Last month, I posted on new International Monetary Fund (IMF) figures showing that President Obama’s Trans-Pacific Partnership (TPP) trade deal was set to link the United States more tightly with many of the world’s growth laggards. As I’ve often noted, this was highly unlikely at best to benefit America on net, since all else equal, when slow-growing countries trade with faster growers, the latter tend to pull in much more in the way of imports than they generate in exports. Therefore, their trade deficits tend to rise and their own growth takes a hit.
Today, we got more data from another blue chip international source: The Organization for Economic Cooperation and Development (OECD). This grouping of the world’s high income countries released its growth projections for this year and next, and guess what? They point to the same outcome.
The OECD looks at fewer first-round members of the new Pacific Rim trade agreement, but it covers those with by far the biggest economies, including Australia, Canada, Japan, and Mexico (along with New Zealand and Chile). Not that its crystal ball is perfectly translucent, but it’s surely noteworthy that of those seven countries it examines, since its last forecasts came out in June, the OECD has lowered its 2015 and 2016 estimates for all – except the United States. Its economy got a growth upgrade for 2015, but a small downgrade for next year.
As a result, whereas the earlier projections pegged America’s growth as the fifth fastest of the group for both years, now the OECD predicts that the United States will be the growth leader this year, and the fourth fastest grower next year.
Also bad news for TPP supporters like President Obama: The second largest economy in the first round of members after the United States – Japan – is forecast to be by far the slowest grower of the seven. Its annual growth rates are predicted to stay below one percent both years. And since the combination of America’s gross domestic product (62 percent of the TPP total) and Japan’s (20 percent), represents more than four-fifths of the new free trade zone, it’s just gotten harder than ever to portray the new pact as an exciting new engine of U.S. recovery and hiring. Indeed, the data keep sending exactly the opposite message.