It was clear that the consumer spending boom was far from over, the Bureau for Economic Research said on Thursday in its latest forecast for the South African economy.

It said a string of second quarter economic indicators showed that though the pace had cooled from the "unsustainable " tempo at the end of 2004, the boom was continuing.

The outlook for domestic spending was also supported by the favourable outlook for inflation and interest rates.

"Bar unforeseen shocks, the South African economy is... expected to perform well; the BER forecasts real GDP growth of 4.2 percent in 2005 and 3.9 percent next year," it said.

It warned, though, that "downside" risks should not be ignored.

The post 9/11 world was an uncertain one, and oil price volatility and United States dollar and interest rate uncertainty clouded the outlook.

A sharper than expected increase in domestic interest rates and weaker global economic growth could produce a more pronounced domestic economic slowdown in 2006.

Sapa

SA economy South Africa is the economic powerhouse of Africa, with a gross domestic product four times that of its southern African neighbours and comprising 25% of the entire continent's GDP.

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