THE mining sector, which is expected to grow by 17 percent next year, will anchor the projected five percent economic growth for 2013. According to Finance Minister Tendai Biti the higher production levels of primary commodities had been supported by a strong external demand. He said at the moment, the country was unable to fully exploit benefits of high international prices to boost exports because of low investment into the sector.
However, he said, the expected resumption of production of nickel and asbestos in 2013 and the anticipated recovery of mineral prices with ongoing investment in the sector will see growth rebound to 17,1 percent.
"Cumulative gold output for the first nine months of 2012 stood at 11,139 tonnes, which remains in line with the 2012 target of 15 tonnes. In 2013, gold output is expected to further increase to 17 tonnes in 2013, benefiting mainly from anticipated firming of gold prices," said Minister Biti.
During the month of September, gold prices continued on an upward trend surpassing the US$1 700 per ounce price. The last two weeks of the month saw the price of gold stabilising to close at US$1 779 per ounce. Diamond output is also expected to increase to 16,9 million carats in 2013 form 8 million carats in 2012, largely driven by enhanced production from the major diamond mining houses at Marange Diamond Fields.
The production output of nickel, coal and platinum are also expected to contribute to the overall growth of the mining sector which in turn will become the major driver of the economic growth.
Agriculture is also set to drive the economy with an upward growth of 4,6 percent on the back of revised tobacco and cotton output for 2012. The sector is expected to grow by 6,4 percent. The growth is expected to be supported by credit financing facilities to be availed to farmers and continued contract farming arrangements for major crops such as tobacco, cotton, barley and soya beans.
The minister, however, projected a marginal 3 percent growth for the manufacturing sector in 2013 citing supply-side constraints to capacity utilisation as a hindrance to the recovery of the sector. Capacity utilisation declined from 57,2 percent in 2011 to 44,9 percent in 2012 as a result of the economy's over-reliance on imported inputs that used to be sourced locally.
"Low capacity utilisation levels largely stem from firms operating obsolete machinery, power outages, higher input costs due to lack of domestic linkages, limited availability and high cost of finance, stiff competition over domestic and export markets, due in part to unreliability of supply-chains, and overall business uncertainty," he said.
The sector was projected to grow by 2,3 percent this year compared to 13,9 percent in 2011. In 2013 the sector is expected to grow by a marginal 3 percent owing to the implementation of the Industrial Development Policy, anticipated lines of credit, fiscal incentives and a favourable agriculture season.
Main manufacturing sub-sectors that are expected to drive the economy growth include beverages, which account for 7,4 percent and foodstuffs that account for only 4 percent.
Minister Biti noted that the macro-economic stabilisation and liberalisation since 2009 that helped improve capacity to bring in fuel, machinery, transport equipment and other raw materials in support of economic recovery had seen a rebound of exports, led by platinum, gold, tobacco and cotton, among others.
"The external position, however, will remain under pressure from a high import bill, as the rebound of exports will not match the steep rise in imports, leaving an anticipated current account deficit of 28,5 percent of GDP," he said.
Exports for 2012 were pegged at US$3,09 billion depicting an 8,3 percent growth from 2011. Mineral exports accounted for the bulk of exports at 64 percent while the tobacco, agriculture and manufacturing sectors were also significant drivers at 19,4 percent, 9,1 percent and 7 percent respectively.
Import growth continued to be mainly influenced by fuel, chemicals, machinery, and manufactured goods, accounting for 8,6 percent of GDP in 2012. Import payments totalled US$6,5 billion marking a 26 percent increase from last year because of continued slumber in the manufacturing industry. Internal demand for consumption goods has thus been covered through imports.
"The retail and distribution sector contributed the highest share of imports. This is largely attributed to the low production in the manufacturing and agriculture sectors which normally produce goods which are currently being imported," Minister Biti said.
, such as grains, groceries and other," Minister Biti said.
He said imports are still expected to grow while exports remain compressed, thus worsening the current account to -24,8 percent of GDP and mainly financed by short term capital inflows.
The trade balance is projected at -US$2,9 billion in 2013 while exports are pegged at US$5,5 billion and imports at US$8,4 billion.
According to Minister Biti, further growth in imports during 2013, without countervailing significant expansion in the economy's export base, will only worsen the current account deficit and this is unsustainable even when one takes account of inflows arising out of higher unregistered remittances, unreported exports, and unidentified financing.