Johannesburg - South Africa's Bureau for Economic Research (BER) expects real GDP growth to slow from the 5% plus environment to 3.3% in 2008 - this being unchanged from what was projected when its forecast was last updated in July.

However, it expects GDP growth to decelerate to 1.9% during 2009, which would be the weakest performance since the 0.5% recorded in 1998, it said.

BER economist Hugo Pienaar said in July growth was expected to slow to 3% in 2009.

Releasing its economic prospects for the fourth quarter on Thursday, the BER says the more significant downward revision concerns 2009, where not only private consumption and fixed investment but also export growth is set to moderate further, with the latter actually showing a slight decline.

"While the BER acknowledges that we are already at the bottom end of the latest (October) consensus forecasts for the SA economy, our reading of the global environment and the potential negative spill-over to SA indicates that (depending on the severity of the recession in developed countries) growth could be even weaker in 2009. The extreme global uncertainties mean that the risks attached to the forecast are higher than usual," he said.

The BER added that although the likelihood of a South African recession has increased recently and cannot be ruled out, its baseline forecast does not foresee two quarters of falling GDP. However, the retail sector has probably already slipped into recession during Q3 and leading indicators seem to suggest that the manufacturing sector is also at risk, the BER notes.

With the world economy hopefully starting to recover towards the end of 2009 and domestic interest rates expected to decline next year, SA growth should recover to 3.6% in 2010, the BER added.

However a return to growth in excess of 5% is not expected anytime soon, the BER said.

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