Zimbabwe's economy is projected to grow by 6,1 percent next year, driven by agriculture and mining, Finance and Economic Development Minister Patrick Chinamasa said. The agricultural sector is estimated to grow by nine percent on improved maize and cotton yields, while the mining sector will expand by 11,4 percent, Minister Chinamasa said while presenting the 2014 National Budget in Harare yesterday. Other sectors that are expected to underpin the growth include construction and tourism. Inflation is forecast to end at 1,5 percent, an indication that the liquidity crunch would prevail. The trade deficit is likely to widen, with exports expected to reach US$5 billion from US$4,4 billion this year against imports of US$8,3 billion , the minister said. Economic growth decelerated from 10,6 percent in 2011 to 4,4 percent in 2012 and 3,2 percent this year, reflecting a fragile recovery owing largely to worsening liquidity, a high debt overhang and the deteriorating infrastructure. The economy is, however projected to grow at an average 7 percent until 2018 under the ZimAsset, a new Government economic blueprint meant to grow the economy. Tourism sector is estimated to grow by 15 percent, from 20 percent projected this year. The manufacturing sector is expected to register a marginal growth of between 1,5 percent and 3,2 percent. Zimbabwe remains unattractive to international financing, largely due to external debt estimated at about US$6,1 billion . This has resulted in the unavailability of sustainable long term credit to the economy with the available short term loans being too expensive to assist industry. Capacity utilisation for the manufacturing sector dropped 44 percent in 2012 to 38,9 this year. Low investment into the country has resulted in the country's manufacturing base shrinking to the extent of reducing the country into a nation of traders. This has resulted in the country importing much more than it exports. The net effect of this has been a debilitating liquidity crunch which has worsened the operating environment. The liquidity crunch which started towards the end of 2011 has gradually worsened in 2013 resulting in several companies collapsing and many more struggling to meet their costs especially staff costs. It is feared some companies may fail to re-open next year. "What we need is retooling," said Minister Chinamasa. "We are 20 years behind and we need to close this gap." Minister Chinamasa said there was need to expand Zimbabwe's export basket, through mineral beneficiation and value addition. "It is against this background that there is need for diversification of the economy through acceleration of mineral beneficiation and value addition that will lead to growth in the mining sector."
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