary pressures have to be fought through the unfailing armoury of increased capacity utilisation across all productive sectors of the economy."

In 2010 tobacco output increased to 123 million from 58 million kg in 2009. Tobacco output is expected to increase to between 170 and 200 million kilogrammes in 2011.

Average tobacco prices are expected to remain firm, reflecting global supply and demand conditions.

The coming back on board of renowned international buyers such as Japan Tobacco Industries and Premier Tobacco is expected to boost tobacco prices.

Cotton output increased from 211 000 tonnes in 2009 to 260 000 tonnes in 2010. Output is expected to rise to 300 000 tonnes, against the background of favourable prices.

International lint prices, which rose to $1,7 per kg during the last quarter of 2010 are currently trading firm at $1,5 per kg.

On the mining front gold production is projected to rise to 13 tonnes in 2011, compared with an estimated 8 tonnes last year.

Higher gold prices as well as the reopening of closed mines and the recapitalisation of existing ones helped mining rebound.

Platinum production reached 7 252 tonnes in October 2010, compared to 6 848 tonnes in the same period of 2009.

Platinum output is set to rise to 12,5 tonnes in 2011, driven by the commissioning of Anglo Platinum's Unki Mine and expansion of Mimosa Mine.

Chrome output will reach an estimated 700 000 tonnes up from 500 000 recorded in 2010.

Coal output estimated at two million tonnes in 2010 is projected to reachthree million tonnes this year.

Mineral exports accounted for 64,5% of the country's exports, which rose to $2,2 billion in 2010, from $1,4 billion the previous year.

The country's diamond export revenue amounted to $361,1 million in 2010, compared to $37,4 million in 2009, mainly due to approved sales by global regulator Kimberley Process Certification Scheme.

Gono said the promotion of food security in the country should remain a priority, given the multiple negative effects on the rest of the country's economic, social and political tentacles that emanate from instances of food shortages.

Presenting his 2011 National Budget Finance minister Tendai Biti said the nation's economic growth would be dependent on political stability, performance of the mining sector, high agricultural productivity and various macroeconomic fundamentals.