UPDATE 3-S.Africa faces sharp cyclical downturn - Treasury

* S.Africa facing sharp cyclical downturn

* Treasury head says fiscal space allowed for stimulus

* Says must manage borrowing to avoid debt trap

(Adds comments by National Planning Commission head Trevor Manuel in paragraphs 14-16)

By Gordon Bell

JOHANNESBURG, May 21 (Reuters) - South Africa faces a sharp downturn after a prolonged boom and is responding with counter-cyclical measures to boost growth, Treasury Director-General Lesetja Kganyago said on Thursday.

But he said the government must manage its borrowing carefully to avoid overburdening the country with debt.

"As the global economy slows, so does South Africa," Kganyago said at a Bureau for Economic Research conference in Johannesburg. "After a prolonged economic boom, South Africa faces a sharp cyclical downturn."

Africa's biggest economy is widely expected to have fallen into its first recession in nearly two decades in the first quarter, with manufacturing and mining hit hard by a global downturn.