COLUMBIA — South Carolina's economy grew in 2008 in spite of the recession, but economists said the state will continue to face challenges during the next year.

The state's gross domestic product increased 0.6 percent last year to $127 billion, the U.S. Bureau of Economic Analysis reported. That was on par with the national average of 0.7 percent for the nation, said Clifford Woodruff, an economist at the Bureau of Economic Analysis.

Economists who pay attention to South Carolina said the results were unexpected.

"It's a little surprising given the deterioration we've see in the other economic data for the state," said Mark Vitner, senior economist for Wachovia in Charlotte. "Things are not as universally bad in the Carolinas as they appeared to be. There's no doubt we're in an extremely challenging period and the Carolinas are going to continue to be challenged for the next 12 to 18 months."

The gross domestic product is the total value of all goods and services produced in a state, and is an indicator of a state's overall economic well-being. It includes everything from cars built at factories to electricity sold to other states to the amount local governments spend to pave roads.

In 2008, South Carolina lost production in construction, manufacturing and the financial sector. But other job sectors held steady or grew enough to keep the state's economic engine churning.

"When you put it in a pot and stir it, you pretty much get GDP growth," said Bruce Yandle, economics professor emeritus at Clemson University.

Still, South Carolina ranked 46th in a category that charts standard of living.

The state's 2008 per capita GDP was $28,364, which was one of the nation's lowest.

In South Carolina, the per capita GDP slipped because of the state's population growth, Vitner said. The 1 percent drop from 2007 did not worry economists but several years would be a problem.

"When GDP per capita declines it means growth is not paying for itself," Vitner said. "People don't have enough money to cover their bills."

One way to change that trend is continued growth in sectors that make and produce expensive products.

South Carolina made gains in that effort in 2008, said Angel Earle, a senior research analyst at the S.C. Department of Commerce.

For example, the professional and technical services category grew .42 percent in 2008. And, utilities grew .28 percent, the fastest rate in the nation, the Bureau of Economic Analysis reported.

"The Blue Cross Blue Shields of the world have increased as far as their contributions to the GDP in South Carolina at a faster rate than other states," Earle said.

In other words, a high-tech computer firm charges more for its services than a garment factory makes for its T-shirts. Therefore, the high-tech firm would contribute more toward the overall gross domestic product, she said.

"Those industries that are creating that workforce have increased at a higher rate than the rest of the country," Earle said.

That's the kind of growth South Carolina needs to improve its per-capita ranking, she said.

"Growth in those industries will bring the change you want," she said.