Growth in South Africa is unlikely to reach precrisis levels unless “supply-side reforms” are under- taken, the World Bank warns in its latest ‘Global Economic Prospects (GEP)’ report released in Washington DC earlier this month. Similar constraints are also weighing on the outlook for Brazil, India, Russia and Turkey.

The report notes that risks from advanced economies have eased, despite the ongoing contraction in the euro area. “However, the pick-up in developing countries will be modest because of capacity constraints in several middle-income countries,” the authors warn.

For growth to return to precrisis rates in these middle-income countries, the bank believes more attention will have to be paid to domestic challenges.

Priority policy attention should be given to tackling “supply-side bottlenecks, whether they stem from weak or poorly enforced regulations, corruption, inade- quate or irregular provision of electricity, or inadequate investments to improve educational and health outcomes”.

This gels with recent statements by the International Monetary Fund’s first deputy MD, David Lipton, who has argued that South Africa needs to “do more on its own” to overcome a number of “home-grown” limits to faster economic expansion.

Lipton has also urged government, labour and business to pursue a “broad national bargain” to overcome the prevailing structural impediments to higher growth and employment.

The World Bank report points out that growth in Brazil, India, Russia, and South Africa has been 2 to 3.5 percentage points slower since 2010 than it was during the precrisis boom period of 2003 to 2007.

Various factors have influenced this poor performance in the different countries, but the bank also suggests that the 2002 to 2007 period may have been one when these economies had expanded ahead of their underlying potential.

The report’s projection for global gross domestic product (GDP) growth is 2.2% for 2013, with developing countries expected to expand by 5.1% – in January the bank forecast that the global economy would expand by 2.4% and developing economies by 5.5%.

The GEP forecasts that the global economy will expand by 3% in 2014 and 3.3% in 2015, with developing-country GDP strengthening to 5.6% and 5.7% in 2014 and 2015 respectively.

South Africa, which grew by 2.5% in 2012, is expected to expand by only 2.5% again in 2013, rising to 3.2% in 2014 and 3.3% in 2015. The country is also an outlier in an otherwise fast-expanding region, with sub-Saharan Africa estimated to have expanded by 4.4% in 2012 – had it not been burdened by South Africa, regional growth would have been 5.4%.

However, the sub-Saharan Africa region is vulnerable to continued commodity price weakening, with metal prices having already fallen 30% since their February 2011 peak.

“If prices decline to their longer-term equilibrium more quickly than assumed in the baseline, GDP growth among sub-Saharan African metal exporters could decline by as much as 0.7 percentage points, while current account and fiscal balances could deteriorate by 1.2% and 0.9% of GDP respectively.”

A key message of the report is that the global economy appears to be transitioning toward a period of more stable, but slower, growth.