UPDATE 7-Zuma sworn in as South African president

* Zuma sworn in as South African president

* Mandela attends ceremony in major political coup for Zuma

* Zuma says South Africa in tough economic situation

* Fate of Finance Minister Trevor Manuel closely watched

(Adds quotes from Zuma)

By Agnieszka Flak and Serena Chaudhry

PRETORIA, May 9 (Reuters) - Jacob Zuma was sworn in as South African president on Saturday after a remarkable political comeback and quickly highlighted the challenges faced by the continent's largest economy.

The prospect of the former guerrilla becoming the nation's fourth head of state since the end of apartheid was unthinkable when he was nearly ruined by graft and rape charges, crises that might have buried many politicians.

Promising to help South Africans realise their dreams, Zuma, 67, took a sober view of the country's economy which may already be in its first recession in 17 years.