UPDATE 2-S.Africa inflation targeting to stay - Gordhan

* GDP seen clearly negative 2009

Inflation targeting to stay

* Inflation has declined since targeting adopted

(Adds Gordhan radio interview)

By Wendell Roelf

CAPE TOWN, July 3 (Reuters) - South Africa will keep its policy of targeting inflation, which has helped to stabilise prices and encouraged economic growth, Finance Minister Pravin Gordhan said on Friday.

Gordhan reiterated in a separate interview that the overall 2009 GDP figure for Africa's biggest economy, which fell into recession in the first quarter of the year, would be "clearly negative".

Inflation targeting has been a source of friction between the ANC government and its allies in the communist party and trade union movements, who want the policy scrapped on the grounds that it has impoverished their members.

The central bank raised interest rates by 500 basis points in the two years to June 2008 to fight inflation, which has retreated since peaking above 13 percent last August but remains above the top end of the 3-6 percent target band.