ECONOMIC INTELLIGENCE WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79B00457A000300030001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 46
• Document Creation Date: December 12, 2016
• Document Release Date: July 26, 2002
• Sequence Number: 1
• Publication Date: November 10, 1977
• Content Type: REPORT

National Secret
Appr-oied For Release 2002/08/12 : 1 - 1
Assessment
Center
Economic Intelligence
Weekly Review
Secret
ER EIW 77-045
COPY N! 597
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ECONOMIC INTELLIGENCE WEEKLY REVIEW
OPEC Price Hike Would Dampen Already Sluggish Economic Pace . . . . . . 1
A 10-percent increase in oil prices would reduce 1978 Big Seven GNP by
one-half percent, raise national inflation rates by 0.5 to 1.3 percentage
points, and add $7.3 billion to the combined trade deficit.
Most Importers Unlikely To Appeal for OPEC Restraint . . . . . . . . . . 3
Foreign governments are not likely to take a strong open stand against an
oil price increase despite the potential negative impact on their economies.
Italy: Balance of Payments Looking Good . . . . . . . . . . . . . . . . 6
The balance of payments has made a sharp turnaround from last year's
deficit, thanks to domestic austerity, record tourist receipts, and extensive
bank borrowing abroad.
Poland: Possible Rescheduling of Hard Currency Debt . . . . . . . . . . . 10
By yearend the hard currency debt will have climbed to $13 billion, and
the financing of trade deficits and debt service obligations will have
become even more difficult.
Caribbean Economies: Gloomy Situation To Continue . . . . . . . . . . . 14
Balance-of-payments problems have contributed to anemic growth,
mounting unemployment, and increased trade restrictions.
Coffee Producers Uniting on Price Policy . . . . . . . . . . . . . . 18
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OPEC PRICE HIKE WOULD DAMPEN ALREADY SLUGGISH
ECONOMIC PACE
A 10-percent OPEC price hike at yearend would damage Big Seven economic
performance in 1978 as follows: (a) an average loss of one-half percent in GNP
compared with what it otherwise would be; (b) a rise of national inflation rates of
between 0.5 and 1.3 percentage points; and (c) an increase in the combined trade
deficit of $7.3 billion, with the United States accounting for 40 percent of the rise.
Such a boost in oil prices would thus retard an already disappointing recovery
process, which has been marked by persistent large-scale unemployment, endemic
inflation, a near-crisis in investor confidence, and dalliance with protectionist
measures. If consumer confidence were weakened by these further adverse
developments-for example, if the rate of saving went up by I percentage
point-overall growth in the Big Seven would be only one-half the rate now
projected.
The smaller Free World industrial nations would be hit even harder by the
hypothesized 10-percent increase. For one thing, the direct contractionary impact
on domestic demand would be larger since a higher proportion of their income goes
for imported oil. Second, their heavy reliance on sales to major industrial markets
also makes many of them vulnerable to an oil-induced shrinkage in Big Seven
demand. The smaller countries as a group would suffer a 0.6-percent loss in GNP and
a $2 billion deterioration in their trade balance. A number of these countries already
are grappling with serious growth or payments problems or both.
As for non-OPEC LDCs, the oil price rise would worsen their combined current
account deficit by adding, directly and indirectly, $2.3 billion to import costs. These
LDCs would need to draw down foreign exchange reserves still further or seek
additional foreign loans if losses in domestic growth and consumption are to be
avoided.
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Big Seven: Impact on Real 1978 GNP of a 10-Percent Oil Price Rise
Percent Change
Total Impact
Oil-Related
Losses
Oil-Related
Gains
United States ..............................
-0.4
-0.6
0.2
Japan ..........................................
-0.8
-1.2
0.4
West Germany ..........................
-0.5
-0.8
0.4
France ........................................
-0.6
-1.0
0.4
United Kingdom ........................
-0.1
-0.5
0.3
Italy ............................................
-0.9
-1.3
0.4
Canada ........................................
-0.2
-0.4
0.2
Weighted Average ................
-0.5
-0.8
0.3
Direct and indirect GNP losses due to higher oil prices.
Direct and indirect GNP gains due to price rises forexports to OPEC.
Big Seven: Impact on 1978 Inflation of a 10-Percent Oil Price Rise
Percentage Point Change
GNP Deflator
Index
Consumer Price
Index
Wholesale Price
Index
United States ..............................
0.5
0.5
0.5
Japan ..........................................
1.0
0.9
1.5
West Germany ..........................
0.7
0.6
1.0
France ........................................
0.8
0.7
1.3
United Kingdom ........................
1.3
1.2
1.1
Italy ............................................
1.1
1.0
1.3
Canada ........................................
0.6
0.5
0.5
Big Seven: Change in 1978 Trade Due to a 10-Percent Oil Price Rise
Million US $
Oil
Imports
Non-Oil
Imports
Exports'
Total Trade
Deficit
Total ..........................................
10,080
-2,490
280
7,310
United States ..........................
3,970
-660
160
3,150
Japan ......................................
2,650
-490
270
1,890
West Germany ......................
1,230
-450
-160
940
France ....................................
1,000
-370
10
620
United Kingdom ....................
270
-70
100
- 100
Italy ........................................
910
-340
110 -
460
Canada ....................................
50
-110
-210
- 150
' Including an increase in exports to OPEC countries resulting from the higher oil revenues due to an
assumed 10-percent price hike. These increases total $670 million for the United States, $490 million for
Japan, $440 million for West Germany, $270 million for France, $270 million for the United Kingdom,
$220 million for Italy, and $50 million for Canada.
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In calculating the results above, we assumed that the l0-percent price rise
would affect all oil moving in international trade. We further assumed that Big Seven
fiscal policies would not be adjusted either to offset or to reinforce the
contractionary effects of an oil price hike and that monetary policy would be
neutral-that is, the money supply would be permitted to adjust to changes in the
demand for money stemming from the oil price hike.
In reality, policy reactions would differ from country to country because of
differences in the impact of the price hike and in the seriousness of unemployment,
inflation, and international indebtedness. Among the Big Seven countries, for
example, Italy would be a big loser, with a 0.9-percent loss in GNP. Japan, while
having to pay nearly $3 billion more for its oil, is obviously in a better position to
absorb the blow than Italy. Among the smaller industrial countries, the Netherlands
and Norway would make out reasonably well because of their large net exports of
oil and gas, which are sold at world prices. Turkey, on the other hand, could be
brought to the financial breaking point by the extra $140 million it would have to
pay for oil imports. Brazil, hit by sharp declines in the prices of key exports, would
find great difficulty in absorbing 400 million to $500 million increase in its oil
bill.
MOST IMPORTERS UNLIKELY TO APPEAL
FOR OPEC RESTRAINT
No foreign government is likely to beat the drums against an oil price increase
despite the potential negative impact on its economy. Most developed countries are
convinced that they would have no influence on OPEC by themselves and very little
more by acting in concert with the United States. The non-OPEC LDCs, individually
or as a group, will not take an open stand against OPEC and certainly would not join
in a US appeal, even though many might privately welcome it.
Developed Countries
The developed countries maintain that only the United States can have an
impact on OPEC decisionmaking. They believe that the key to US influence is its
role in the Arab-Israeli dispute. The West Europeans and Japanese see their own
Middle East policies as more even-handed than those of the Americans but have little
hope of influencing thinking in Washington. These governments also cite increasing
US demand for imported oil as the chief economic pressure behind an OPEC price
rise. In their view, the lack of an effective US national energy policy undercuts any
appeal to OPEC to hold the line on prices.
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Since government attitudes toward OPEC actions are shaped more by political
than economic realities, the severity of the economic impact of an oil price increase
is a poor guide to a country's political response. To date, none of the developed
country governments has indicated interest in a concerted move against a price hike.
While we anticipate that several oil importing countries would be willing to join the
United States in public and private appeals to OPEC countries, a number of others
would stand aloof. The United Kingdom and Norway, which have their own oil,
would be unlikely to do anything.
Among the major foreign industrial nations, West Germany, Japan, and Canada
probably would be receptive in varying degrees to a US initiative to forestall an
OPEC price rise:
The West Germans, who have been protected from the full impact of
OPEC price rises by the appreciation of the Deutschemark, believe that
an appeal would carry little weight, particularly in view of the inability of
the United States to curb demand for imported oil.
The Japanese, determined to avoid even the appearance of confrontation
with their Arab suppliers, probably would endorse a demarche only if it
were supported by numerous other developed countries.
The Canadians have few political hangups regarding the Middle East and
probably would urge OPEC restraint; Ottawa already is dipping into
general tax revenues to subsidize prices in oil-short eastern Canada.
Among the smaller developed countries with large current account deficits,
Austria and Denmark would likely support an appeal to OPEC. Both are relying on
export growth to pull them out of the doldrums and thus fear the adverse effect of
an oil price rise on their trading partners. Portugal might be persuaded to go along
but would need prodding. Lisbon is likely to be extremely cautious in the wake of
Arab reactionto its recent recognition of Israel.
A sizable group of developed countries, most of which already are contending
with serious balance-of-payments problems, see no advantage to a consumer country
plea to OPEC:
The French probably would shun what they consider a futile gesture,
which inevitably would smack of confrontation.
The Italians want to preserve their perceived role as a bridge between the
Middle East and North Africa and Western Europe and would be reluctant
to join any action that might jeopardize this role or the numerous barter
deals Italian firms have arranged with OPEC countries.
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The Spanish, who do not recognize Israel and took a pro-Arab stance
during the 1973 war, probably could not be persuaded of the value of an
appeal to OPEC; Madrid has received about $150 million in loans from the
Saudis this year and does not want to close the door to future borrowing.
The Turks believe that OPEC has the right to set prices where it will, and
they would be unlikely to work against a price rise for fear of losing what
few benefits they receive from their large concessionary oil contract with
Iraq.
Two developed countries-the United Kingdom and Norway-probably con-
sider silence the best policy. Norway already is a net oil exporter, and the United
Kingdom is expected to become a net exporter by 1980; both have consistently
pegged their own oil prices to those of OPEC.
Despite private grumblings about OPEC stinginess, most non-OPEC LDCs are
willing to suffer another 10-percent oil price rise without public protest. Any appeal
to OPEC would be independent of the developed countries' positions; the non-OPEC
LDCs would not risk their prized political solidarity by joining a US-sponsored
effort:
Brazil, which has the largest oil bill among the LDCs, has been courting
Arab favor and capital since the 1973 embargo and probably would once
again press OPEC for preferential treatment for all LDCs.
India already has privately expressed concern to OPEC members about a
further oil price increase but is unlikely to speak out publicly against
countries that regularly provide substantial loans. Officials in New Delhi
maintain that they have no right to criticize OPEC because its members
were so long "exploited by colonial powers."
Mexico, a net oil exporter, would tacitly support a price hike by OPEC
and then follow suit.
The small African states do not want to offend OPEC countries and thereby
risk losing the little aid that they receive, even though their prospects for getting
more assistance are not all that good. Prosperous Asian countries such as South
Korea and Taiwan would not want to diminish their small influence in LDC circles
by joining in a US-sponsored appeal to OPEC.
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The Italian balance of payments has made a sharp turnaround from last year's
deficit, thanks to domestic austerity, record tourist receipts, and bank borrowing
abroad. Foreign currency reserves, at a $1.6 billion low last fall, rebounded to $6.5
billion by the end of September. Rome has handled recent debt repayments with
little difficulty and can count on a strong current account to help meet its sizable
1978 obligations. These successes in the foreign sector have come at a cost of greater
unemployment and reduced growth.
Current Account in Surplus
The current account should show a $1.8 billion surplus in 1977,* following a
$2.6 billion deficit last year. Improvement is evident in both the trade and invisibles
accounts.
1974
1975
1976
1977`
19782
Exports (f.o.b.) ............................................
30,074
34,553
36,688
44,100
48,300
Imports (f.o.b.) ............................................
38,568
35,719
40,726
43,700
46,750
Trade balance ..........................................
-8,494
-1,166
-4,038
400
1,550
Services, net ................................................
510
338
872
900
900
Transfers, net' ............................................
572
589
527
550
550
Current account balance' ........................
-7,412
-239
-2,639
1,850
3,000
By June, surging exports had pulled the trade account into the black, as
austerity held down imports. In constant prices, exports rose at a 10.2-percent
annual clip in the first half, compared with a 2.8-percent rise in imports. The
January-August trade surplus of $166 million (f.o.b./f.o.b., seasonally adjusted)
contrasts with a $2.3 billion deficit in the same period last year. For all of 1977,
Italian trade should be $400 million in surplus. Reduced energy consumption has
largely offset the latest OPEC price hike, leaving only a marginal worsening in the oil
trade deficit. Meanwhile, the non-oil trade balance, which had registered a $1.0
billion surplus in January-August 1976, zoomed to a $3.5 billion surplus in the first
eight months of this year.
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Foreign Trade
M.
Italy has traditionally relied on good performance in the service and transfer
accounts to offset chronic trade deficits. Last year, however, a $1.4 billion surplus
on invisibles only partly offset the wide trade gap. With trade in surplus this year,
the $1.4 billion surplus expected for invisibles will be pure gravy. The large surpluses
on invisibles are being achieved despite annual net interest payments of roughly
$400 million on medium- and long-term debt.
Within the invisibles account, tourism is yielding the biggest gains. Foreign
tourists are expected to spend $3.6 billion in Italy this year, up from $3.0 billion in
1976. One-fourth of all tourist revenue spent in the European Community is
garnered by Italy. Italian tourists, on the other hand, are legally constrained in the
amounts they can spend abroad. The surplus on private transfers is also picking up as
industrial recovery in northern Europe increases the flow of worker remittances.
In 1978, austerity should continue to restrain internal demand, permitting
exports to continue outpacing imports. The current account surplus of $3.0 billion
now expected for next year would be a postwar high.
Foreign Debt in Hand
One recent feature of the payments situation has been a sharp increase in the
net foreign indebtedness of Italian commercial banks. After averaging about $1
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billion in 1973-75, this credit channel developed over the last year into a major
source of finance. Net bank borrowing was especially brisk in early 1977; net foreign
indebtedness of banks increased from $3.0 billion last December to $7.5 billion by
July of this year. Since July, it has declined, lessening the possibility of a credit
squeeze by foreign banks. Nevertheless, the overhang of bank debt remains
formidable.
The Bank of Italy encouraged commercial bank borrowing abroad as a means
of obtaining foreign exchange while the current account was in deficit. It required
that advance import payments and export credits be financed in foreign currency
and placed foreign currency loans outside the ceiling on domestic credit expansion.
As the current account improved, the central bank phased out foreign financing
regulations.
Besides the jump in short-term bank indebtedness, Rome must cope with a
legacy of medium- and long-term debt contracted largely in 1974-76. At yearend
1976, Italy's medium- and long-term hard currency debt totaled $18.4 billion. Rome
nevertheless had no difficulty repaying an $835 million stand-by credit from the
IMF this year and returning $500 million on a $2 billion "gold-backed" credit from
the West German central bank. Moreover, Italy has repaid all private borrowings on
schedule.
Italy: Net Foreign Financial Position
Yearend
Yearend
End Sep
1975
1976
1977'
Net medium and long term ........................................
- 6,592
- 4,774
-4,708
Accounts receivable ..................................................
14,094
13,637
12,032
Export credits ..........................................................
7,218
6,174
4,976
Loans ........................................................................
6,876
7,463
7,056
Accounts payable ......................................................
20,686
18,412
16,740
Suppliers' credits ......................................................
1,713
1,207
842
Loans ........................................................................
12,711
10,209
9,651
Public ......................................................................
1,585
1,870
1,801
Private ......................................................................
11,126
8,339
7,850
Bank of Italy/Foreign Exchange Office ..............
6,262
6,995
6,247
OEC ........................................................................
1,885
2,407
2,907
IMF ........................................................................
2,877
2,853
1,840
Bundesbank ............................................................
1,500
1,736
1,500
Net short term ..............................................................
-772
-3,119
-6,545
Bank of Italy/Foreign Exchange Office ..............
-40
-108
NA
Commercial banks ..................................................
-732
-3,011
-6,545
Net total position ........................................................
- 7,364
-7,893
-11,253
' Estimate; data do not include $400 million in Euromarket loans contracted in 1977
by state agencies but not drawn.
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On the whole, the outlook for management of the foreign currency debt is
good. Net long- and medium-term foreign currency indebtedness amounts to only
$4.8 billion. Rome is a sizable international creditor as well as debtor, having lent
large sums to finance exports to the USSR and Eastern Europe. The receipt of loan
repayments even resulted in a small not repayment surplus in 1976 and 1977.
Substantial foreign currency reserves-$6.5 million worth at the end of September-
and the expanding currentaccount surplus are other elements of financial strength.
In addition, Rome holds $3.4 billion in gold, valued at the official price.
Debt service will prove troublesome in 1978, when $3.3 billion net principal
repayments ($5.1 billion gross) fall due. Obligations to repay $1.2 billion to the EC
and the $1.5 billion still outstanding on the West German loan make up most of this
total. Existing reserves and the current account surplus should provide adequate
financing. In a pinch, part of the West German loan probably could be rolled over,
although Bonn has expressed reservations about stretching out bilateral credits.
Moreover, Rome can look forward to drawing the remaining $414 million on its
April IMF credit provided that Italy meets IMF conditions. After 1978, debt service
will ease considerably.
Financial stability recently has allowed Italy to exhibit more flexibility in its
exchange rate policy. Rome has intervened to keep the lira from rising against the
dollar, thereby permitting the lira to depreciate against the strong continental
currencies. In so doing, Rome is collecting dollars that will assist in the repayment of
foreign debt.
The Italian Strategy
For most of the period since the oil crisis, Italy has been a heavy borrower. At
first, large Euromarket loans were contracted by public agencies until worries over
creditworthiness effectively closed this borrowing channel. Late 1974 saw a switch
of emphasis to official medium-term borrowing. The latest credit source to be
tapped was short-term bank borrowing. This heavy borrowing provided international
liquidity while productive resources were being shunted to the export sector to help
pay the enormously increased oil bills.
Rome's balance-of-payments strategy, however, has not been compatible with
economic growth and low unemployment. While austerity is forcing the current
account into the black, it also dictates near economic stagnation this year and next.
Unemployment, already high will increase further. A reconciliation between eco-
nomic growth and balance-of-payments stability will require major structural re-
forms, primarily in the area of labor costs and public finance, reforms that Rome
thus far has been unable to effect.
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POLAND: POSSIBLE RESCHEDULING OF HARD CURRENCY DEBT
A rapid increase in imports of Western capital goods and grain, combined with
sluggish export growth, had pushed Poland's hard currency debt to more than $10
billion at yearend 1976. By the end of 1977, the debt will have risen another $3
billion, and the debt service ratio will have climbed to 60 percent.
Even though Poland has been able to obtain the funds needed to cover its trade
deficits and its growing debt service obligations, both Warsaw and Western creditors
are becoming increasingly concerned over the mushrooming debt. The Polish
Government may find this deficit-credit-debt process grinding to a halt as early as
next year. It may be unable to obtain the necessary loans to take care of its
financing needs and may thus be forced into a major rescheduling of its debt with
Western commerical banks and/or governments.
The Growing Trade Deficits
After taking power in late 1970, party boss Edward Gierek instituted a
program to push economic development and raise workers' living standards. To
support this program, Poland has imported a large volume of Western industrial
equipment and materials on credit. In response to consumer anger over chronic meat
shortages, Warsaw also has purchased substantial quantities of foreign feed grains
and, more recently, meat. Soaring world prices, particularly in late 1973 and 1974,
added greatly to Poland's import bill.
Polish exports to the developed West have not kept pace with imports, growing
an average of 23 percent a year (in current dollars) since 1970 compared with almost
40 percent for imports. The poorer export performance is largely attributable to
Western recession in 1974-75 and halting recovery in 1976-77. Meat exports, once
the primary source of hard currency earnings, have been trimmed to help satisfy
domestic demand.
By 1976, the trade deficit had reached $3.3 billion, with the hard currency
debt rising from $1.9 billion at yearend 1973 to $10.2 billion at yearend 1976. Debt
service obligations (principal plus interest) have grown rapidly, equaling 50 percent
of merchandise exports to the developed West in 1976 and a projected 60 percent in
1977.
Increased Difficulty of Financing
Credits sponsored by Western governments have played a key role in facilitating
Poland's imports of machinery and equipment. By yearend 1976, the amount
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Exports, f.o.b . ...................................................................... 2,865 3,026 3,330 3,750
Imports, f.o.b ....................................................................... 5,233 6,076 6,660 6,450
Services and transfers, net .................................................. 300 325 550 570
Interest, net .......................................................................... -240 -450 -680 -870
Current account balance .............................................. -2,308 -3,175 -3,460 -3,000
Financed by:
Medium- and long-term credits, net ............................ 1,100 1,750 2,300 2,000
Short-term capital and errors and omissions ................ 1,208 1,425 1,160 1,000
Poland: Estimated Hard Currency Balance of Payments
1974 1975 1976 1977'
Million US $
Outstanding net debt .......................................................... 3,950 6,873 10,200 13,000
Percent
' Projected.
Scheduled repayments of principal on medium- and long-term debt plus interest payments on total
debt as a percent of merchandise exports to the developed West.
outstanding on government and government-backed credits represented about
one-third of total Polish indebtedness. Austria, France, the United Kingdom, West
Germany, and the United States have been the largest sources. Outstanding debt on
US Government and government-backed credits totaled $501 million at yearend
1976, of which $121 million was on Eximbank credits, $166 million of CCC credits,
and $214 million on PL 480 credits.
Borrowing from private Western commercial banks has soared because of
Warsaw's need to take care of immediate financial requirements arising from large
trade deficits and growing debt service payments. By yearend 1976, more than
one-half of Poland's debt was owed to these banks. Other sources of financing have
included deposits by oil-rich Middle East countries and loans from CEMA banks.
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Shaky Situation in 1977
Warsaw's efforts to control its hard currency trade deficit continue to be
thwarted by sluggish Western economic recovery and soft world prices for Polish
exports. The government has had more success in holding down imports, in part
through import substitution, especially for industrial raw materials. Last November,
Gierek obtained a commitment of more Soviet oil through 1980, thus holding down
hard currency requirements; this gain was reinforced by a Soviet credit, which
probably has allowed Warsaw to shift some of its other raw material purchases to the
USSR.
If the trends of the first half continue through the remainder of 1977, Poland
will be able to cut its trade deficit with the developed West by at least $500 million.
Nevertheless, the financing required to cover the deficit and meet debt service
obligations will be close to $5 billion this year. Warsaw has had available for use in
1977 about $2 billion in Western government and government-backed credits and
$1.2 billion in unused Western bank credits. The remainder of its financing will
come principally through new commercial bank borrowing. Other possible sources
are short-term funds from Middle Eastern countries and perhaps some money from
CEMA banks.
Outlook: No Easy Solutions
Poland faces unpleasant options over the next few years in trying to manage its
hard currency debt. Warsaw must continue to curb imports, yet economic growth
plans and consumer needs require large imports of Western machinery, industrial
materials, and agricultural and food products. Warsaw already has announced its
intentions to curb imports of Western machinery in 1978-80. These imports can be
curtailed for a time without much effect on economic growth; a large backlog of
equipment awaits installation, and some plant already in place is underutilized. If
recovery in the West remains sluggish, Warsaw would have to make further cuts,
especially in industrial raw material imports, and would be forced to lower its
economic growth targets. Continuing poor harvests-Poland has had four in a
row-would make a reduction in growth plans even more severe.
Poland's hard currency imports are nearly double exports. Thus, even under
favorable circumstances-a strong recovery in exports, good harvests, and zero
import growth-Poland will not be able to achieve the 1980 goal of balancing its
trade with the West. Gross financing requirements almost certainly will continue to
total $4 billion to $5 billion a year as mounting debt repayment obligations offset
the expected decline in trade deficits. At least half of the financing will have to be
raised in private Western money markets since only about $2 billion a year is
expected to be drawn on Western government and government-backed credits.
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
Prospects for Debt Relief
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mi ion credit to finance agricultural purchases in FY 1978 and is seeking $400
million to $500 million a year thereafter for similar purchases. The Poles want a
seven-year repayment period on the credits, including a three-year grace period.
Such terms are highly unusual; credits for financing agricultural purchases rarely
exceed three years.
e sere government has asked the United States for a $500 million to
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s a last
the roles might try to reschedule Western government and
government-backed credits. Warsaw probably would first approach Austria, France,
or the United Kingdom because of the large amount of government-backed debt
outstanding and the excellent political relations with these countries. Warsaw
probably will be more reluctant to approach the West Germans because of Bonn's
past extensions of large financial assistance. Domestic opposition to further
handouts is growing within West Germany. Poland might also hesitate to turn to the
United States for rescheduling, especially if it receives US concessionary credits for
its agricultural purchases. Some further relief from Moscow is possible, although un-
likely, given Soviet payments problems.
Whatever approach or combination of approaches Warsaw might take to ease its
financial burdens, major debt rescheduling could take place as early as 1978.1
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
CARIBBEAN ECONOMIES: GLOOMY SITUATION TO CONTINUE
Balance-of-payments problems in the Caribbean economies* have contributed
to three years of anemic economic growth, mounting unemployment, and increased
trade restrictions. This set of difficulties has undercut efforts to establish a viable
common market in the region. Economic conditions there will remain depressed
because of limited prospects for higher world sugar prices, heavy competition from
Western Europe for the US tourist dollar, and the continuing diversion of new
investments away from the area.
The United States can expect: (a) tightened investment restrictions, which will
limit the profitability of the $4 billion to $5 billion US investment stake in the area;
(b) continued slow growth of US exports to the region, now the third largest US
market in Latin America; (c) increased demands for US economic assistance; (d)
growing political difficulties and occasional civil unrest, which may provide Cuba
with increased opportunities to expand its influence; and (e) increased pressure for
emigration from the region, with most of the impact on the United States.
Payments Problems in 1975-76
The region's economic situation began deteriorating in 1975 when a fall in
tourism and commodity export earnings combined with rising import prices created
serious payments problems. The payments squeeze worsened last year as a result of
the continued sharp drop in the world price of sugar, which accounts for about 15
percent of regional exports. Prices on the world market, where 15 percent of the
region's sugar is sold, averaged about 11.6 cents per pound in 1976, compared with
20.5 cents in 1975 and 30.0 cents in 1974. Tourism in 1976 failed to register the
buoyant revival normally expected with US economic recovery because of increased
competition with Western Europe, high prices and deteriorating service, and violence
in Jamaica, which hurt the reputations of other resort areas as well.
Declining foreign investor confidence aggravated the payments problem by
reducing the inflows of private foreign capital. Nationalistic policies proved particu-
larly damaging in Jamaica, Guyana, and the Bahamas, which experienced reductions
in net foreign private investment. Lacking sound credit ratings needed to raise long-
term foreign funds, Jamaica and Guyana resorted to patchworks of short-term com-
mercial credits, small-scale economic assistance, and drawdowns of foreign reserves.
At the same time, import restrictions had to be strengthened to keep trade deficits
within manageable limits.
Economic austerity measures aimed at reducing imports, along with the falloff
in foreign investment, cut sharply into real growth. Average real growth dropped
*Bahamas, Barbados, Dominican Republic, Guyana, Jamaica, Surinam, and Trinidad and Tobago. Cuba, Haiti,
and a number of smaller islands are not included.
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
from 3.7 percent in 1973-74 to 1.6 percent in 1975-76. Guyana and Jamaica were
hardest hit with real GDP declining 13 percent and 7 percent, respectively, last year.
Except for the Dominican Republic and Trinidad and Tobago, economic expansion
has lagged far behind growth in the labor force. As a consequence, unemployment in
the region as a whole reached 22 percent by the end of 1976. Despite the rise in
unemployment, inflation continued to range between 7 and 15 percent in the
various economies because of supply shortages resulting primarily from import
curbs.
Caribbean Economies: Unemployment and Changes in Real GDP
Unem- Changes in Real GDP
ployment
1976 1973 1974 1975 1976 1977'
Bahamas ........................................................ 21 8.5 6.9 -14.4 4.8 2.6
Barbados ...................................................... 20 2.1 -1.6 -1.7 6.2 2.0
Dominican Republic .................................. 20 12.1 8.9 5.1 5.5 4.0
Guyana ........................................................ 20 0.3 7.0 5.0 -13.0 -5.0
Jamaica ........................................................ 30 -2.6 -2.1 -1.0 -6.9 -4.0
Surinam ........................................................ 15 6.0 -8.8 2.9 0 2.0
Trinidad and Tobago .................................. 15 -0.5 0 7.1 4.8 5.0
Weighted average ...................................... 22 4.4 3.0 1.8 1.5 1.9
Little Improvement in 1977
The general economic situation of these countries remains poor this year. The
one bright spot has been the recovery of the world aluminum market, which has
bolstered Caribbean bauxite/alumina sales. World sugar prices are still depressed,
averaging 7 to 8 cents a pound during the first 10 months of 1977. As for tourism,
the moderate revival that began last year appears to have reached a plateau by
mid-1977. In these circumstances we expect total earnings from goods and services
in current dollars to increase only about 5 percent this year.
For several of the countries, balance-of-payments strains have remained severe
or have even intensified since the start of 1977. In the case of Jamaica and Guyana,
sources of foreign assistance and short-term commercial credits are now generally
depleted, and foreign investment inflows have almost disappeared. With foreign
reserves dangerously low, both countries have had to tighten import restrictions
further. Most other Caribbean countries are continuing to keep close controls on
their imports.
Continued import restrictions are blocking a revival of economic growth,
adding to unemployment, and exerting inflationary pressure in most of the eco-
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nomies. We expect average real GDP this year to increase by only 1.9 percent,
compared with last year's gain of 1.5 percent. The best performer will be Trinidad
and Tobago, reflecting its position as an oil refiner and exporter. Growth is slowing
in Barbados and the Bahamas as the revival in tourism loses strength. Weak sugar
prices are hurting the Dominican Republic. For first half 1977, inflation has been
running at a 14-percent annual rate in the region as a whole.
Caribbean Economies: Exports, Imports, and International Reserves
Million US $
Bahamas
Exports, f.o.b.' ..................................................................
502
503
550
580
Imports, (non-oil) c.i.f .....................................................
314
231
276
315
International reserves ......................................................
50
53
47
60
Barbados
Exports of goods and services, f.o.b . ............................
179
211
208
230
Imports, c.i.f .....................................................................
210
219
237
266
International reserves ......................................................
39
40
28
25
Dominican Republic
Exports of goods and services, f.o.b . ............................
735
1,008
830
895
Imports, c.i.f .....................................................................
774
889
878
951
International reserves ......................................................
91
116
127
140
Guyana
Exports' ............................................................................
268
369
257
275
Imports, c.i.f .....................................................................
222
316
362
308
International reserves ......................................................
63
100
27
15
Jamaica
Exports of goods and services, f.o.b . ............................
1,055
1,122
946
1,050
Imports, c.i.f .....................................................................
936
1,124
913
875
International reserves ......................................................
190
126
32
27
Surinam
Exports of goods and services, f.o.b . ............................
269
277
305'
290
Imports, c.i.f .....................................................................
230
262
275'
285
International reserves ......................................................
74
97
116
100
Trinidad and Tobago
Exports of goods and services, f.o.b . ............................
2,488
2,218
2,666
2,700
Imports, c.i.f .....................................................................
1,865
1,471
1,966
2,000
International reserves ......................................................
390
751
1,014
1,150
' Projected.
s Exports of goods (excluding oil products) and tourist receipts.
' Merchandise exports.
Estimated.
Jamaica and Guyana remain the hardest hit by the recent difficulties. Although
official foreign assistance since the IMF standby credit in July should allow Jamaica
to meet essential foreign obligations this year, Kingston has had to cut imports 4
percent from last year's depressed level. Real GDP will likely drop for the fifth
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consecutive year, to 84 percent of the 1972 level, and unemployment and inflation
have worsened. Guyana, unable to obtain substantial foreign assistance, faces at least
a 15-percent import cut this year to bring external obligations to a manageable level.
Real GDP will likely drop at least 5 percent-to 83 percent of the 1975 level-and
unemployment will climb beyond 20 percent of the labor force.
Effects on Integration Efforts
The mounting economic difficulties have undercut efforts to strengthen the
fledgling Caribbean Common Market (CARICOM).* Import restrictions by some
members have hurt the export sectors of their regional trading partners and have
increased the intraregional trade deficits of the smaller members. Trinidad and
Tobago and Barbados have been particularly hard hit by the trade restrictions of
Jamaica and Guyana. Trade restrictions have intensified nationalistic prejudices and
leadership rivalries in the region. The smaller members, already critical of CARICOM
because of disproportional benefits accruing to the larger members, are becoming
increasingly reluctant to cooperate in further integration efforts. Partly because of
this uncooperative spirit, the highly respected Secretary-General of CARICOM,
Alister McIntyre, recently resigned.
Current problems underscore basic economic and political factors that argue
against the success of regional integration. The economies are extremely competi-
tive, leaving little opportunity for mutual trade except in light manufactures, which
can often be purchased more cheaply outside the region. The share of intraregional
imports, which grew from only 5 percent of the imports of the present CARICOM
members in 1967 to 8 percent in 1975, may well have declined in 1976 and 1977.
The recent setbacks expose the area's basic structural weaknesses imposed by
limited resources and small domestic markets. Most of the economies are heavily
dependent on imports and rely on one or two prominent export industries-such as
sugar, bauxite, or tourism-that are typically operated as foreign-owned enclaves
with little linkage to the domestic economies. Moreover, widespread distaste for
farm labor has prevented most countries from fully exploiting their agricultural
resources. As a result, sugar production, except in the Dominican Republic, has
declined steadily since the mid-1960s. A large and growing share of food require-
ments must be imported despite the existence of unused arable land. Two major
exceptions to these developments are the Dominican Republic, which has a diversi-
fied economy based on minerals, agriculture, and light manufacturing, and Trinidad
and Tobago, which has the region's only known oil and gas deposits. In spite of
*CARICOM includes Antigua, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Monserrat, St. Kitts-
Nevis-Anguilla, St. Lucia, St. Vincent, and Trinidad and Tobago.
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
recently tightened foreign investment codes, the resource bases and political stability
of these two countries give them the area's most attractive investment climate.
Prospects
With the major exceptions of the Dominican Republic and Trinidad and
Tobago, prospects for a substantial recovery of the larger Caribbean economies are
dim over the next several years. Although bauxite/alumina producers will continue
to benefit from rising sales, assuming the continued recovery of the world aluminum
industry, capacity constraints will soon put a lid on expansion of output. Even with
a new international sugar agreement, sugar prices are unlikely to rise much above
production costs of 10 to 12 cents per pound. The outlook for tourism will remain
clouded by the region's deteriorating and costly tourist services, its reputation for
violence, and competition from Western Europe. As a result, over the next couple of
years, most of the countries will be hard pressed to pay for needed imports, eco-
nomic growth will remain sluggish, and unemployment will continue to rise.
The bleak export market outlook combined with nationalistic economic poli-
cies in most of the countries will discourage private investment in the immediate
future. A case in point is the shift of bauixite/alumina investments from the
Caribbean to Brazil, Guinea, and Australia. Moreover, potential foreign investors in
import substitution industries will continue to be deterred by weak internal demand.
In these circumstances, the economic and social problems of the area will
worsen. Unemployment, particularly among youth, will increase, thereby exerting
additional pressure on governments to raise funds for welfare and public investment;
this could engender higher taxes on, and greater equity participation in, foreign-
owned business-moves detrimental to future growth.
Progress toward a fully operative Caribbean common market over the next
several years remains unlikely. Continuing import restrictions will further intensify
regional economic and political rivalries, and will lessen the already limited oppor-
tunities for intraregional trade. These rivalries will be magnified by a further
Balkanization of the region as more of the small islands opt for independence over
Coffee Producers Uniting on Price Policy
Coffee producing nations are scheduled to meet in London on 14 November to
discuss joint policies for defending coffee prices. This meeting follows a series of
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agreements by regional coffee producer groups to coordinate marketing efforts.
News of the producer agreements has pushed the December future price up more
than 40 cents per pound in the last two weeks, to $1.95.
Central American producers agreed in late October to withhold coffee from the
market to bolster prices. Last Friday Brazil and Colombia, the world's largest coffee
producers, followed by agreeing to coordinate marketing procedures. Early this
week African producers announced their support of the other producers, also
agreeing to halt sales until prices improve.
Unity among coffee producers will probably be effective for only a short time
because most of these countries need foreign exchange. As prices firm, the
temptation to sell coffee will mount. For the longer term, prices will likely trend
downward reflecting the ample supply of coffee available to meet reduced world
demand. r~7 I
SECRET 19
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
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 National
rc* ifr Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
Assessment
Center
Economic Indicators
Weekly Review
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
This publication is prepared for the use of U.S. Government
officials. The format, coverage and contents of the publication are
designed to meet the specific requirements of those users. U.S.
Government officials may obtain additional copies of this document
directly or through liaison channels from the Central Intelligence
Agency.
Non-U.S. Government users may obtain this along with similar
CIA publications on a subscription basis by addressing inquiries to:
Document Expediting (DOCEX) Project
Exchange and Gifts Division
Library of Congress
Washington, D.C. 20540
Non-U.S. Government users not interested in the DOCEX
Project subscription service may purchase reproductions of specific
publications on an individual basis from:
Photoduplication Service
Library of Congress
Washington, D.C. 20540
pprove or a ease 02"108712: TA=RDP7ggBO0457A000300
 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
1. The Economic Indicators Weekly Review provides up-to-date information
on changes in the domestic and external economic activities of the major non-
Communist developed countries. To the extent possible, the Economic Indicators
Weekly Review is updated from press ticker and Embassy reporting, so that the
results are made available to the reader weeks-or sometimes months-before receipt
of official statistical publications. US data are provided by US government agencies.
2. Source notes for the Economic Indicators Weekly Review are revised every
few months. The most recent date of publication of source notes is 20 October 1977.
Comments and queries regarding the Economic Indicators Weekly Review are
welcomed.
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 INDUST Ai2PPRM(M*PGW/O O?J?I8~MW9R9 M -7
West Germany
130
120
Semilogarithmic Scale
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
United Kingdom
Italy
t
1067
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR, JUL OCT
1972 1973 1974 1975 1976 1977
LATEST
MONTH
Percent
Change
from
Previous
Month
United States
SEP 77
0.4
Japan
AUG 77
1.2
West Germany
AUG 77
0
France
AUG 77
0
, AVERAGE ANNUAL Percent AVERAGE ANNUAL
GROWTH RATE SINCE Change GROWTH RATE SINCE
from
1 Year 3 Months LATEST Previous 1 Year 3 Months
1970 Earlier Earlierl MONTH Month 1970 Earlier Earlierl
3.6 6.1 4.9 U. United Kingdom JUL 77 2.8 0.4 -1.0 -8.5
3.8 2.9 -2.6 Italy AUG 77 -3.6 1.5 -2.0 -33.5
2.1 2.7 O Canada AUG 77 0 3.9 2.7 0.3
3.1 0 -3.1
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UNEMPLOYMENT PERCENT OF LABOR FORCE
United States
Japan
West Germany
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
United Kingdom
Italy (quarterly)
A labor force survey based on new definitions of economic activity sharply raised the official estimate of Italian unemployment in first quarter 1977. Data for earlier periods thus are not comparable.
Italian data are not seasonally adjusted.
gS
roughly comparable to US rates. For 1975-77, the rates for France and the United Kingdom should be increased by 5 percent and
15 percent respectively, and those for West Germany decreased by 20 percent to be roughly comparable with US rates.
1
S Year 3 Months
1 Year
3 Months
Earlier Earlier
Earlier
Earlier
United States OCT 77 6,872 7,564 6,744
United Kingdom OCT 77
1,433
1.308
1.394
Japan 10N 77 1,190 1,120 1,050
Italy 77111
1,692
776
1.432
West Germany 7,F -P 77 1,046 1,034 1,045
Canada 7EP 77
798
753
847
France _ i P 77 1,159 941 1,150
.. ,
NOTE: Data are seasonally adjusted. Unemployment rates for France are estimated.
The rates shown. for Japan, Italy and Canada are
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DOMESTIC PRICES1 INDEX: 1970=100
United States
Japan
Semilogarithmic Scale
181
West Germany
150
125
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
United Kingdom
Percent
Change
AVERAGE ANNUAL
GROWTH RATE SINCE
Percent
Change
from
AVERAGE ANNUAL
GROWTH RATE SINCE
LATEST
from
Previous
1970
1 Year
3 Months
LATEST
Previous
1970
1 Year
3 Months
MONTH
Month
Earlier
Earlier
MONTH
Month
Earlier
Earlier
United States
OCT 77
0.7
8.5
6.9
6.9
United Kingdom
SEP 77
0.4
14.7
19.0
10.8
AUG 77
0.4
6.6
6.6
6.1
SEP 77
0.5
13.8
15.6
4.4
Japan
AUG 77
0.2
7.6
0.8
-2.3
Italy
JUL 77
-
0.3
15.7
14.7
5.0
:;EP 77
1.8
10.5
7.6
6.2
i
I
i.l
i3.2
13.2
_~?..
West Germany
AUG 77
-0.1
5.2
1.9
-0.3
AUG 77
0.4
10.1
9.8
7.9
'
"S EP 77
-0.1
5.5
3.7
-1.4
StP 77
U.6
f.5
6.4
0.
U
France
MAR 77
0.9
8.4
8.2
7.6
AUG 77
0.5
9.0
9.9
9.1
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 Approved or a ease
tA= DP791B6
-
GNP '
RETAIL SALES
Constant Market Prices
Constant Prices
Average
Average
Annual Growth Rate
Since
Annual
Growth Ra
te Since
Percent Chong*
Percent Change
Latest
from Previous 1 year
Previous
Latest
from Previous
1 Year
3 Months
Quarter
Quarter 1970 Earlier
Quarter
Month
Month
1970
Earlier
Earlier'
United States 77 111
0.9 3.2 4.6
3.8
United States
Sep 77
-1.4
2.9
4.2
-0.6
Japan 77 II
1.9 5.6 5.6
7.6
Japan
Jun 77
-0.1
9.8
2.6
1.4
West Germany 77 II
-0.2 6.3 2.4
-1.0
West Germany
Aug 77
3.4
2.9
7.9
14.5
France 76 IV
0 3.9 4.9
0
France
Jun 77
7.7
-0.3
1.0
-8.1
United Kingdom 77 1
-1.9 1.6 -1.3
-7.5
United Kingdom
Sep 77
-0.7
1.0
-2.2
12.2
Italy 76 IV
1.1 3.0 5.5
4.6
Italy
Apr 77
-0.4
2.8
1.0
-3.1
Canada 77 II
-0.6 4.9 0.5
-2.4
Canada
Jul 77
3.0
4.4
0.6
-2.8
Seasonally adjusted.
Seasondly adjusted.
? Average far latest 3
months compared with avera
ge for previ
ous 3 months.
FIXED INVESTMENT'
WAGES IN MANUFACTURING'
Non-residential; constant prices
Average
Annual Growth Rate Since
Average
Percent Change
Annual Growth Rate Since
Latest
from Previous
1 Year
3 Months
Percent Change
Period
Period
1970
Earlier
Earlier
Latest
from Previous 1 Year
Previous
Quarter
Quarter 1970 Earlier
Quarter
United States
Sep 77
0.4
7.5
6.6
6.5
United States 77 III
1.0 2.1 7.8
4.2
Japan
Jun 77
1.7
17.3
12.5
8.7
Japan 77 II
0.5 1.1 4.5
2.0
West Germany
77 II
1.7
9.5
7.5
7.2
West Germany 77 11
-1.6 0.4 3.4
-6.4
France
77 I
2.3
14.1
13.9
9.5
France 75 IV
8.8 4.2 2.9
40.1
United Kingdom
Aug 77
0
15.3
3.0
3.5
United Kingdom 77 I
-0.6 0 3.4
-2.5
Italy
May 77
5.3
21.1
29.4
33.2
Italy 76 IV
5.2 3.0 15.4
22.4
Canada
Jul 77
0.3
11.4
11.0
12.6
Canada 77 11
6.1 3.2 - 1.1
26.7
' Hourly earnings (seasonally adjusted)
for the United States, Japan, and Canada;
hourly wage
' Seasonally adjusted.
rates for others. West German and F
rench data refer
to the beg
inning of t
he quarter.
' Average far latest 3
months compared with that for previous
3 months.
MONEY MA
RKET RATES
Percent Rate of Interest
1 Year
3 Months
1 Month
Representative ra
tes
Latest Date
Earlier
Earlier
Earlier
United States
Commerical paper
Nov 2 6.55
5.08
5.60
6.31
Japan
Call money
Nov 4 4.63
6.75
5.75
5.00
West Germany
Interbank loans (3 months)
Nov 2 4.06
4.60
4.03
4.17
France
Call money
Nov 4 8.75
11.44
8.50
8.38
United Kingdom
Sterling interbank loans (3
months)
Nov 2 4.84
15.36
7.20
5.65
Canada
Finance paper
Nov 2 7.38
9.28
7.38
7.10
Eurodollars
Three-month deposits
Nov 2 7.14
5.36
6.18
6.98
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us $
National urren
cy
Average
Average
Annual Growth Rate Since
Annual Growth Rate Since
Percent Change
Percent Change
Latest
from Previous 1 Year 3
Months
Latest from Previous 1 Year
3 Months
Month
Month 1970 Earlier
Earlier
Month Month 1970 Earlier
Earlier
United States Aug 77
-0.1 9.5 4.1
-4.4
United States
Aug 77 -0.1 9.5 4.1
-4.4
Japan Jul 77
-1.8 10.4 10.4
-4.4
Japan
Jul 77 -1.0 6.3 3.1
-5.3
West Germany Aug 77
-1.1 11.4 9.1
7.9
West Germany
Aug 77 -0.2 4.5 -0.1
0.6
France Jul 77
1.5 11.3 8.2
10.2
France
Jul 77 -0.1 9.2 8.7
1.7
United Kingdom Aug 77
2.9 11.0 13.9
15.7
United Kingdom
Aug 77 1.9 16.1 16.7
10.1
Italy Jun 77
1.7 11.2 14.5
9.8
Italy
Jun 77 1.6 16.9 19.4
18.5
Canada Jun 77
-1.7 9.3 -2.9
6.9
Canada
Jun 77 -0.9 9.5 5.4
9.6
IMPORT PRICES
OFFICIAL RESE
RVES
National Currency
Average
Billion US $
Annual Growth Rate
Since
Latest Month
Percent Change
1 Year
3 Months
Latest
from Previous 1 Year 3 Months
End of Billion US $ Jun 1970 Earlier
Earlier
Month
Month 1970 Earlier
Earlier
United States
Aug 77 19.1 14.5 18.6
19.2
United States Aug 77
1.1 13.4 8.6
1.0
Japan
Sep 77 17.9 4.1 16.5
17.4
Japan Jul 77
-1.5 10.5 -2.3
7.0
West Germany
Aug 77 34.9 8.8 34.3
34.8
West Germany Aug 77
0.6 4.4 -0.7
3.3
France
Jul 77 9.9 4.4 9.4
10.0
France Jul 77
0.1 10.3 14.3
-0.3
United Kingdom
Sep 77 17.2 2.8 5.2
11.6
United Kingdom Aug 77
-1.0 19.3 13.9
1.7
Italy
Aug 77 10.5 4.7 6.3
7.9
Italy Jun 77
3.3 21.3 15.1
22.4
Canada
Aug 77 4.8 4.3 5.6
5.2
Canada Jun 77
0.5 8.6 8.5
7.4
CURRENT ACCOUNT
BALANCE 1
BASIC BALAN
CE '
Current and Long-Term-Capital Transactions
Cumulative (Million U$ $)
Cumulative (Million
US $)
Latest
Latest
Period
Million US $ 1977 1976 Change
Period Million US $ 1977 1976
Change
United States 2 77 II
-4,605 -8,763 1,070 -9,833
United States
No longer published'
Japan Sep 77
1,142 6,473 1,815
4,658
Japan
Sep 77 611 4,398 1,732
2,666
West Germany Sep 77
-647 159 956
-798
West Germany
Aug 77 -927 -3,282 883
-4,165
France 77 II
-438 -2,101 -2,052
-50
France
77 1 -1,354 -1,354 -2,015
660
United Kingdom 77 III
911 -293 -2,011
1,719
United Kingdom
76 IV -277 N.A. -4,171
N.A.
Italy 77 I
-929 -929 -1,413
484
Italy
76 III 779 N.A. 1,096
N.A.
Canada 77 11
_1,4121_2,229I_3,088
859
Canada
77 1 164 164 882
-718
' Converted to US dollars at the current market rates of exchange.
'Converted to US dollars at the
current market rates of exchange.
s As recommended by
the Advisory Committee on the Presentation of Balance of Payments
s Seasonally adjusted.
Statistics, the Department of Commerce no longer publishes a basic balance.
TRADE-WEIGHTED EXCHANGE RATES'
EXCHANGE RATES
Spot Rate
As of 4 Nov 77
Percent Change from
Percent Change from
As of 4 Nov 77
us $ 1 Year 3 Months
1 Year 3 Months
Per
Unit 19 Mar 73 Earlier Earlier
28 Oct 77
19 Mar 73 Earlier Earlier 28
Oct 77
Japan (yen) 0.0040 6.02 18.62 7.23
0.95
United States
5.01 0.25 -0.67 -0.27
West Germany 0.4432 25.15 6.27 1.69
0.24
Japan
11.87 20.46 6.96
0.83
(Deutsche mark)
West Germany
27.80 3.94 1.12
0.10
France (franc) 0.2065 -6.31 3.25 0.46
-0.05
France
-8.13 0 -0.67 -0.32
United Kingdom 1.8040 -26.70 13.75 3.73
1.52
United Kingdom
-27.57 13.47 3.79
1.44
(pound sterling)
Italy
-39.43 - 5.03 -0.82 -0.13
Italy (lira) 0.0011 -35.71 -1.64 0.26
0.09
Canada
- 8.26 -13.76 -3.94 -0.41
Canada (dollar) 0.9019 -9.60 - 12.36 - 3.35
-0.27
' Weighting is based
on each fisted country's trade with 16 other industrialized countries to
reflect the competitive impact of exchange rate variations among the major currencies.
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FOREIGN TRADE BILLION US $, f.o.b., seasonally adjusted
United States
14.0
12.0
10.0
Japan
West Germany
10.0
8.0
4.0
3.5
Semilogarithmic Scale
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
United Kingdom
LATEST
MONTH
MILLION
US $ 1977
1976
CHANGE
LATEST
MONTH
MILLION
US $ 1977
1976
CHANGE
United States
SEP 77
10,916
12,631
90,584
109,882
85,171
88,297
6.4%
24.4%
United Kingdom
SEP 77
5,095
4,936
41,159 '..
44,196
32,650
37,511
26.1%
17.8%
Balance
-1,715
-19,298
-3,126
-16,172
Balance
159
-3,037
-4,861
1,824
Japan
SEP 77
6,439
5,183
58,430
45,838
48,305
40,860
21.0%
12.2%
Italy
AUG 77
4.022
3,489
29,216
29,071
23,305
25,696:
25.4?.o
13.1%
Balance
1,256
12,592
7,445
5,147
Balance
533
146
-2,391
2,537
West Germany
SEP 77
10,061
8,023
86,227
70,820
73,878
60,750
16.7%
16.6%
Canada
JUL 77
3,570
3,243
24,281
23,263
21,994
22,127
10.4%
5.1%
Balance
2,038
15,407
13,129
2,279
Balance
327
1,018 '..
-134
1,152
France
AUG 77
5,510
41,964
37,453
12.0%
5.888
44,174
39,000
13.3%
Balance
-378
-2,210
-1,548
-662
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
FOREIGN TRADE PRICES IN US $1
Japan
105
West Germany
1Export and import plots are based on five month weighted moving averages.
A-12
1977
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United Kingdom
Italy
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 ApprovSELECTED D02/ /1 P~kFPe6Ugjt 0 00030001-7 - ?L6
MONEY SUPPLY'
INDUSTRIAL PRODUCT
ION'
Average
Annual Growth Rate Since
Average
Percent Change
Annu
al Growth Rate Since
Latest
from Previous
1
Year
Percent Change
Month
Month
1970
Earlier
Latest
from Previous
1 Year
3 Months
Period
Period 1970
Earlier
Earlier'
Brazil
May 77
1.5
36.3
41.7
Brazil
76 II
0.1 11.0
10.7
0.4
India
May 77
0.4
12.2
17.8
India
Mar 77
-0.7 5.3
9.0
20.7
Iran
Jun 77
-4.5
28.8
26.5
South Korea
Jun 77
8.2 22.7
14.5
22.6
South Korea
Jul 77
1.9
31.6
39.6
Mexico
May 77
1.9 5.9
2.4
27.1
Mexico
Jun 76
-0.3
17.0
16.6
Nigeria
76 IV
0.2 11.3
9.0
0.7
Nigeria
Feb 77
5.9
35.9
54.8
Taiwan
Aug 77
-2.9 12.9
1.2
-14.9
Taiwan
Jul 77
1.4
24.4
27.1
Thailand
May 77
1.5
13.5
13.0
Seasonally adjusted
.
' Average for latest
3 months compared with average for previous 3 months.
Seasonally adjusted.
' Average for latest
3 months compared with overage for previous 3 months.
CONSUMER PRICES
WHOLESALE PRICES
Aver
age
Annual Growth Rate Since
Average
Percent Change
Annual Growth Rate Since
Latest
from Previous
1 Year
Percent Change
-
Month
Month
1970
Earlier
Latest
from Previous
1 Year
Month
Month
1970
Earlier
Brazil
Aug 77
1.9
27.0
43.2
Brazil
Aug 77
0.9
27.2
37.0
India
May 77
1.6
8.3
9.7
India
Jun 77
0.6
9.5
9.5
Iran
Jul 77
0.9
12.5
29.9
Iran
Jul 77
- 1.3
10.6
19.9
South Korea
Aug 77
1.3
14.6
9.7
South Korea
Aug 77
0.7
16.3
9.2
Mexico
Jul 77
1.1
14.7
32.9
Mexico
Jul 77
0.7
16.4
48.2
Nigera
Mar 77
3.4
14.9
13.6
Taiwan
Aug 77
0.5
9.1
4.2
Taiwan
Aug 77
5.6
11.4
12.3
Thailand
Jul 77
1.0
10.1
7.1
Thailand
Aug 77
1.1
8.7
9.9
EXPORT PRICES
OFFICIAL RESERVES
US $
Million US $
Latest Month
Average
1 Year
3 Months
Annual Growth Rate Since
End of
Million US $ Jun 1970
Earlier
Earlier
Percent Change
Latest
from Previous
1 Year
Brazil
May 77
5,808 1,013
3,401
5,878
Period
Period
1970
Earlier
India
Jul 77
4,395 1,006
2,665
4,134
Brazil
Jul 77
-12.4
16.3
28.4
Iran
Aug 77
11,561 208
9,057
11,460
India
Feb 77
8.0
10.4
8.9
South Korea
Jul 77
3,656 602
2,128
3,247
Iran
Jul 77
0
35.5
18.7
Mexico
Mar 76
1,501 695
1,479
1,533
South Korea
77 1
1.7
8.8
11.9
Nigeria
Jun 77
4,663 148
5,885
4,931
Nigeria
May 76
-0.1
27.3
12.3
Taiwan
Aug 77
1,416 531
1,586
1,331
Taiwan
Jul 77
0.6
12.4
9.7
Thailand
Aug 77
1,992 978
1,990
2,005
Thailand
Dec 76
2.0
13.3
13.1
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
Latest 3 Months
Percent Change from
3 Months 1 Year
Latest Period
Earlier'
E
arlier 1977
1976
Change
Jul 77 Exports
110.6
27.2
7,225
5,312
36.0%
Jul 77 Imports
22.8
-2.0
6,873
6,989
-1.7%
Jul 77 Balance
352
-1,677
2,029
May 77 Exports
41.3
10.3
2,288
2,082
9.9%
May 77 Imports
-47.5
1.8
1,810
1,770
2.2%
May 77 Balance
478
312
167
Iran
Jul 77 Exports
-32.5
- 1.9
13,733
12,829
7.0%
Jun 77 Imports
-14.5
-6.0
6,346
6,274
1.2%
Jun 77 Balance
5,598
4,695
904
South Korea
Jul 77 Exports
75.1
17.6
5,352
4,155
28.8%
Jul 77 Imports
63.9
17.5
5,428
4,437
22.4%
Jul 77 Balance
- 76
-281
205
Mexico
Jun 77 Exports
17.1
25.3
2,162
1,661
30.2%
Jun 77 Imports
73.5
-21.5
2,340
2,971
-21.2%
Jun 77 Balance
-178
-1,310
1,132
Nigeria
May 77 Exports
22.9
24.5
1,965
1,570
25.2%
Dec 76 Imports
86.7
8.4
2,531
1,990
27.2%
Dec 76 Balance
1,502
1,102
399
Taiwan
Aug 77 Exports
95.9
14.7
5,872
5,191
13.1%
Aug 77 Imports
8.2
11.1
5,116
4,544
12.6%
Aug 77 Balance
756
647
109
Thailand
Apr 77 Exports
34.3
22.9
1,221
963
26.8%
Apr 77 Imports
18.9
23.2
1,251
1,035
21.0%
Apr 77 Balance
- 30
- 72
41
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
AGRICULTURAL PRICES MONTHLY AVERAGE CASH PRICE
7.5 $ PER BUSHEL
0 1-3 NOV I 0 0 1-3 NOV I t I 0
1973 1974 1975 1976 1977 1973 1974 1975 1976 1977
1-3 NOV I
1-3 NOV
5 $ PER BUSHEL
Chicago
3 NOV
2.16
4
26 OCT
t96
OCT 77
1.89
NOV 76
2.35
3
1-3 NOV
200
25
COFFEE/TEA
400 C PER POUND
2,000
350
TEA COFFEE
London Auction Milds Washed, New York
17 OCT
102.3
4 OCT
199.50
10 OCT
96.9
30 SEP
199.50
OCT 77
89.6
OCT 77
199.50
NOV 76
76.0
NOV 76
179.08
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 Approved For Release 2002/08/12 : CIA-RDP79B00457A000300030001-7
37.5 $ PER HUNDRED WEIGHT
No. 2 Medium Grain, 4% Brokens,
f.o.b. mills, Houston, Tex.
SOYBEAN MEAL
$ PER METRIC TON $ PER TON
800
400
240
325 0 PER POUND Bahia, New York price
1-25 OCT I
41 Percent Bulk, f.o.b. Decatur
80 1973
19AUG 213.50
12 AUG 225.00
AUG 77 222.22
NOV 76 150.51
3 NOV 160.00
26 OCT 142.00
OCT 77 136.41
NOV 76 180.15
Crude, Tank Cars, f.o.b. Decatur
3 NOV 0.1896
26 OCT 0.1887
OCT 77 0.1876
NOV 76 0.2170
Crude, Bulk, c.i.f. US Ports
3 NOV 0.1975
1-19 AUG 1,000
I 1 1977
1-25 OCT 11
1976 1977
OCT 77 0.2017
NOV 76 0.1980
1-3 NOV
0
1973 1974 1975 1976 1977
NOTE: The food index is compiled by the Economist for 16 food commodities
which enter International trade. Commodities are weighted by
3-year moving averages of imports Into industrialized countries.
7,000 U.5
$ PER METRIC TON 400
350
300
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INDUSTRIAL MATERIALS PRICES MONTHLY AVERAGE CASH PRICE
COPPER WIRE BAR
140 0 PER POUND
3 NOV 22.9 32.0
26 OCT 23.2 32.0
OCT 77 23.1 32.3
NOV 76 27.3 37.0
53.3
1-3 NOV I I 1,000
LEAD
$ PER METRIC TON 45 t PER POUND
LME
uS
3,000
3 NOV
53.1
60.6
3 NOV
26 OCT
54.2
60.6
40
26 OCT
OCT 77
54.8
80.6
OCT 77
NOV 76
58.2
70.6
2,500
35
NOV 76
LMG :.ti :a 529j
3 NOV 578.9 6.31.9 580
28.6 32.C
28.3 31.1
27.9 31.1
20.8 26.1
1-3 NOV I I
1,000
800
600
NOV 76 368.6 407.7
50 150
25 125
1-2 NOV I
O inn
3 NOV
26 OCT
OCT 77
NOV 76
1-3 NOV I I
2NOV agr
26 OCT 125 225
OCT 77
NOV 76 X3,3
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MP USD
167.0 164.5
167.0 158.1:
167.0 156.1
167.0 157.1
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ALUMINUM
Major US Producer
it per pound
53.00
51.00
48.00
41.00
US STEEL
Composite
$ per long ton
359.36
339.27
327.00
306.72
IRON ORE
Non-Bessemer Old Range
$ per long ton
21.43
21.43
20.51
18.75
CHROME ORE
Russian, Metallurgical Grade
$ per metric ton
150.00
150.00
150.00
150.00
CHROME ORE
S. Africa, Chemical Grade
$ per long ton
58.50
58.50
42.00
44.50
FERROCHROME
US Producer, 66-70 Percent
t per pound
41.00
43.00
43.00
53.50
NICKEL
Composite US Producer
$ per pound
2.16
2.40
2.41
2.20
MANGANESE ORE
48 Percent Mn
$ per long ton
72.24
72.00
72.00
67.20
TUNGSTEN ORE
65 Percent WO3
$ per short ton
10,260.25
10,804.92
8,455.38
5,049.57
MERCURY
NY
$ per 76 pound flask
140.00
141.90
134.50
125.26
SILVER
LME Cash
t per troy ounce
483.77
469.85
436.90
431.93
GOLD
London Afternoon Fixing Price $ per troy ounce
162.07
146.60
130.44
142.42
RUBBER
60 C PER POUND
INDUSTRIAL MATERIALS INDEX
300
1970=100
1-25 OCT 11
1977
LUMBER INDEX6
1Approximates world market price frequently used by major
world producers and traders, although only small quantities of
these metals are actually traded on the LME.
2Producers' price, covers most primary metals sold in the US.
3As of 1 Dec 75, US tin price quoted is "Tin NY lb composite."
4Quoted on New York market.
5S-type styrene, US export price.
6This index is compiled by using the average of 13 types of lumber whose
prices are regarded as "bell wethers" of US lumber construction costs.
7Composite price for Chicago, Philadelphia, and Pittsburgh.
NOTE: The industrial materials index is compiled by the Economist for 19 raw
materials which enter international trade. Commodities are weighted by
3-year moving averages of imports into industrialized countries.
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