While South Africa was likely to see gross domestic product (GDP) growth of about 2,7% this year and 3,5% in 2011, the Bureau for Economic Research (BER) on Monday warned that the global economy could suffer a growth relapse at the end of this year or early in 2011.

In a quarterly economic prospects report, the BER pointed out that South Africa's GDP had grown by an estimated 2,5% to 3% in the last quarter of 2009.

Despite this growth, as well as the 0,9% growth achieved in the third quarter, GDP for the full year would have contracted by nearly 2%, the researchers said.

Nevertheless, an improved view on net exports has led to an expected growth of 2,7% for 2010, despite weaker consumer spending and fixed investment forecasts.

Further, the researchers noted that a "mild inventory rise" would likely occur in 2010, which could make a big positive contribution to GDP growth.

South Africa's GDP would grow by an estimated 3,5% in 2011.

The researchers highlighted, however, that some risks to growth remain, the biggest of which would be if the 2009 fourth-quarter job growth was not sustained and retrenchments continue.

"This would have a negative impact on consumer demand (responsible for two-thirds of GDP) and could potentially also lead to increased social unrest. Such a scenario would also put government finances under increased strain as it means that tax revenue will remain under pressure," the researchers said.

Statistics South Africa reported last week that the South African economy had created 89 000 jobs in the fourth quarter.

Meanwhile, BER senior economist Hugo Pienaar noted that a reacceleration of price pressures at the end of 2009 would be temporary, with consumer price inflation (CPI) to fall back into the 3% to 6% target band from February.

Weak domestic consumer demand, the sustained strength of the rand, lower wage increases and subdued global inflations would also contribute to lower domestic inflation, with CPI to average at 5,3% this year and at 5,9% next? year.

The BER noted that the projections took into account 30% a year electricity price tariff increases for both years.

Producer price inflation would average 5,3% this year and would rise to 7,5% next year.

Meanwhile, mild job growth in the fourth quarter of 2009 and recent positive manufacturing data indicated that interest rates would likely remain flat throughout 2010, with a 100 basis point rise expected throughout the first half of next year, said the BER.

"However, a scenario where the tariff hikes granted to Eskom are in line with the South African Reserve Bank's 25% assumption and 2009 Q4 GDP growth (especially if it is driven by consumer demand weakness) surprises on the downside, could result in a further (final) 50 basis point rate cut in March," said Pienaar.

The BER further forecast the rand to average at R7,85 to the dollar in the last quarter of this year, before weakening to an average of R8,38 to the dollar by the last quarter of 2011.

The researchers pointed out that while the rand would remain "well supported" in the first half of this year, the second half of the year could prove more challenging, as developed countries "start to rein back" some of the stimulus measures and as growth resumes in these economies.

"By that time, the domestic current account deficit is also expected to widen again, as imports start to pick up. A larger current account shortfall will require increased capital inflows from abroad at a time when global risk aversion may be on the increase amid fears of a renewed growth slowdown. Foreigners are unlikely to finance the shortfall if the global recovery is not assured," the BER noted.