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September 17, 2013

AP survey: Sluggish global economic recovery ahead

(Continued)

WASHINGTON —

— Congress should not increase the federal minimum wage of $7.25 an hour. Some economists warn that a higher minimum wage could lead some employers to hold back on hiring lower-wage workers. That could escalate unemployment, they say.

The economists' dim outlook for the recovery in many advanced economies coincides with a slowdown in some key emerging economies after years of powerful growth.

China's growth, for example, slowed in the second quarter to 7.5 percent — explosive by the standards of developed countries but the slowest pace for China in two decades. The economists surveyed by the AP foresee little change through 2014.

The economists note that aging populations may be holding back growth in Japan and Europe. As older workers retire in greater numbers than younger workers can replace them, workforces shrink and economic growth tends to slow.

Prime Minister Shinzo Abe has sought to revive Japan's moribund economy by boosting government spending and pushing the Bank of Japan to launch its own bond purchases. Those efforts led to a burst of growth in the first half of the year. But economists worry about the effects of a higher consumption tax that's set to take effect next year.

In 1997, Japan raised taxes on consumers — a move that many economists think stifled a nascent economic recovery.

"People are a little spooked about what that means this time," Webman said.

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