ECONOMIC INTELLIGENCE WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00702A000700030004-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 58
• Document Creation Date: December 16, 2016
• Document Release Date: March 21, 2005
• Sequence Number: 4
• Publication Date: July 6, 1978
• Content Type: REPORT

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Economic Intelligence
Weekly Review
6 July 1978
ER 1'TYVR 8-(W
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6 July 1978
Bonn Summit Issues: Big Six and EC Positions ............................................ 1
Departing from the usual format of the EIWR, this issue contains just one
article-a detailed description and analysis of the positions likely to be
taken by leaders of the Big Six Industrial countries and the EC Commis-
sion at the mid-July summit meeting in Bonn. The article begins with an
overview statement of the approaches that we expect from each partici-
pant. Then follow seven sections giving the particulars for individual
country positions in turn-for Japan, West Germany, France, the United
Kingdom, Italy, Canada, and the European Community. In each section
the discussion is organized under five headings: (a) economic situation
and policy, (b) monetary issues, (c) energy, (d) trade, and (e) North-South
issues.
Statistics
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West German Chancellor Schmidt and British Prime Minister Callaghan are
taking a keen interest in shaping the outcome of the Bonn summit, which opens
Sunday, 16 July. Schmidt, the host, is intent on seeing his initiatives in the monetary
area adopted first by other EC leaders and then endorsed at the summit. Callaghan,
along with EC Commission President Jenkins, seems most concerned that participants
make the specific commitments needed to restore confidence in the global economy.
Other foreign leaders are taking a lower key approach. Japanese Prime Minister
Fukuda will use the summit to publicize his country's recently improved economic
performance. French President Giscard d'Estaing, Italian Prime Minister Andreotti,
and Canadian Prime Minister Trudeau would like a general agreement on coordinated
reflation, although they will not commit their countries to new measures.
A potential for some bargain clearly exists among the four most active players-
-Carter, Schmidt, Giscard, and Callaghan. For example, all foreign leaders would
like to see the United States take stronger action to stabilize the dollar and cut oil
imports. Five nations want Japan and West Germany to grow faster so they will
increase foreign purchases. The outline of an agreement that could emerge on these
and other issues, such as the growth in protectionism, may not become evident until
immediately before the summit.
Generating the most interest among participants is the subject of economic
growth. All the foreign leaders have fairly definite opinions on what should be done to
stimulate more rapid growth and believe they have read the moods of their
constituencies on how much their own governments can do. Fukuda believes others
will agree that Tokyo is following the right path; he probably will indicate willingness
to add stimulus later this year if need be. Callaghan and Trudeau will point out that
they recently have taken stimulative measures and will suggest others should now do
Note: Comments and queries regarding the Economic Intelligence Weekly Review
are welcome. For the text, they may be directed to
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their part. Giscard and Andreotti believe their governments also are on the correct
courses. Depending on the outcome of the EC leaders' presummit meeting in Bremen,
Jenkins may be able to announce action by a few of the smaller EC members. Schmidt
will agree that Germany can do more but will contend that a higher growth target in
the short term cannot be met and that his and other governments should have a free
hand in determining the timing and amount of stimulus.
Chancellor Schmidt recognizes that he will be the focus of attention on the
subject of reflation and will argue that instability in foreign exchange markets is
the key factor working against more rapid economic growth because of the uncertain-
ty it creates for private investors. While chances are slim that the EC countries will
have any specific plans for greater monetary cooperation within the Community by
the time of the summit, they could have an agreement on principles that should
underlie greater EC monetary cooperation. In any case, dollar stabilization will stand
as a universal concern.
Trade could be the most pressing issue to handle because participating govern-
ments have set a mid-July deadline for achieving major progress in the Multilateral
Trade Negotiations (MTN). Much depends on the success of the ongoing high-level
meetings aimed at reaching at least a general accord, including compromises on the
tough, unresolved issues of agriculture, subsidies, countervailing duties, and safe-
guards. Most of the European leaders and Prime Minister Trudeau probably would
settle for a package consisting primarily of tariff reductions in order to minimize losses
and save face. Japan and West Germany, worried by threats to their exports, will press
for major reductions in both tariff and nontariff barriers and a strong statement
against the growing protectionist trend.
Energy will be a less contentious issue than at the 1977 summit. All the
participants can readily endorse the need to increase worldwide investment in energy
conservation and production, even though most apparently have no specific programs
in mind. The Europeans and Japanese remain firmly opposed to many US nuclear
energy objectives but are not likely to stir up controversy over them in Bonn.
Finally, the discussion of North-South issues will focus chiefly on the importance
of developing a united front at future common fund negotiations and on official aid
for LDCs. President Giscard will urge a special fund for Africa, and Prime Minister
Fukuda once again will cite Japan's pledge to double aid within three years.
Of the five major subjects to be addressed, the United States probably will come
under serious fire only on the issues of dollar stabilization and energy policy. The
decline of the dollar against the yen in recent weeks practically guarantees that the
Japanese, the West Germans, and possibly the British will urge that Washington step
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up intervention to stabilize foreign exchange markets. West Germany, the United
Kingdom, and France will stress the importance of US action on energy measures as a
means of both stabilizing the dollar and easing future pressure on world oil supplies.
Japan
Prime Minister Fukuda will stress the recent surge in Japanese growth in hopes
that other leaders will endorse his economic strategy. Fukuda sees a summit
acceptance of his economic policies as improving his domestic political position.
Economic management is certain to become a key issue in his bid for reelection this
December as president of the ruling Liberal Democratic Party-and, in effect, prime
minister. Fukuda will also stress Japan's fundamental commitment to liberalized
international trade.
Economic Situation and Policy
Prime Minister Fukuda will point to his pledge of 7-percent domestic-led growth
as Japan's contribution to the pace of global expansion. He will cite the 10-percent
GNP growth rate in the January-March quarter and some slippage in Japan's large
trade surplus as evidence that his policies are correct. He will maintain this despite the
fact that similarly strong growth in the first quarter of both 1976 and 1977 faltered
during the course of the year.
Most forecasts, including CIA's, project growth of 5 to 6 percent in fiscal year
1978. Fukuda is holding firm to his growth commitment; he would be willing,
however, to launch additional stimulative action-probably in the form of new deficit
spending-if it appears needed later on. Few details of such action will be available by
mid-July because (a) Tokyo will have only two to three months' statistics on the fiscal
year and (b) substantial bureaucratic infighting has developed over the shape of a
possible supplemental spending package. Although the Ministry of International Trade
and industry is backing new stimulus, the more influential Ministry of Finance is
recalcitrant. Finance officials argue that strong growth in January through March
augurs well for the current fiscal year.
On the balance-of-payments front, the Prime Minister may publicly back away
from his promise to cut the current account surplus from $14 billion in FY 1977 to $6
billion in FY 1978. In private, Japanese officials have already admitted that the
surplus will increase in calendar year 1978, precluding much, if any, reduction in the
fiscal year. Fukuda will stress his efforts to restrain exports and to bolster imports as
proof of his desire to trim the surplus. Even with these actions we believe Japan's
calendar year 1978 current account surplus will reach at least $17 billion and could
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Japan
CONSUMER PRICE
40,- INFLATION Percent
36
32
28
20,--TRADE AND CURRENT
ACCOUNT BALANCE
15k Billion US$
10-
5-
-10- 1975 1976 1977 1978
'. Current Account Balance
Foreign Trade Balance (f.o.b./c.i.f.)
GNP
Constant Market Prices
Index: 1970=100
100111 111111 111111 I II III IV I II Ill IV i 11 Ill IV l II III IV
1975 1976 1977 1978
6b
8r SURPLUS OR DEFICIT
6as a percent of GNP1
taUVtKNMCN I bUUlat I
UNEMPLOYMENT RATE
Percent
J A J O J A J O J A J O J A J O
1975 1976 1977 1978
1975 1976 1977 1978
1 Based on National Income Accounts definitions.
576525 778
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approach $20 billion, largely because yen appreciation is driving dollar export prices
well above last year's levels and because Japanese imports continue to lag.
Fukuda believes exchange rate stability is a prerequisite for healthy global
economic expansion and would probably join with the Europeans in a request that
Washington bolster its defense of the dollar. Japanese officials point to US oil imports
and the resurgence of US inflation as factors that could lead to continued foreign
exchange market speculation and further yen appreciation. Many Japanese see US
policy as forcing the yen exchange rate to bear the burden of adjustment for bilateral
imbalances. Fukuda would like Washington to give some indication of possible foreign
exchange market action in the future-such as activation of yen/dollar swaps-if
speculation picks up. At a minimum, the Japanese would like a statement that
Washington is concerned over yen/dollar speculation.
As the world's second-largest importer of oil, Japan is unlikely to initiate any
criticism of another country's. energy policies. Nonetheless, Fukuda does believe that
the US appetite for imported oil is a prime cause of international monetary instability.
He is certain to support multilateral moves to increase investment in energy
production and conservation. Nuclear energy policies will not be a contentious issue
for Tokyo, as they were at the 1977 summit. Even so, the initial two-year joint US-
Japan study of alternative reprocessing techniques will end in 1979, and Fukuda may
want to explore possible further nuclear cooperation with both the United States and
the EC.
Prime Minister Fukuda is pushing his advisers to reach an agreement on both
tariff and nontariff issues by mid-July. The Japanese want to defend their export
market shares even though they are reluctant to permit access to their own market. As
a result, Tokyo is looking for deep cuts in industrial tariffs by the United States and the
EC as well as some easing of selective restraints on Japanese products by European
countries. Fukuda is having a difficult time wresting agricultural concessions from the
Japanese bureaucracy because the farmers have substantial political clout in his party.
Nonetheless, Fukuda believes an agreement on agriculture is possible; Japan will
sweeten its agricultural offer to the United States by boosting quotas on beef and
possibly citrus fruits. Tokyo reportedly is planning to raise subsidy payments to
farmers to offset any harm done by easing import restrictions.
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Japan keeps a low profile on North-South questions unless they involve oil or the
major Southeast Asian LDCs. Fukuda will point to Japan's pledge to double aid
outflows within three years, without disclosing what base period is being used in the
calculation or what currency. The powerful Ministry of Finance has suggested using
the 1976 dollar value of Japanese aid as a base; because of the rapid appreciation of
the yen, this implies a much smaller rise in the volume of aid outflows than if yen
values were used.
To enhance its image with Southeast Asian raw material suppliers, Tokyo is
contributing $30 million to tin buffer stocks, supports a price stabilization policy for
rubber, and has left the door open on a regional export earnings stabilization scheme.
Most Japanese officials still oppose large-scale, global buffer stocks or a general
common fund, regarding them as bottomless financial pits. The Japanese have avoided
discussing this issue since the collapse of the common fund talks, waiting for the
United States and the EC to reach a modus vivendi with the LDCs.
West Germany
As host of the summit, West German Chancellor Helmut Schmidt has a vested
interest in ensuring that the talks be judged a success. Anything less would hurt his
image as a major world leader and his standing on the German political stage. Anxious
to polish up traditionally good US - West German relations, Schmidt has been careful
in recent statements to play down differences over the issue of economic growth and
to stress instead common positions on such other issues as trade liberalization and
energy conservation.
Economic Situation and Policy
The West German economy has lost the momentum built up towards the end of
last year. Real growth during first quarter 1978 was less than 1 percent (annual rate).
Some pickup is expected over the next few months as industry recovers from
abnormally disruptive labor disputes and as last year's stimulation measures impact
more fully on the economy. Nevertheless, real GNP growth for 1978 probably will be
in the 2.5- to 3-percent range, short of the 3.5-percent target.
The sluggishness of the economy thus far has not generated any strong domestic
pressure on Chancellor Schmidt to take further stimulative action. Voters generally are
far less concerned over unemployment than over the danger of renewed inflation.
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West Germany
180 GNP
Constant Market Prices
160 Index: 1970=100
CONSUMER PRICE
INFLATION Percent
120
1001 II III IV I II III IV I II III IV I II III IV
1975 1976 1977 1978
10 UNEMPLOYMENT RATE
0
-2
I I I I I I I I I I I I I I
LA J 0 J A J 0 J A J 0 J A J 0
1975 1976 1977 1978
20r-TRADE AND CURRENT
ACCOUNT BALANCE
15 F- Billion US$
L Percent
0 I I I I I I I I( I I I I I I 1
J A J 0 J A J 0 J A J 0 J A J 0
1975 1976 1977 1978
GOVERNMENT BUDGET
-SURPLUS OR DEFICIT
-as a percent of GNP1
1975 1976 1977
Current Account Balance
Foreign Trade Balance (f.o.b./c.i.f,)
6 July 1978 SECRET
1975 1976 1977 1978
1Based on National Income Accounts definitions.
5)6526 7.78
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Lack of a domestic mandate poses serious problems for Bonn's efforts to develop a
growth package that would mollify foreign critics. The government's narrow
Bundestag majority is threatened by dissension within Schmidt's own Social Demo-
cratic Party (SPD) and by disagreements between the SPD and its coalition partner,
the Free Democratic Party (FDP). The coalition has been further weakened by FDP
setbacks in two recent state elections.
Bonn and Washington disagree on the appropriate way to achieve more rapid
West German economic growth. The Germans feel that their anti-inflationary policy
is correct and should be followed by other countries. They remain convinced that
because foreign trade plays such an important part in the German economy, more
rapid growth of output and investment largely depends on a revival of external
demand. Under these circumstances, German policymakers and leaders of the business
and banking community have little faith in the longer run stimulative effect of
macroeconomic measures, particularly public sector expenditures.
Chancellor Schmidt nevertheless appears willing to take further stimulative
measures as part of a "concerted action" that would also include US efforts to reduce
oil imports, more trade concessions from Japan, curbs on protectionist trends in Britain
and France, and a general commitment to achieve greater exchange rate stability. The
German leader is currently engaged in discussions within his own party and with his
coalition partner to gain support for a compromise stimulation package.
In recent statements, SPD Finance Minister Hans Matthoefer and FDP Econom-
ics Minister Otto Lambsdorff have advocated a major tax cut, but details and timing
remain open. Matthoefer would prefer to delay a tax cut until 1980 to permit a
thoroughgoing reform of the system. Lambsdorff appears to be pushing for tax cuts
effective next year, in part to head off the formation of a "Tax Protest" party, which
could reduce the FDP vote below the 5 percent required for parliamentary
representation.
Chancellor Schmidt is principally concerned that the international monetary
markets achieve a "greater measure of stability and predictability." He has frequently
cited excessive exchange rate fluctuations as one of the key. factors undermining
business confidence and retarding worldwide economic recovery. As a first step
towards greater currency stability, the Chancellor hopes that the EC Bremen summit
will agree in principle to greater monetary cooperation among the EC countries. The
details of a new arrangement could be worked out by technical experts for submission
to the December EC summit.
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Schmidt recognizes the political and economic problems that a closer linkage of
EC currencies would initially pose to nonsnake countries but remains convinced that
in the longer run the gain from greater exchange rate stability would outweigh them.
Moreover, Schmidt believes that closer EC monetary cooperation would represent
significant progress toward a genuine economic union and toward a more balanced
US-European partnership; thus he may ask President Carter to give his blessing to the
EC negotiations.
West Germany's main concern is that the United States provide convincing
evidence of its commitment to reducing energy consumption and, more importantly,
its dependence on oil imports. Bonn views a credible US stand on energy as a virtual
sine qua non for a German commitment to take further stimulative measures. The
Germans will support a US effort to stimulate investment in energy conservation and
development of new energy sources, particularly in the LDCs.
Already worried by appreciation of the deutsche mark, Bonn fears worldwide
protectionist trends as an even greater danger to its export-oriented industrial sector.
The Germans favor early conclusion of the Multilateral Trade Negotiations, with
maximum reductions in tariff and nontariff barriers, as the most effective way to stem
protectionism. Bonn prefers to avoid orderly marketing arrangements and similar
steps limiting trade but went along with EC arrangements on textiles and steel and
apparently will go along on synthetic fibers. As a member of the EC, the Germans also
accept, if grudgingly, the protectionist EC agricultural stance.
At the moment, Chancellor Schmidt probably would be happy to touch only
lightly on North-South issues. The German position remains split between the more
accommodating approach pressed by the Foreign Ministry, which fears isolation from
the EC position, and the tougher line taken by the Economics and Finance Ministries.
The latter two oppose both mandatory government contributions to the common fund
and establishment of a second window financed by voluntary contributions. Chancel-
lor Schmidt thus far has endorsed the tougher stand. He has expressed the view that
the expanding relations between industrial and developing countries should be
"placed on a stable foundation." While there are no firm ideas as to how this should be
achieved, the Germans have increased their bilateral aid budgets and are also floating
proposals for massive capital transfers to the Third World.
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President Giscard d'Estaing has taken a secondary role to Chancellor Schmidt in
summit preparations. He is likely to push for an aid fund for Africa, along with such
traditional French objectives as a return to more stable exchange rates. Above all, he
hopes the summit will demonstrate to his electorate that French economic troubles are
only part of an international problem.
Economic Situation and Policy
Giscard still supports a policy of coordinated reflation and wants West Germany
to do more toward this end. The issue is less pressing than it was last year because of
the improvement in the French trade balance.
Paris itself is not likely to provide more stimulus. Bolstered by the Center-Right
victory in the March elections, the government remains fully committed to the anti-
inflationary "Barre Plan" introduced in September 1976. The policy focuses on
reducing monetary growth and narrowing the budget deficit, while pressing business
and labor to slow the growth of wages.
A second major theme-"liberalization"-has now been added to the Barre Plan.
Basically this means a reduction in government economic intervention, with the aim
of increasing economic efficiency. In particular, all price controls on the industrial
sector will be removed by October, giving French manufacturers full freedom to set
prices for the first time since World War II. At the same time, prices charged for
government services are being raised to reflect more accurately the cost involved.
Finally, government aid to distressed firms will be cut, thus stepping up the pressure
on French business to improve its efficiency.
Given the austere approach of the Barre Plan, the short-term economic outlook
remains mediocre. Real GNP growth in 1978 probably will be no more than one-half
point above the 2.9 percent recorded last year. This relatively slow growth, coupled
with a rapid influx of young people into the labor force, means that unemployment
will rise from 4.8 percent at yearend 1977 to 5.4 percent by December 1978.
Meanwhile, the removal of price controls on industrial products will add perhaps 2
percentage points to the inflation rate, pushing it close to 11 percent, December to
December. The only bright spots for policymakers are wages and the balance of
payments. Wages rose only 2.2 percent during the first quarter, the smallest increase
in nine years, while the trade balance now is in small surplus.
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France
CONSUMER PRICE
40r- INFLATION Percent
0
-2
1 1 1 1 I 1 1 1 1 1 1 1 1 1 1 l
A J 0 J A J 0 J A J 0 J A J 0
1975 1976 1977 1978
01111111111111111
J A J O J A J O J A J O J A J O
1975 1976 1977 1978
20 TRADE AND CURRENT
ACCOUNT BALANCE
15 f- Billion US$
1001 11 1 1 1 1 f I I I I I I I I
1 II III Iv I II III Iv I 11 III IV I 11 III IV
1975 1976 1977 1978
Current Account Balance
6 July 1978
1975 1976 1977 1978
tBased on National Income Accounts definitions.
576527 7 7B
GNP
Constant Market Prices
Index: 1970=1 00
UNEMPLOYMENT RATE
Percent
F GOVERNMENT BUDGET
SURPLUS OR DEFICIT
as a percent of GNP1
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For some time, Paris has sought a return to more-or-less fixed exchange rates,
arguing that the wide swings of recent years have been disruptive to trade. Pending a
more permanent solution, the French want the IMF to exercise strong surveillance on
exchange policies.
Giscard, like Schmidt, would like stable ties among European exchange rates. The
two reportedly have reached some kind of agreement regarding steps toward greater
monetary cooperation within the EC, but no details are available. The Gaullists-and
the Left also-will be wary of a monetary agreement with West Germany, which
could be interpreted as mortgaging French policy to that of the Federal Republic.
Giscard probably is strong enough to get his way on any monetary arrangement that is
likely to emerge. At the Bremen summit, France likely will push for an EC currency
agreement, at least in principle; however, French reentry into the snake is not likely
this year, given the large and growing gap between the French and German inflation
rates.
Giscard considers France a leader in adapting to the post-1973 energy situation.
French officials point to a huge nuclear power program, various energy conservation
measures including an oil-import ceiling, and a fairly close link between energy prices
and costs. While still not willing to join the International Energy Agency, Paris is
willing to work closely with the other Western countries on energy conservation and
research and development. President Giscard firmly believes, however, that a
reduction in US oil imports is vital if a coordinated policy is to be effective.
The French oppose major liberalization of trade and have been rather reluctant
participants in the current negotiations. Their position has been that exchange rates
should be stabilized first, on the grounds that it is pointless to cut tariffs by a few
percentage points when exchange rates can fluctuate by much greater amounts. Also
they regard US policies as being far more protectionist than those of EC countries and
fear that the United States will somehow get the lion's share of the benefits from the
Multilateral Trade Negotiations.
With some support from London, Paris was the major opponent of the 40-percent
tariff cut advocated by the United States, suggesting a 25-percent target instead. With
respect to codes of conduct and nontariff measures generally, the French have been
very reluctant to accept greater GATT discipline over subsidies, particularly regional
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development subsidies. They also support UK insistence on the principle of selective
application of safeguards; imports from Japan and the LDCs would be the main
targets of such action. In negotiations on a government procurement code, the French
oppose US efforts to ensure that government purchases are conducted through a public
bidding process. Most important, Paris has rejected any proposals that might threaten
the EC's Common Agricultural Policy, which it views as a cornerstone of EC unity.
However, France has been mildly encouraged of late by the US negotiation position on
grains, and this has contributed to a generally more optimistic French outlook on
MTN prospects.
Good relations with LDCs are particularly important to Paris because of the
country's colonial heritage and a desire to boost France's global influence. As a result,
France often declines to line up with the other developed countries on North-South
issues, seeking instead to play the role of intermediary. French officials are asking
their contacts within the Group of 77 to moderate demands on the common fund and
want the United States and West Germany to soften their positions. Since France gives
proportionally more aid to LDCs than any of the summit participants, Giscard
probably will urge other leaders to step up their aid programs and to help establish a
special fund for Africa. He is open to criticism, however, on the grounds that fully
one-half of French aid goes to France's own overseas departments and territories. The
Africa fund is not a subject of domestic discord on the Center-Right; the Left will
certainly oppose it-ineffectually-as part of Giscard's imperialist schemes.
United Kingdom
Prime Minister Callaghan optimistically views the summit as an opportunity for
coordinated action to restore confidence in the international economy and prevent a
new global recession. He has outlined a scheme intended simultaneously to spur
economic growth, stabilize exchange rates, conserve energy, promote trade, maintain
long-term capital flows, and beef up aid for developing nations. The Prime Minister
would like summit participants to agree on a game plan prior to the meeting. The
Conservatives have ridiculed the Callaghan package as an election ploy, arguing that it
would have no effect on the West's economic problems and would be detrimental to
Britain's economy.
Economic Situation and Policy
Callaghan's government undertook what it considers Britain's contribution to
world growth in April when it introduced a $4.6 billion stimulation package. The
measures were expected to raise the public sector borrowing requirement for fiscal
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United Kingdom
GNP
Constant Market Prices
Index: 1970=100
120
CONSUMER PRICE -ilill III
40,- INFLATION Percent 100 , ? , ? ,,, ,%, , ? ,,, ,%, , ? ,,, ,X,
361-- A 1975 1976 1977 1978
F UNEMPLOYMENT RATE
Percent
1111 11111 1111 1i 1
01111111111111111
J A J O J A J O J A J O J A J O
1975 1976 1977 1978
20,-TRADE AND CURRENT 'v GOVERNMENT BUDGET
ACCOUNT BALANCE 13 SURPLUS OR DEFICIT
15k Billion us$ 6 as a percent of GNP1
1975 1976 1977 1978
Current Account Balance
Foreign Trade Balance (f.o.b./c.i.f.)
1975 1976 1977 1978
1Based on National Income Accounts definitions.
576528 7 78
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SECRET
year 1979 (which began 1 April) to $15.5 billion, just short of the limit promised the
IMF as a borrowing condition. In view of the borrowing constraint, additional UK
stimulation seems unlikely. In an effort to avoid exceeding the constraint, London last
month announced an increase in employer social insurance contributions, designed to
offset a tax cut added to the finance bill by the Conservatives. This led to a confidence
vote, which the government narrowly survived. The Callaghan government also raised
the Bank of England's minimum lending rate.
Britain is expected to record 1978 GDP growth of 2.5 to 3 percent, up from less
than 1 percent in 1977. The unemployment rate will stick near 6 percent, and for this
reason British officials have stressed the importance of sustaining more rapid GNP
growth rather than stabilizing exchange rates. Inflation should ease to about 9 percent
for all of 1978, although it may turn upward in the second half of the year. The
current account, which has been fluctuating widely, should register a small surplus for
the year on the strength of increased North Sea oil production.
Monetary Issues
Prime Minister Callaghan feels strongly that any international monetary stabiliza-
tion program should include the United States and thus was unhappy with the Europe-
only orientation of discussions at the EC summit meeting in April. While supporting
the principle of greater monetary cooperation within the European Community, the
British are reluctant to link the pound to the deutsche mark in a widened snake,
fearing that such an arrangement would severely erode Britain's competitive position
or necessitate restrictive demand management policies, Indeed, London is hesitant to
join any monetary arrangement that would inhibit national freedom of action on
exchange rate movements without obtaining as a minimum some EC pooling of
reserves or another mechanism for transferring resources to the lagging economies.
The British have suggested that a multilateral initiative be developed for defending
the dollar when necessary but have neither defined what they mean nor pressed the
issue recently. They still believe Washington could do more to stabilize the dollar.
Energy
British and US officials hold like views on what summit participants should aim
for on energy questions. The British believe the major stress should be on conservation
and additional investment in both oil and nonoil sources. Prime Minister Callaghan
may suggest that the summit endorse the drawing up of new energy policy proposals
by the International Energy Agency and certainly will back the formation of programs
by the World Bank to promote energy investment in the LDCs. Whether he would
make a substantial financial commitment to these efforts is questionable. Since the
Prime Minister firmly believes that the adoption of strong US energy measures is
6 July 1978 SECRET
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essential to the well-being of other consumers and producers and to the health of the
dollar, he doubtless will make that point in Bonn.
Trade
At the summit, Prime Minister Callaghan probably will emphasize his belief that
the best guarantee against protectionism is more rapid worldwide economic growth.
The British hope to avoid major trade liberalization in the Multilateral Trade
Negotiations, although officially they have committed themselves to a successful
conclusion of the negotiations. They have opposed Washington on issues of major
importance to the United States in the MTN, including subsidies/countervailing
duties, dispute settlements, and safeguards. London has also opposed substantial tariff
cuts and has pressed for selective safeguards to protect domestic industry and adoption
of an escape clause allowing for postponement of subsequent tariff cuts. Britain's
leaders believe that the more competitive developing nations-Brazil, South Korea,
and Taiwan-should no longer receive special export treatment, fearing that a
continued rise in imports from these areas will further endanger uncompetitive UK
industries. The British have introduced import restrictions in an attempt to minimize
damage to weak industries, and emphasis on a new "Buy British" campaign could cast
even more doubt on the government's antiprotectionist stance.
North-South Issues
The British are not expecting North-South issues to play a major role at the
summit. They would urge that countries with balance-of-payments surpluses increase
aid to the LDCs and have themselves decided to cancel debt for the poorest countries.
The Callaghan government still objects to the Group of 77 demand for direct
government contributions to the fund but may consider endorsing a limited second
window to finance commodity-related development projects.
Italy
The unsettling political developments of the last several months have over-
shadowed economic issues in Rome. Thus, the Italians probably will be even less
assertive than usual at the summit. Rather than focus on international issues, Prime
Minister Andreotti may solicit approval from the participants for Italy's domestic
stabilization and antiterrorist efforts.
Economic Situation and Policy
The Andreotti government's austerity program struck with a vengeance in 1977,
causing GDP declines in each quarter of the year. While the data indicate a rebound
16 SECRET
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in first quarter 1978, Italian policymakers consider the recovery tenuous. Further
progress against inflation-which has fallen from a 28-percent annual rate in late 1976
to 10 percent presently-is not likely. In fact, inflation probably will accelerate under
the pressure of outsized budget deficits. In addition, the heavy schedule of union
contracts up for renewal augurs jumps in labor costs beyond those provided by the
generous wage indexation system. Austerity brought Italy's current account into the
black, but even this achievement will be transitory if recovery and inflationary
psychology generate an inventory boom that sucks in imports.
Prime Minister Andreotti heartily supports a strategy of coordinated reflation.
Reflation is in line with the new government's program, which calls for GDP growth
of 4.5 percent by yearend. There are few sharp differences among key Italian parties
on this or other summit issues. The Italians have been strident in urging countries with
strong currencies to reflate, seeing export sales as their safest road to domestic growth.
With wages and many budgetary components indexed to the cost-of-living, the
Italians actually have limited scope for discretionary economic policy. Whether labor
costs can be curbed will depend to a large degree on the ability of Communist labor
leaders to win support for their moderate line among other unions and the rank and
file generally. Major contract renewals slated for this fall will provide the first test of
Communist union chief Luciano Lama's ability to prevail.
While Prime Minister Andreotti will endorse any general call for exchange rate
stabilization for the sake of public relations, he will reject specific proposals to fix
intra-EC exchange rates. Rome has reaped benefit rather than harm from the dollar's
recent decline. By pegging the lira to a falling dollar, Italy was able to remain
competitive with EC neighbors while keeping dollar-denominated import prices
steady. Although inflation has slowed and the balance of payments has improved,
Rome feels that problems in these areas are far from solved and, that the lira cannot
hold its own over the long haul with other EC currencies. The Italians will, however,
support vaguely worded promises of greater EC coordination of exchange rates and
would jump at any proposal to share currency reserves that does not entail fixing
artificial values for the lira.
Energy
On energy topics, Prime Minister Andreotti will follow the lead of his EC
partners. With meager energy reserves and delays in their nuclear program, the
Italians can offer few initiatives in the energy field. Andreotti will support proposals
for more investment in energy development, primarily with an eye toward securing
international financial assistance for the domestic nuclear power program. The
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Italy
CONSUMER PRICE
40 r- INFLATION Percent
36
32
28
24
20
0
-2
I l l l i l l l i l l l i l l l
A J 0 J A J 0 J A J 0 J A J 0
1975 1976 1977 1978
20, TRADE AND CURRENT
ACCOUNT BALANCE
15 1-- Billion US$
SURPLUS OR DEFICIT
as a percent of GNP1
1975 1976 1977 1978
Foreign Trade Balance (f.o.b./c.i.f.)
pprovedFor-ReTease-2005/
GNP
Constant Market Prices
Index: 1970=100
+
1 1 1 i
1 1 1 1
1 1 1 i
i -L j
100
1
II 111 IV I
11 111 IV 1
II III IV I
II III IV
1975
1976
1977
1978
UNEMPLOYMENT RATE1
C Percent
1 New definitions of employment raised the
official Italian estimate in first quarter 1977.
Data for earlier periods are not comparable.
0~ I I l i 1 1 1 1 1! I I i l l
J A J O J A J O J A J O J A J O
1975 1976 1977 1978
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Christian Democrats, Communists, and two other parties pushed the program through
parliament last October over the opposition of Socialists who hoped to gain political
advantage vis-a-vis the Communists. The Italians have little immediate chance of
reducing their dependence on foreign oil; they thus will look askance at any EC
Commission decision to float one of its earlier proposals for ceilings on oil imports.
Italy will readily join in any denunciations of protectionism, at the same time
insisting that import protection be permitted in exceptional circumstances. While
Rome has been one of the principal advocates within the EC of cartel arrangements
for declining industries, it has allowed small, efficient Italian steel producers to
undercut EC minimum prices. The Italians will avoid substantial concessions in the
areas of industrial and regional subsidies and selected agricultural products of interest
to the United States. Their resistance to agricultural concessions is especially strong
because they believe these products receive second-class treatment under the EC's
Common Agricultural Policy and thus are even more susceptible to competition from
third countries. Rome is pessimistic about the outlook for the Tokyo round and will be
happy if the Multilateral Trade Negotiations are brought to a speedy, face-saving
conclusion. The Italians recommended a "minipackage" of moderate tariff cuts and
some new rules on government procurement. They would have preferred a 25-percent
cut with no exceptions.
Rome has been on the margin of the North-South dialogue, careful to pursue a
flexible policy that will not jeopardize commercial relationships with the LDCs.
Andreotti's Christian Democrats and the Communists-whose support for the govern-
ment is vital-have no outstanding policy differences regarding economic relations
with the LDCs. Like several other EC governments, Rome is more willing than
Washington to accommodate the LDCs on the divisive issues of financing the common
fund and establishing a second window. Andreotti's government believes (a) the
common fund could receive a small endowment before the conclusion of commodity
agreements and (b) a limited second window with voluntary contributions should be
used to finance feasibility studies for modernization and diversification projects, which
could then be underwritten by existing aid agencies. The Italians do not want a second
window to become a rival of existing international agencies.
Prime Minister Trudeau will go to the summit quite conscious of a serious erosion
in his domestic political base. Facing an election by early 1979, his governing Liberal
6 July 1978 SECRET
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Party has experienced a sharp drop in popular support primarily because of severe
inflation, persistently high unemployment, and depreciation of the Canadian dollar.
Trudeau sees little room for domestic economic initiatives and will stress the need for
more rapid economic growth abroad to strengthen Canada's balance of payments and
stimulate its economy.
Economic Situation and Policy
Ottawa is cutting some taxes this year to spur the economy, and Trudeau
probably will argue at the summit that his government has applied as much
stimulation as possible, given continuing inflation, budget constraints, and balance-of-
payments problems. Canada's federal deficit is projected at $11.5 billion * for the
fiscal year beginning 1 April-equal to 5 percent of GNP. Trudeau is aware of
increasingly conservative fiscal sentiment in the hinterlands, a mood reflected in the
slowdown in provincial spending growth. Under these circumstances, Ottawa will be
looking to US and European growth as a means of pulling Canada out of its economic
quagmire.
Real GNP probably will increase by 3.5 to 4 percent this year, up from 2.6
percent in 1977. This increase, however, will not be enough to reduce Canada's 8.6-
percent unemployment rate. Inflation is likely to accelerate somewhat from the 8-
percent rate experienced last year. Despite a substantial increase in the trade surplus,
higher interest and dividend payments and a growing travel deficit will keep the
current account deficit near last year's $4 billion.
Any economic moves by Canada in the near term will be mainly cosmetic. Jean
Chretien, Canada's finance minister, could propose a minibudget in the fall-a
precedent he started last year as a means of fine-tuning budgetary policy. The most
palatable option available to Ottawa would be an extension of the 2-to 3-percent
provincial sales tax reduction, which was introduced this spring. Under the present
formula, the cuts will expire between October and December 1978. The only other
stimulative measures within Ottawa's current means are minor tax concessions to small
business and to industries featuring high technology.
Prime Minister Trudeau is concerned over the sharp depreciation of the
Canadian dollar during the past 18 months and the possibility of moves by the United
States to support the US dollar. Ottawa fears unilateral actions by Washington, such as
import surcharges or a foreign interest equalization tax, which would hurt Canadian
exports or restrict US capital flows to Canada. It also is wary of the current rise in US
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Canada
GNP
Constant Market Prices
Index: 1970=100
CONSUMER PRICE
INFLATION Percent
100L_I I I I I I I I I I I I I I I
1 II III IV I II III IV I II III IV I II III IV
1975 1976 1977 1978
0
-2
I I I I I I I I I I I I I I I I
AAJJO J A J 0 J A J 0 J A J 0
1975 1976 1977 1978
20,-TRADE AND CURRENT
ACCOUNT BALANCE
15 [- Billion US$
1.975 1976 1977 1978
Current Account Balance
Foreign Trade Balance (f.o.b./c.i.f.)
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F UNEMPLOYMENT RATE
Percent
GOVERNMENT BUDGET
SURPLUS OR DEFICIT
- as a percent of GNP1
4
2
0
-2
1Based on National Income Accounts definitions.
576530 7.78
1975 1976 1977 1978
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interest rates, which discourages capital movements to Canada and tends to drive up
Canadian interest rates, thus retarding economic growth. The Canadians strongly
support reflation in Europe and Japan to strengthen both the US and Canadian dollars
and will join US efforts in this regard at the summit. Although Canada claims that it is
committed to the principle of floating exchange rates, the Bank of Canada has
intervened massively since the first of the year to support the Canadian dollar. The
government has bolstered reserves by borrowing heavily abroad.
The Canadians probably would welcome greater international focus on conserva-
tion and accelerated development of new energy sources. They have successfully used
price and tax incentives to increase conservation and encourage oil and gas explora-
tion. Canada has proposed the establishment of an energy development fund for the
LDCs as a summit agenda item.
On nuclear nonproliferation questions, Prime Minister Trudeau will likely align
himself with US views, since Canada is committed to a vigorous nuclear safeguard
program. After months of negotiations, Ottawa finally reached agreement last January
with Japan and the EC restricting the enrichment, reprocessing, and storage of
Canadian-supplied uranium. Canada is delaying a decision on the construction of
commercial reprocessing facilities pending completion of the US-sponsored Interna-
tional Fuel Cycle Evaluation Program.
Although Trudeau expects to be pressed on trade issues, he will most likely resist
specific concessions on the Canadian side. Ottawa is severely constrained in commit-
ting itself to the Multilateral Trade Negotiations. Almost two-thirds of Canada's
exports are raw or semiprocessed materials and minerals. In addition, Ottawa's ability
to cut tariffs is limited by regional problems that pose serious political difficulties.
Canada's most highly protected industries-such as textiles-are concentrated in
Quebec, and tariff cuts that seriously threaten these industries would strengthen the
already discomfiting Quebec separatist movement. Moreover, western Canada's
interests include tariff protection for some new industries. Finally, protectionist
sentiment is particularly strong now because of the high rate of unemployment.
In the MTN, the Canadians want to eliminate or sharply reduce tariffs on
processed and semiprocessed materials, and they are pushing for substantial reduction
of nontariff barriers, particularly those hampering trade in basic commodities. Ottawa
also wants the inclusion of an injury clause in US countervailing duty legislation.
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Partly because of its historic ties with Commonwealth LDCs, Canada has
sometimes attempted to mediate between North and South. This role has led to
differences with US positions. The Canadians, for example, are willing to support a
second window supported by voluntary contributions in the common fund, believing
that it could serve a more useful function than the buffer stock financing mechanism
of the common fund itself. Ottawa continues to insist that individual commodity
agreements have a sound economic basis. Canada would prefer to deal with LDC
issues in the context of other agenda items.
The European Community
EC Commission President Roy Jenkins will play a delicate role at the summit.
Chancellor Schmidt, as President of the EC Council beginning in July, will speak for
the Community where joint positions have been agreed. Nothing, however, prohibits
Jenkins from presenting independent EC Commission views, and he may well do so,
especially on monetary issues. The five small EC members view Jenkins as a
spokesman for their interests.
Economic Situation and Policy
The Commission regards coordinated fiscal stimulation as the only cure for the
present economic malaise, and Jenkins probably will be a forceful spokesman on this
issue. If the mid-1979 EC target growth rate of 4.5 percent: is to be met, the
Commission estimates that government spending for the Community as a whole must
increase by the equivalent of 0.8 percent of GNP. The Commission has indicated that
West Germany, the Netherlands, Belgium, and Luxembourg have the most latitude to
ref late their economies, noting that balance-of-payments problems and high inflation
restrict the freedom of action of the remaining members. In the absence of strong,
coordinated reflationary measures, the Commission predicts that 1979 real GNP
growth in the Community will only match the dullish 2.5-percent to 3.0-percent pace
expected in 1978.
Jenkins will try to get the EC leaders to ratify a coordinated program at their own
summit in Bremen on 6 and 7 July, but a strong program is not likely to result. The
outcome of that meeting will determine how forceful Jenkins will be as a spokesman at
the Bonn summit. In Bonn, Jenkins will likely stress the need for balance in any
stimulation plan-including the need for stronger energy measures by the United
States-in order not to appear as part of a front against Schmidt.
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The EC Commission (propelled by Jenkins) has been renewing its drive for
economic and monetary union (EMU) as a means of revitalizing the Community and
halting the trend to divergence. Schmidt's proposals for increased monetary coopera-
tion, delivered at the April EC summit, gave a new impetus and respectability to the
movement for EMU and were accordingly welcomed by Jenkins.
Since the April meeting, various EC groups have been working out specific plans
for greater EC exchange rate cooperation. At the June gathering of the EC finance
ministers, three potential schemes were discussed:
? An enlarged "snake" that includes Britain, France, and Italy, with
provisions for a transitional period and/or permanent modification to
increase snake flexibility.
? Target zones for nonsnake currencies defined in terms of a weighted
average of currencies, with an obligation to defend these rates through
intervention.
? Target zones defined as above, without any obligation to defend the rates.
Although the Council took no decisive action, a summary of the discussions will be
submitted to the EC heads of government at the Bremen summit.
More recently, Schmidt and Giscard have apparently seized the initiative from
the Community on monetary matters. They have developed new arrangements for
monetary cooperation and have sent emissaries to various EC capitals to take
soundings on their closely held plan. If an agreement in principle is reached at
Bremen, the EC may present the accord at the Bonn summit as its contribution to
monetary stability and seek US endorsement.
The Commission is a strong advocate of energy conservation and production of
domestic energy as ways to reduce dependence on foreign oil. Thus Jenkins would
support likely US initiatives on energy cooperation. At the 30 May EC Energy
Council, the Nine agreed in principle to undertake energy-saving demonstration
projects and alternative energy pilot projects but postponed a decision on funding until
late this year. Jenkins might initiate discussion on energy cooperation with non-OPEC
I,DCs since Commission officials are presently looking into the transfer of energy
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technology to LDCs and developing measures to protect and guarantee investment in
LDCs.
The Commission would like summit participants to agree on 1985 oil import
ceilings and 1985 targets for coal production and nuclear energy production. So far, it
has been unable even to obtain agreement among the Nine on the Community's own
1985 energy goals.
The Commission, which traditionally has maintained a liberal trade stance, is in
the middle of a squabble among West Germany, Britain, and other members over
protectionist tendencies in the Community. In response to mounting pleas for
protection, the Commission has negotiated with third country suppliers new steel
import restrictions and tightened access for textiles. Similar arrangements are being
considered for footwear exporters.
The steel accords are part of EC Commissioner Davignon's positive adjustment
plan for the ailing EC steel industry. This plan includes both voluntary and mandatory
minimum prices for steel plus domestic market-sharing arrangements among EC
producers. The plan also proposes to organize a Community-wide restructuring of the
industry. Similar plans for other troubled industries such as synthetic fibers, shipbuild-
ing, and plastics are under consideration.
Bonn sees the Commission neglecting the virtues of free trade in promoting
industrial help programs; London, on the other hand, thinks the Commission is
insensitive to the need for maintaining employment. Jenkins obviously believes that
the Commission is in fact making a contribution to "positive adjustment." He may be
expected to say as much if Schmidt and Callaghan at the summit disagree on what to
emphasize in adjusting to trade imbalances.
The EC's main objectives in the ongoing MTN are to achieve:
? Preservation of the Common Agricultural Policy (CAP).
? A safeguard code permitting unilateral selective application against the
trade of specific countries causing injury.
? US acceptance of the need to prove injury before applying countervailing
duties.
6 July 1978 SECRET
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On North-South issues, the Commission continues to tread a middle road between
the liberal Dutch and conservative West Germans. The Commission would like
negotiations on the common fund resumed and sees the summit as a chance to
publicize developed country overtures to LDCs. Only the West Germans are holding
out on the Commission's proposal to accept the idea of voluntary contributions to a
second window. With Schmidt's opposition possibly weakening, the Commission hopes
its position will be adopted at Bremen. While the Commission agrees with the United
States that LDCs should not have control over management of a common fund, it has
yet to accept the US position that voting rights should be related to contributions made
through individual commodity agreements. Instead the Commission prefers a system
under which no single group would have control. 25X1
25X1
26 SECRET 6 July 1978
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Next 3 Page(s) In Document Exempt
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Assessment
Center
Economic Indicators
Weekly Review
6 July 1978
ER EI 78-027
6 July 1978
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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:
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Exchange and Gift Division
Library of Congress
Washington, D.C. 20540
Non-U.S. Government users not interested in the DOCEX
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
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 16 February 1978.
Comments and queries regarding the Economic Indicators Weekly Review are
welcomed.
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 BIG SIX FOF EIGN COIUNTFZigt"8G561 1 Ti9WQ?1-69&Agt6RS
Industrial Production
140
130
Unemployment Rate
INDEX: 1970=100, seasonally adjusted
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1973 1974 1975
'Including Japan, West Germany, France, the United Kingdom, Italy, and Canada.
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Consumer Price Inflation
Percent, seasonally adjusted, annual rate
Note: Three-month average compared with previous three months.
Trade Balance
4.0
Note: Five-month weighted moving average.
Industrial
Production
Big Six
AVERAGE ANNUAL
Percent Change GROWTH RATE SINCE
LATEST from Previous 1 Year 3 Months
MONTH Month 1970 Earlier Earlier2
United States APR 78 1.4 3.7 5.0 5.1
Consumer Prices
Big Six
United States
APR 78 0.3 9.2 6.5 6.0
APR 78 0.9 6.6 6.6 ' 8.5
Billion US $, f.o.b., seasonally adjusted
JAN APR JUL OCT JAN APR JUL OCT JA -3,PR JUL. OCT
Unemployment Rate
Big Five
United States
MONTH US $ 1978 1917 Change
Trade Balance
Big Six FEB 78 5,140 7,790 3,178 4,612
United States FEB 78 -4,518 -6,884 -3,495 -3,389
2Average for latest 3 months compared with average for previous 3 months, seasonally adjusted at annual rate.
A-3
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LATEST
LATEST MONTH
Year Earlier
3 Months
Earlier
APR 78
4.3
4.2
4.2
APR 78
6.0
7.1
6.3
MILLION
CUMULATIVE (MILLION US $)
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INDUSTRIAL PRODUCTION INDEX: 1970=100, seasonally adjusted
Japan
France
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
Semilogarithmic Scale
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United Kingdom
-moo l i.ii
100
Italy
Canada
134
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR APR JUL L OCT
1973 1974 1975 1976
Percent
Change
from
AVERAGE ANNUAL
GROWTH RATE SINCE
Percent
Change
from
AVERAGE ANNUAL
GROWTH RATE SINCE
LATEST
Previous
-
1 Year
3 Months
LATEST
Previous
1 Year
3 Months
MONTH
Month
1970
Earlier
Earlierl
MONTH -
Month
- 1970
Earlier
Earlierl
United States
MAY 78
0.6
3.7
4.9
9.7
United Kingdom
APR 78
1.0
0.7
1.9
6.1
Japan
MAY 78
0.3
4.0
6.7
11.4
Italy
APR 78
-1.4
2.5
-2.4
-2.0
West Germany
APR 78
1.7
2.0
0.9
-8.7
Canada
APR 78
-0.2
3.8
2.1
3.7
France
APR 78
0.8
3.5
4.8
13.4
1Average for latest 3 months compared with average for previous 3 months.
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UNEMPLOYMENT RATE PERCENT
United States
Japan
2
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1973 1974 1975 1976 1977 1978
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United Kingdom
5.7
Italy (quarterly)
3.8
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.
Canada
3.4
THOUSANDS OF PERSONS UNEMPLOYED
1 Year
Earlier
3 Months
Earlier
1 Year
Earlier
3 Months
Earlier
United States
MAY 78
6,149
6,894
6,090
United Kingdom
JUN 78
1,365
1,353
1,400
Japan
APR 78
1,220
1,020
1,130
Italy
178
1,520
1,459
1,598
West Germany
MAY 78
997
1,040
1,012
Canada
MAY 78
949
840
901
France
MAY 78
1,113
1,066
1,042
NOTE: Data are seasonally adjusted. Unemployment rates for France are estimated. The rates shown for Japan and Canada are
roughly comparable to US rates. For 1975-78, 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. Beginning in
1977, Italian rates should be decreased by 50 percent to be roughly comparable to US rates.
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
CONSUMER PRICE INFLATION Percent, seasonally adjusted,
annual rate'
United States
Japan
West Germany
1973 1974
1Three-month average compared with previous three months.
pproved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
United Kingdom
35
30
25
20
15
10
4.7
JAN APR JUL OCT JAN
1973
LATEST Previous 1970 1 Year 3 Months
MONTH Month Earlier Earlier2
United States
Japan
?yc
from
APR JUL OCT
1974
9.9 1
APR 78 -0.1 9.8 3.9 4.0
3.2
LATEST
MONTH
United Kingdom MAY 78
Italy MAY 78
Canada j MAY 78
OCT JAN APR JUL OCT
Percent AVERAGE ANNUAL
Change GROWTH RATE SINCE
from
Previous 1970 1 Year 3 Months
2Average for latest 3 months compared with average for previous 3 months, seasonally adjusted at annual rate.
A-9
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
 ' Approved For Release 2005/04/18
C !
O702A 700030 O4_- --
GNP
Constant Market Prices
Constant Price
s
Average
Average
Annual Growth Rate Sime
Annual
Growth Rate Since
Percent Change
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
Mar 78
1.4
3.2
1.0 -8.2
United States 78 1
0 3.1 3.8 0
Japan
Jon 78
2.9
9.2
1.0 -2.8
Japan 78 1
2.4 5.5 5.7 10.0
West Germany
Apr 78
-0.8
2.5
7.0 -7.3
West Germany 78 1
0.1 2.4 1.1 0.4
France
Jan 78
9.9
0
1.0 10.5
France 77 IV
1.4 3.8 3.4 5.8
United Kingdom
May 78
2.2
1.2
5.6 5.2
United Kingdom 77 IV
-0.5 1.6 - 1.1 -1.9
Italy
Feb 78
1.3
2.8
2.1 5.9
Italy 77 IV
-3.7 1.7 -5.9 -13.9
Canada
Apr 78
2.0
4.2
3.0 5.9
Canada 78 1
0.7 4.7 2.8 2.7
Seasonaly ad usted.
Seasonally adjusted.
s Average far latest
3 months compared with average for previous 3 months.
FIXED INVESTMENT '
WAGES IN MANUFACTURING'
Nonresidential; constant
prices
Average
Average
Annual Growth Rate Since
Annual Growth Rate Since
Change
Percent
-----
Percent Change
Latest
from Previous
I Year 3 Months
Latest
from Previous I Year Previous
Period
Period
1970
Earlier Emilio- '
Qaarter
Qaarter 1970 Earlier ocean's,
United States
Apr 78
0.8
7.6
8.3 7.5
United States 78 I
1.0 2.2 4.7 4.1
Japan
Jan 78
1.2
16.3
9.4 4.7
Japan 78 I
0.9 1.1 -0.4 3.6
West Germany
78 I
0.9
8.9
4.3 3.9
West Germany 78 I
-0.5 0.7 1.6 -2.1
France
77 IV
3.1
14.1
12.0 12.9
France 77 IV
0.8 4.0 4.7 3.3
United Kingdom
Jan 78
0.5
14.7
3.3 2.7
United Kingdom 77 IV
-1.5 1.3 4.1 -5.9
Italy
Apr 78
0
20.1
17.4 13.4
Italy 78 I
5.3 1.7 -11.4 22.7
Canada
Apr 78
-0.1
10.9
7.7 6.8
Canada 78 I
-3.7 4.8 -12.7 -14.1
' Hourly earnings (seasonally adjusted) far the United States, Japan, and Canada; hourly wage
seasonally adjusted.
rates far others. West German and French data refer to the beginning of the quarter.
Average far latest 3
months compared with that for
previous
3 months.
MONEY MARKET RATES
Percent Rate of Interest
1Year
3 Months
1 Month
Representative rates
Latest Date
Earlier
Earlier
Earlier
-
United States
Commercial paper
Jun 28 7.75
5.39
6.80
7.19
Japan
Call money
Jun 30 4.38
5.63
4.12
4.12
West Germany
Interbank loans (3 months)
Jun 28 3.66
4.22
3.52
3.62
France
Call money
Jun 30 7.88
8.75
8.62
7.88
United Kingdom
Sterling interbank loans (3 months)
Jun 28 10.05
7.78
6.73
9.14
Canada
Finance paper
Jun 28 8.04
7.12
7.78
8.13
Eurodollars
Three-month deposits
Jun 28 1 8.65
5.80
7.40
8.02
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
 EXPORT PRItproved For Release 2005/04/18:
IA 8?q%QZ gA000700030004-7
US $
National Currency
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
Mar 78
-0.1
9.3
3.8
7.6
United States Mar 78
-0.1
9.3 3.8 7.6
Japan
May 78
1.1
12.2
23.6
45.4
Japan May 78
3.1
5.8 0.7 14.3
West Germany
Mar 78
1.0
12.0
15.6
9.9
West Germany Mar 78
-0.7
3.8 -1.5 -11.6
France
Feb 78
-0.5
11.4
9.9
22.7
France Feb 78
1.5
9.3 6.4 19.5
United Kingdom
May 78
0.6
11.4
15.6
-10.8
United Kingdom May 78
2.0
15.4 9.3 15.6
Italy
Oct 77
-0.6
10.9
12.7
0.2
Italy Oct 77
-0.9
16.3 16.0 -0.7
Canada
Mar 78
12.8
10.1
14.7
62.2
Canada Mar 78
1.3
9.4 9.1 11.9
IMPORT PRICES
OFFICIAL RESERVES
National Currency
Average
Annual Growth Rate Since
Billion US $
Percent Change
Latest
Month
Latest
from Previous
1 Year
3 Months
1 Year 3 Months
Month
Month
1970
Earlier
Earlier
End of
Billion US $ Jun 1970 Earlier Earlier
United States
Mar 78
2.0
13.1
7.8
27.5
United States Apr 78
18.8
14.5 18.9 19.5
Japan
May 78
5.3
7.1
-17.0
-12.3
Japan May 78
27.7
4.1 17.3 24.2
West Germany
Mar 78
1.9
3.6
- 1.9
-0.9
West Germany Apr 78
41.3
8.8 34.6 40.7
France
Feb 78
1.9
9.9
3.8
12.5
France Apr 78
10.6
4.4 10.0 0.1
United Kingdom
May 78
1.0
17.6
2.6
14.2
United Kingdom Apr 78
17.7
2.8 10.2 21.4
Italy
Dec 77
-0.7
19.5
9.7
-13.1
Italy Mar 78
10.6
4.7 6.4 11.6
Canada
Mar 78
-2.7
8.8
10.2
3.5
Canada May 78
4.7
9.1 5.2 3.7
CURRENT ACCOUNT BALANCE
'
BASIC BALANCE '
Current Account and Long-Term
Capital Transactions
Cumulative (Million US $)
Cumulative (Million US S)
Latest
-
Lotest
Period Million US $
1977
1976
Change
Period Million US $
1977 1976 Change
United States'
78 I
-6,954 -20,115 -1,430 -18,685
United States
No longer published P
Japan
May 78
750
17,606
5,884
11,722
Japan May 78
-700
14,373 3,862 10,511
West Germany
May 78
285
3,584
2,659
926
West Germany Mar 78
2,026
-1,648 2,472 -4,120
France
78 I
0 -3,179 -5,721
2,541
France 78 I
-1
-3,218 -6,842 3,624
United Kingdom
77 IV
682
-14 -2,172
2,157
United Kingdom 77 IV
1,389
5,353 -2,254 7,607
Italy
77 III
2,390
1,629 -2,028
3,657
Italy 77 III
2,520
2,128 -2,083 4,211
Canada
78 I
-1,417 -4,020 -4,230
210
Canada 78 1
-744
84 3,751 -3,667
' Converted to US dollars at the current market rates of exchange.
'Converted to US dollars at the current market ra
tes of exchange.
r As recommended by the Advisory Committee on the
Presentation of Balance of Payments
I Seasonally adjusted.
Statistics, the Department of Commerce
no longer publishes a basic balance.
EXCHANGE RATES
TRADE-WEIGHTED EXCHANGE
RATES'
Spot Rate
As of 30 Jun 78
As of 30 Jun 78
Percent Change from
Percent Change from
us $
l year
3 Months
Per Unit
19 Mar 73
Earlier
Earlier
23 Jun 78
1 Year
3 Months
19 Mar 73
Earlier
Earlier 23 Jun 78
Japan (yen)
0.0049
28.58
32.88
7.19
2.47
United States -1.11
-6.77
-1.46 -0.73
West Germany
0.4825
36.26
13.56
-2.70
0.27
Japan 33.44
30.20
7.33 2.28
(Deutsche mark)
West Germany 30.59
4.82
-1.75 -0.13
France (franc)
0.2219
0.66
9.56
0.97
1.25
France -7.62
-0.32
2.68 0.98
United Kingdom
1.8595
-24.44
8.13
-0.78
0.70
United Kingdom -29.51
1.33
-0.24 0.33
(pound sterling)
Italy - 41.81
-5.5 4
0.59 -0.21
Italy (lira)
0.0012
-33.90
3.54
-0.43
0.26
Canada - 11.15
- 8.14
1.31 -0.07
Canada (dollar)
0.8906
-10.73
-5.51
1.55
0.15
' Weighting is based on each listed 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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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
Big Other Com- Big Other Com-
World Seven OECD OPEC munist Other World Seven OECD OPEC munist Other
UNITED STATES
1975 .......................... 107.65
46.94
16.25
10.77
3.37
29.82
103.42
49.81
8.83
18.70
0.98
25.08
1976 .......................... 115.01
51.30
17.68
12.57
3.64
29.44
129.57
60.39
9.75
27.17
1.16
31.09
1977 .......................... 120.17
53.92
18.53
14.02
2.72
30.98
156.70
70.48
11.08
35.45
1.22
38.47
1st Qtr ................ 29.46
13.75
4.73
3.13
0.86
6.99
37.37
16.07
2.76
8.97
0.30
9.27
2d Qtr ................ 31.67
14.39
4.81
3.69
0.71
8.07
40,45
18.14
2.77
9.31
0.35
9.88
3d Qtr ................ 28.75
12.23
4.39
3.58
0.47
8.08
39.50
17.73
2.78
8.92
0.32
9.75
4th Qtr ................ 30.29
13.55
4.60
3.62
0.68
7.84
39.38
18.54
2.77
8.25
0.25
9.57
JAPAN
1975 .......................... 55.73
16.56
6.07
8.42
5.16
15.87
57.85
16.93
6.08
19.40
3.36
12.05
1976 .......................... 67.32
22.61
8.59
9.27
4.93
17.84
64.89
17.58
7.78
21.88
2.91
14.72
1977 .......................... 81.11
28.02
9.73
12.03
5.32
26.01
71,33
18.87
7.93
24.33
3.41
16.79
1st Qtr ................ 17.89
5.89
2.45
2.46
1.36
5.73
17.44
4.72
1.84
6.24
0.79
3.85
2d Qtr ................ 19.73
6.73
2.41
2.91
1.19
6.49
17.88
4.88
2.10
5.74
0.86
4.30
3d Qtr ................ 20.63
7.40
2.47
3.05
1.33
6.38
17.63
4.68
1.84
5.88
0.84
4.39
4th Qtr ................ 22.86
8.00
2.40
3.61
1.44
7.41
18.38
4.59
2.15
6.47
0.92
4.25
1978 ..........................
Jan ........................
WEST GERMANY
1975 .......................... 91.70
28.33
36.44
6.78
8.81
11.05
76.28
27.09
27.78
8.24
4.87
8.21
1976 .......................... 103.63
33.44
41.86
8.25
8.72
11.04
89.68
31.28
32.64
9.73
5.93
10.01
1977 .......................... 119.28
39.01
48.00
10.78
8.59
12.90
102,63
36.38
37.37
10.12
6.14
12.62
1st Qtr ................ 28.19
9.28
11.62
2.31
2.11
2.87
24.45
8.46
8.85
2.58
1.42
3.14
2d Qtr ................ 29.20
9.59
11.79
2.69
2.07
3.06
25.21
9.09
9.04
2.43
1.54
3.11
3d Qtr ................ 28.75
9.20
11.45
2.71
2.26
3.13
25.27
8.99
8.97
2.54
1.65
3.12
4th Qtr ................ 33.14
10.94
13.14
3.07
2.15
3.84
27.70
9.84
10.51
2.57
1.53
3.25
FRANCE
1975 .......................... 52.87
20.00
15.50
4.90
3.13
8.61
53.99
23.04
14.33
9.43
1.94
5.21
1976 .......................... 57.05
22.49
16.15
5.08
3.23
8.75
64.38
27.81
16.93
11.36
2.24
6.01
1977 .......................... 65.00
25.90
18.19
5.97
3.00
11.94
70.50
30.28
18.24
11.82
2.46
7.70
1st Qtr ................ 15.68
6.25
4.55
1.40
0.75
2.73
17.89
7.50
4.84
3.06
0.52
1.97
2d Qtr ................ 16.69
6.60
4.79
1.57
0.83
2.90
17.96
7.84
4.71
2.65
0.61
2.15
3d Qtr ................ 14.75
6.02
4.08
1.32
0.67
2.66
16.14
6.99
3.85
2.87
0.62
1.81
4th Qtr ................ 17.88
7.03
4.77
1.68
0.75
3.65
18.51
7.95
4.84
3.24
0.71
1.77
1978
Jan ........................
UNITED KINGDOM
1975 .......................... 44.03
12.55
16.59
4.55
1.56
8.64
53.35
18.47
18.52
6.91
1.68
7.67
1976 .......................... 46.12
14.03
17.53
5.13
1.39
7.92
55.56
19.66
18.81
7.29
2.08
7.65
1977 .......................... 57.44
16.99
22.56
6.78
1.63
9.48
63.29
24.02
21.34
6.31
2.40
9.22
1st Qtr ................ 13.14
4.02
5.16
1.51
0.35
2.10
15.45
5.80
5.12
1.78
0.49
2.26
2d Qtr ................ 14.35
4.20
5.72
1.69
0.44
2.30
16.52
6.02
5.73
1.70
0.58
2.49
3d Qtr ................ 14.59
4.47
5.55
1.75
0.46
2.36
15.20
6.05
4.74
1.44
0.66
2.31
4th Qtr ................ 15.36
4.30
6.13
1.83
0.38
2.72
16.12
6.15
5.75
1.39
0.67
2.16
1978
Jan ........................
ITALY
1975 .......................... 34.82
15.61
7.86
3.72
2.46
4.67
38.36
17.32
6.75
7.85
2.09
4.34
1976 .......................... 36.96
17.41
8.69
4.23
2.18
3.96
43.42
19.35
8.04
8.12
2.65
5.24
1977
1st Qtr ................ 9.80
4.56
2.30
1.26
0.53
1.15
11.37
5.00
2.14
2.18
0.60
1.45
2d Qtr ................ 11.47
5.33
2.61
1.51
0.60
1.42
12.49
5.51
2.24
2.50
0.64
1.60
3d Qtr ................ 10.93
5.01
2.51
1.41
0.63
1.37
10,55
4.39
1.80
2.10
0.73
1.53
Oct & Nov ........ 7.73
3.68
1.66
0.99
0.40
1.00
7.97
3.52
1.48
1.34
0.53
1.10
Approved For Release 2005/04118: CIA-RDP80T00702A000700030004-7
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
Developed Countries: Direction of Trade 1
(Continued)
Big Other Com- Big Other Com-
World Seven OECD OPEC munist Other World Seven OECD OPEC munist Other
CANADA
1975
.......................... 33.84
26.30
1.73
0.71
1.20
2.00
38.59
29.78
1.70
3.43
0.32
2.02
1976
.......................... 40.18
32.01
2.03
0.81
1.25
2.09
43.05
33.55
1.82
3.48
0.38
2.56
1977
.......................... 42.98
34.77
2.13
0.94
1.06
4.08
44.67
35.67
1.77
3.05
0.33
3.85
1st
Qtr
................
10.35
8.37
0.53
0.23
0.22
1.00
10.92
8.64
0.43
0.82
0.09
0.94
2d
Qtr
................
11.34
9.23
0.54
0.24
0.29
1.04
12.28
9.92
0.47
0.74
0.10
1.05
3d
Qtr
................
10.25
8.12
0.54
0.23
0.29
1.07
10.38
8.17
0.43
0.82
0.07
0.89
4th
Qtr
................
11.04
9.05
0.52
0.24
0.26
0.97
11.09
8.94
0.44
0.67
0.07
0.97
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
FOREIGN TRADE BILLION US $, f.o.b., seasonally adjusted
9.4
6.3
2.0
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
-proved For Release"2005/0411 CTA-RDP80T00702A000700030004-7
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
54,237
69,009
58,447
18.1%
-14,771
-8,280
-6,491
39,330
32,397
21.4%
27,515
25,370
8.5%
11,815
7,C)"
X787
55,032
46,735
17.8%
45,808
38,606
18.7%
9,224
8,128
1,096
24,665
20,659
19.4%
24,652
21,770
13.2%
13
-1,111
1,124
LATEST
MONTH
MILLION
US $
11
754
United States
MAY 78
,
13,992
Balance
-2,238
Japan
MAY 78
7,848
5,940
Balance
1,907
West Germany
MAY 78
10,313
8,522
Balance
1,791
France
APR 78
6,416
6,279
Balance
138
LATEST MILLION
MONTH , US $ 1978
1977
CHANGE
5,231
27,077
21,791
24.3%
5,538
27,973
24,164
15.8%
Balance
-307
-896
-2,372
1,476
APR 78
4,650
16,050
14,034
14.4%
4,053
14,955
14,756
1.3%
Balance
598
1,095 :
-722
1,817
FEB 78
3,946
3,710
7,175
6,680
6,761
6,509
6.1%
2.6%
Balance
235
495
252
243
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
FOREIGN TRADE PRICES IN US $1
West Germany
lExport and import plots are based on five-month weighted moving averages.
A- 16
pproved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
1978
576503 6-78
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
 ApproveSEQr?f91e 2DEVE/LOPINGP000NTRIESoosooo4-7
MONEY SU
PPLY '
INDUSTRI
AL PRODUCTION '
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 '
Period
Period
1970
Earlier Earlier'
Brazil
Jan 78
4.2
36.6
44.5
19.9
India
Dec 77
3.3
4.7
4.6 2.5
India
Dec 77
1.0
13.8
13.6
26.1
South Korea
Mar 78
5.8
22.7
26.8 16.9
Iran
Feb 78
0.8
28.1
27.7
30.3
Mexico
Feb 78
1.4
5.9
11.2 3.3
South Korea
Mar 78
0.9
31.7
38.8
32.2
Nigeria
76 IV
0.2
11.3
9.0 0.7
Mexico
Mar 78
3.0
20.5
30.5
40.3
Taiwan
Apr 78
1.5
15.3
17.4 - 2.0
Nigeria
Apr 77
-2.3
36.9
47.5
99.7
' Seasonally adjusted.
Taiwan
Mar 78
5.3
25.2
31.0
I
24.3
'Average for latest 3 months comp
ared with average
for previous 3 months.
Thailand
Nov 77
3.3
13.1
12.3
4.7
'Seasonally adjjussad.
' Average for latest 3 months compared with average for previous 3 months.
CONSUMER PRICES
Average
WHOLESALE
PRICES
Annual Growth Rate Since
Percent Change
----
- .. --. --
Average
Latest
from Previous
1 Year
Annual Growth
Rate Since
Month
Month
1970
Earlier
Percent Change
--
------
Latest
from Previous
I Year
Brazil
May 78
3.2
28.0
36.0
Month
Month
1970
Earlier
India
Feb 78
-1.5
7.5
3.2
Brazil
May 78
3.4
28.4
34
5
Iran
Mar 78
2.3
12.5
17.6
Indio
Mar 78
0.8
8.1
.
-0
6
South Korea
May 78
1.0
14.4
12.6
Iran
Mar 78
3
2
11
1
.
Mexico
May 78
1.0
15.0
17.2
South Korea
May 78
.
0.8
.
15.9
12.5
11
2
Nigeria
Dec 77
3.2
16.6
31.0
Mexico
May 78
2.5
16.5
.
16
3
Taiwan
Apr 78
1.8
10.1
7.6
Taiwan
Mar 78
1.1
8.2
.
1
2
Thailand
Apr 78
1.0
8.6
8.8
Thailand
Jan 78
-0.2
9.5
.
6.4
EXPORT PRICES
OFFICIAL RESERVES
US $
Average
Million US $
Annual Growth Rate Since
Latest Month
Percent Change
-
1 Year
3 Months
Latest
from Previous
I year
End of
Million US $ Jun 1970
Earlier
Earlier
Period
Period
1970
Earlier
Brazil
Jan 78
6,757
1,013
6,193
6,041
Brazil
Dec 77 I
2.0
13.7
- 15.8
India
Feb 78
5;563
1,006
3,481
5,069
India
Mar 77
-0.9
9.6
17.9
Iran
Apr 78
12,584
208
10,548
12,848
Iran
Mar 78
0
32.0
0
South Korea
Apr 78
4,116
602
3,247
4,418
South Korea
77 IV
4.6
8.9
i
8.8
Mexico
Jan 78
1,909
695
1,507
1,720
Nigeria
May 76
-0.1
27.3
12.3
Nigeria
Apr 78
3,768
148
4,784
3,900
Taiwan
Mar 78
-0.7
11.2
3.8
Taiwan
Mar 78
1,433
531
1,349
1,447
Thailand
Dec 76
2.0
13.3
13.1
Thailand
Apr 78
2,138
978
2,006
1,950
Approved For Release 2005/04/18 : CIA-RDP80Tb0702A
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
FOREIGN TRADE, f.o.b.
Latest 3 Months
Percent Change from
3 Months 1 Year
Latest Period Earlier' Earlier 1977 1976 Change
Apr 78
Exports
19.0
0.5
12,137
10,128
19.8%
Apr 78
Imports
7.7
5.8
11,999
12,346
- 2.B%
Apr 78
Balance
138
-2,218
2,356
76 IV
Exports
3,781.6
240.7
76 IV
Imports
11,741.0
195.7
76 IV
Balance
Dec 77
Exports
-22.1
13.9
6,142
5,050
21.6%
Dec 77
Imports
14.4
25.9
5,365
4,548
18.0%
Dec 77
Balance
776
502
274
Iran
Mar 78
Exports
-36.7
-4.4
24,237
23,475
3.2%
Jan 78
Imports
20.5
21.0
12,561
11,513
9.1%
Jan 78
Balance
11,676
11,962
-286
South Korea
Mar 78
Exports
-36.9
28.4
10,046
7,715
30.2%
Mar 78
Imports
-5.5
29.5
10,526
8,405
25.2%
Mar 78
Balance
-480
-690
210
Mexico
Feb 78
Exports
91.6
14.9
4,092.9
3,315.8
23.4%
Feb 78
Imports
-47.3
23.8
5,487.5
6,029.6
-9.0%
Feb 78
Balance
-1,394.6
-2,713.8
1,319.2
Nigeria
Dec 77
Exports
-28.5
15.2
4,752
4,033
17.8%
Dec 76
Dec 76
Imports
Balance
86.7
8.4
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
Taiwan
Apr 78
Exports
-27.6
32.3
1,526
1,226
24.5%
Apr 78
Imports
- 14.5
20.4
1,309
1,044
25.4%
Apr 78
Balance
217
182
36
Thailand
Dec 77
Exports
-27.2
-1.6
3,559
3,040
17.1%
Jan 78
Imports
0.6
21.4
4,246
3,313
28.2%
Dec 77
Balance
-687
-273
-414
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
AGRICULTURAL PRICES MONTHLY AVERAGE CASH PRICE
27 JUN 2.50
4 21 JUN 2.58
X150
200 MAY 78 2.61
JUN 77 2.29
1-27 JUN it
0 1974 1975 1976 1977 1978 0
No. 2 Medium Grain, 4% Brokens,
f.o.b. mills, Houston, Texas
1-27 JUN II
0 .4.
1974 1975 1976 1977 1978 0
1-19 JUN
1974 1975 1976 1977 1978 0
1.0 $ PER POUND
Memphis Middling 1 1/16 inch
COFFEE/TEA
C PER POUND
COFFEE
2,000 Other Milds Arabicas, ex-dock New York
27 JUN 162.00
20 JUN 164.00
300 MAY 78 169.26
1,500 JUN 77 262.09
27 JUN 0.5920
21 JUN 0.5965
MAY 78 0.5942
JUN 77 0.6230
CORN
S PER METRIC TON 5 $ PER BUSHEL
1-27 JUN]
TEA
London Auction
APR 97.9
MAR 106.1
FEB 78 108.0
JUN 77 142.0
$ PER METRIC TON
1,000
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
Chicago No. 1 Yellow
27 JUN 6.79
21 JUN 6.74
MAY 78 7.09
JUN 77 8.20
SOYBEAN MEAL
$ PER TON
,500 400
:400
SOYBEAN OIL/PALM OIL FOOD INDEX
Crude, Tank Cars, f.o.b. Decatur 1,000
27 JUN 0.2648
21 JUN 0.2620
MAY 78 0.2879 800 400
JUN 77 0.2708
0.3047 i
0.2696 600 300
:400
27 JUN
0.3150
21 JUN
0.3125
MAY 78
0.2847
JUN 77
0.2830
1-27 JUN I I
1974 1975 1976 1977 1978
200
$ PER METRIC TON
27 JUN 172.00 ': 350
21 JUN 168.50
MAY 78 176.55 300
JUN 77 216.57
250
;200
168.9-/!'
150
1-27 JUN 100
II
1976 1977 1978
1-20JUN 11
1974 1975 1976 1977 1978
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.
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
 A pproved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
INDUSTF $AL MATERIALS PRICES MONTHLY AVERAGE CASH PRICE
COPPER WIRE BAR
140 C PER POUND
$ PER METRIC TON 45 LEAD
LME US 3,000
27 JUN 58.8 65.6
21 JUN 59.4 65.6
MAY 78 59.2 64.6
JUN 77 59.4 71.6
550
"
ZINC
100 C PER POUND
1,500
1,000
us 14,000
604.9 600.3
607.1
LVIN
LME'
$ PER METRIC TON
1,000
27 JUN
21 JUN
MAY 78
JUN 77
LME US
25.7 31.0
25.8 31.0
24.6 31.0
25.4 31.0
1-27 JUN
1974 1975 1976 1977 1978
8,000
6,000
1-27 JUN1
1974 1975 1976 1977 1978
1-27 JUN 4,000
1974 1975 1976 1977 1978
PLATINUM
250 $ PER TROY OUNCE
1-27JUN[L
0 100
1974 1975 1976 1977 1978
1-27 JUN
1] 1,000
2,000
TIN
$ PER METRIC TON 650 C PER POUND
$ PER METRIC TON15O
1-27 JUN
1974 1975 1977 1978
Approved For Release 2005/04/18 CIA-RDP80TO070
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
SELECTED MATERIALS
ALUMINUM
Major US Producer
t per pound
US STEEL
Composite
$ per long ton
IRON ORE
Non-Bessemer Old Range
$ per long ton
CHROME ORE
Russian, Metallurgical Grade
$ per metric ton
CHROME ORE
S. Africa, Chemical Grade
$ per long ton
FERROCHROME
US Producer, 66-70 Percent
9 per pound
NICKEL
Composite US Producer
$ per pound
MANGANESE ORE
48 Percent Mn
$ per long ton
TUNGSTEN ORE
Contained Metal
$ per metric ton
MERCURY
New York
$ per 76 pound flask
SILVER
LME Cash
t per troy ounce
GOLD
London Afternoon Fixing Price $ per troy ounce
RUBBER
60 C PER POUND
55.00
53.00
51.00
44.00
395.81
359.36
339.27
316.36
21.43
21.43
21.43
19.50
NA
150.00
150.00
150.00
56.00
58.50
58.50
39.00
42.00
41.00
43.00
45.00
2.07
2.06
2.41
2.20
67.20
72.24
72.00
72.00
16,961.00
21,549.00
22,821.00
13,954.00
153.00
124.33
126.23
110.00
535.91
472.49
446.93
478.82
185.66
160.45
140.76
125.71
LUMBER INDEX6
1 1973=100
140
120
1-27 JUN
1974 1975 1976 1977 1978
1-23 JUNI
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 bellwethers of US lumber construction costs.
7Composite price for Chicago, Philadelphia, and Pittsburgh.
1-20 JUNII
100
1974 1975 1976 1977 1978
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.
$ PER METRIC TON
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700030004-7