In a State of the Nation Address to Parliament, Mugabe repeated accusations that sanctions and sabotage by former colonial power Britain and its Western allies were the chief causes of Zimbabwe's unprecedented economic meltdown.

But the veteran leader, who last week won approval from his ruling ZANU PF party to continue in office for two more years after expiry of his term in 2008, said his decision to strengthen economic ties with the East after falling out with the West was beginning to pay off.

"The under-performance of the economy we are now turning around is largely a product of the illegal overt and covert sanctions imposed on us, by Britain and her allies, as punishment for daring to reclaim our land," said Mugabe.

"Once more I wish to pay tribute to our people for their resilience and to all our Look East development partners for their sterling display of solidarity at the time of our greatest need," he added.

Zimbabwe is grappling with a severe economic recession described by the World Bank as unprecedented in the world outside a war zone.

The economic meltdown has seen inflation shoot to more than 1 000 per cent while food, fuel, electricity, essential medicines, hard cash and just about every basic survival commodity is in short supply.

Critics say Mugabe, Zimbabwe's sole ruler since independence in 1980, is largely responsible for driving the country's once robust economy into the ground, pointing to his populist seizure of land from white commercial farmers to resettle blacks, which derailed the mainstay agricultural sector.

Mugabe, who has been shunned by the West on charges of rigging elections and human rights abuses, denies ruining the country and instead blames Western powers he says are out to cause economic strife in Zimbabwe to incite rebellion against his government.

The veteran leader vowed to resist Western pressure boasting that hard times his country has faced since 1999 had propelled Zimbabweans "to the apogee of resilience and self-reliance, and awakened us in much ingenuity and pragmatism that have contributed to the home-grown programmes aimed at rejuvenating our economy."

The World Bank however says Zimbabwe is one of only two African countries that will register negative economic growth next year.

According to the bank's 2007 Global Economic Prospects report released last week, Zimbabwe's economy is seen shrinking by a further 3.3 percent while Seychelles is seen declining by 1.8 percent.

Apart from economic recession, Zimbabweans also have to grapple with one of the world's worst HIV-AIDS pandemics with the disease killing at least 3000 people in the country each week.

Mugabe, who has in the past used security forces to clamp down on protests against worsening economic hardships, praised the army and police for the "peace and tranquility" Zimbabwe was enjoying while also reminding opponents they would be dealt with harshly if they dared challenge his government through street protests.

ZimOnline

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