Nov 24, 2009

PRETORIA (Reuters) - South Africa included figures for drugs and prostitution in its economic growth calculation for the first time on Tuesday, but analysts said the estimated $465 million for illegal activities last year was too low.

Statistics South Africa said illegal and underground activities make up only 0.2 percent of the economy in the country, which has one of the world's highest rates of violent crime.

Analysts immediately cast doubt on the estimate of 3.5 billion rand for 2008.

"I think it is a bit conservative," said Freddie Mitchell, economist at research group Efficient.

"The international community sees South Africa as a haven for drugs, so I think 3.5 (billion rand) is a bit of an underestimation."

The statistics agency released previously "non-observed" activities in its gross domestic product calculations for the first time, in line with international standards.

The new category includes many activities like prostitution, abalone poaching and the growing and selling of drugs.

Carjacking is common in South Africa and drug use is rife in some areas and among young people. Marijuana is seen as a cash crop in many rural areas.

Stats S.A. said in the release of third quarter data, which also revised and rebased previous figures, that Africa's biggest economy measured 2.284 trillion rand, of which illegal activities make up 0.2 percent.