WASHINGTON – A robust recovery for the global economy remains well out of reach.
Thats the view that emerges from a survey of economists just as the Federal Reserve is expected this week to reduce its stimulus for the U.S. economy.
Europe has finally emerged from recession. Japan is growing after two decades of stagnation. And the United States is trudging ahead. Yet an Associated Press survey of more than two dozen economists suggests that global growth will remain below full health this year and next.
Persistently weak growth would make it harder to resolve many of the worlds biggest economic challenges. They include historically high unemployment in Europe, sluggish spending by consumers and businesses in the United States, heavy government debts in Europe and Japan and unstable economies in some emerging nations.
The economists think the 17 nations that use the euro will grow at an annual rate barely above 1 percent in the second half of 2013 and in 2014. From April through June, the eurozone eked out its first quarterly growth after 18 months of contraction – a 1.2 percent annual rate. No acceleration is foreseen in the next year and a half.
The United States and Japan are expected to fare only slightly better.
The economists think the U.S. economy will grow at a 2.3 percent annual rate in the second half of 2013 and 2.6 percent in 2014. Japan is expected to grow 2.2 percent next year – far weaker than its 3.8 percent growth rate from April through June.
The AP survey collected the views of private, corporate and academic economists on a range of issues. Among their views:
The Fed will start reducing its $85 billion in monthly bond purchases after its latest policy meeting ends today. The initial cut in purchases will be small – $10 billion a month. The Feds bond purchases have been intended to keep long-term loan rates low to induce people to borrow and spend. Though U.S. hiring and growth remain soft, some Fed officials dont think the bond purchases are doing much good anymore.
The U.S. unemployment rate wont return to a range associated with a healthy economy – roughly 5 percent to 6 percent – before 2015 and perhaps not until 2016 or later. The rate is now 7.3 percent. It rose as high as 10 percent during the recession.