ECONOMIC INTELLIGENCE WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00702A000700040005-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 65
• Document Creation Date: December 16, 2016
• Document Release Date: March 21, 2005
• Sequence Number: 5
• Publication Date: July 13, 1978
• Content Type: REPORT

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~r~9 inrs
Economic Intelligence
Weekly Review
13 July 1.978
Department of Agriculture review(s)
completed.
EN F:1wh 78-028
1:; July 1978
Cnpv N!
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ECONOMIC INTELLIGENCE WEEKLY REVIEW
13 July 1978
OECD Countries: Growth, Inflation, and Current Account Outlook for
1978-79 ........................................................................................... 1
The outlook for 1978-79 is for slow but definite Improvement in growth,
marginal progress on unemployment, a decline in inflation rates in 1978
with a possible rise In 1979, and a swing toward greater balance on
International payments.
World Beef: No Price Relief in Sight ....................................................... 11
Strong Import demand combined with little change in export availabilities
promise to push beef prices still higher as the United States and several
major exporters begin the herd rebuilding phase.
West Germany: Wage Settlements Strike Sour Note for the Future ..........
Labor-management and labor leadership - rank-and-file harmony have
suffered major damage In the recent round of wage settlements.
South Yemen: Cutoff in Arab Aid .......................................................... 21
Severance of aid and worker remittances from Persian Gulf states will
seriously impair current Income and economic growth in South Yemen.
Ghlna's suspension of economic aid to Vietnam will further slow econom-
ic growth but will not cripple the SRV economy.
China: Oil Industry Needs Foreign Help .................................................. 26
Peking may drop opposition to direct foreign participation in offshore oil
development in light of growing domestic demand for oil and uncertainty
over the adequacy of investment funds and technology.
Notes ................................................................................................... 30
Turkey-USSR Trade and Aid To Expand
USSR and Eastern Europe Crop Prospects
Brezhnev on Long-Term Grain Supply
Zaire's Mining Operations Reviving
EC Summit Produces No Surprises
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OECD COUNTRIES: GROWTH, INFLATION, AND
CURRENT ACCOUNT OUTLOOK FOR 1978-79
After substantial recovery in 1976, economic activity in most of the non-US
OECD countries sagged again in 1977. The composite growth rate of the six largest
countries-Japan, West Germany, France, United Kingdom, Canada, and Italy--
dipped below 3 percent in 1977, and the smaller developed countries grew at less than
2 percent. Unemployment worsened, inflation remained high, and imbalances in
international payments positions in the OECD were aggravated.
The outlook for 1978-79 is for slow but definite improvement in growth rates,
marginal progress on unemployment, a decline in inflation rates in 1978 with possibly
some rise in 1979, and a swing in the direction of a better balance of payments. But
the improvement is distinctly relative. The prospect in most of the OECD is for a
continuation of higher rates of unused capacity, unemployment, and inflation than
had been customary in the 1960s and early 1970s. Growth in the United States is
forecast by the administration to slow somewhat but should still remain ahead of the
OECD average.
Because the projected trends already seem fairly well established and the policies
that underwrite them largely in place, we think our growth forecast is slightly more
likely to err by being too low than by being too high. It does not differ drastically from
forecasts made by outside sources, nor does our assessment of inflation prospects.
Real GNP growth in the non-US OECD is expected to reach 3.0 percent in 1978
and 3.5 percent in 1979, after attaining only 2.6 percent in 1977.* The smaller
* Consistency and analytical requirements in the development of forecasts make it desirable to specify rates of change
to the nearest tenth of a percent and current account balance to the nearest tenth of a billion dollars. However, since
forecasting cannot really be that precise, small differences in the forecast data should be regarded as indicative rather
than exact.
Note: Comments and queries regarding the Economic Intelligence Weekly Review
are welcome. For the text, they may be directed to
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Non-US OECD Countries: Economic Trends
Non-US
OECD Countries
Big Six
Countries
Japan
West Germany
France
United Kingdom
Smaller
OECD Countries
Real Consumer Current
GNP Growth Price Inflation Account Balance
Percent Percent Billion US$
0 5 10 15 20 0 5 10 15 20 -30 -20 -10 0 10 20
1977U
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developed countries as a group are expected to experience a marginal drop in growth
from 1.8 percent in 1977 to 1.6 percent in 1978 and a subsequent moderate recovery
to 2.6 percent in 1979. The Big Six growth rate is forecast to climb from 2.8 percent in
1977 to 3.5 percent in 1978 and 3.8 percent in 1979.
In Japan, 1978 growth is projected at 5.3 percent, considerably below the
government's 7-percent target for fiscal year 1978. Expected growth in 1979 is placed
slightly lower, at 5.1 percent. The driving force behind current Japanese growth is a
20-percent increase in budgeted government investment, raising 1978 projected total
investment growth to 9.0 percent. Even if the government achieves its investment
objective-if execution falls behind it may be necessary to pass supplementary
budgets-consumption and business investment seem unlikely to respond sufficiently
to push the economy to the 7-percent goal. Despite the seeming intractability of the
Japanese payments surplus, measured in dollar terms, the growth of export volume is
expected to slow greatly, lowering the direct contribution of the foreign sector to GNP
growth and discouraging investment. Japan's strong showing in first quarter 1978
(10.0-percent GNP growth at an annual rate) is believed to be the result of temporary
phenomena and a repetition of 1976 and 1977 patterns of rapid first-half growth. In
1979, the government would be unable to raise investment spending by another 20
percent, regardless of growth targets. Since we see some further strengthening of
private spending in 1979, but no surge sufficient to take up all the slack in public
investment, we expect growth in 1979 to fall off slightly from the 1978 rate.
West German growth is projected at 2.7 percent in 1978 and 3.5 percent in 1979.
A rise in government investment expenditures is pushing up total investment in 1978,
as in Japan. Also as in Japan, recent currency appreciations are expected to constrain
the growth of export volume, diminishing the impetus to growth from foreign
demand. Lacking a surge in domestic private spending, which we do not foresee,
German growth should pick up only moderately, unless the government undertakes a
considerably more expansionary fiscal program than is currently on the books. Despite
public discussion of an early and substantial West German tax cut, we have not
included such a measure in our assumptions because we believe that the political and
technical challenges to an acceptable tax-cut package are likely to preclude its
implementation early enough to affect 1979.
In France, GNP growth is forecast to rise from 3.0 percent in 1977 to 3.4 percent
in 1978 and 4.1 percent in 1979. The return of the center-right coalition in the March
parliamentary elections has restored business confidence, and investment growth is
expected to rise from a - 0.6 percent last year to 3.0 percent this year and 4.0 percent
in 1979. Consumer spending is projected to pick up also, in response to rising incomes.
Given France's still serious, although improving, inflation and balance-of-payments
problems, the government is expected to concentrate on stabilization and avoid
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GNP Private Consumption Government Consumption Gross Fixed Investment Final Domestic Demand
1977 1978 1979 1977 1978 1979
Big Six 2.8 3.5 3.8 2.3 3.2 3.4
Japan 5.1 5.3 5.1 3.2 3.6 3.9
West Germany ...... .., 2.4 2.7 3.5 2.9 3.1 3.6
France 3.0 3.4 4.1 2.5 2.8 3.8
United Kingdom 0.1 2.7 2.5 -0.8 4.0 2.5
Canada ............................ 2.7 3.7 4.1 2.8 3.2 3.9
Italy 1.7 2.0 2.3 2.1 2.1 2.1
1977 1978 1979 1977 1978 1979 1977 1978 1979
1.8 2.8 2.9 1.7 5.1 4.3 2.1 3.6 3.6
3.6 3.6 4.0 4.3 9.0 6.0 3.7 5.4 4.7
0.7 3.1 3.0 3.0 4.2 4.0 2.5 3.4 3.6
3.8 3.5 3.5 -0.6 3.0 4.0 1.9 3.0 3.8
-0.2 2.0 2.0 -3.9 4.5 3.5 -1.2 3.7 2.6
2.0 2.0 2.5 0.3 0.8 1.8 12.2 2.5 3.2
2.3 2.2 2.4 0.1 Negl 1.0 1.8 1.7 2.0
Exports of Goods Imports of Goods
and Services and Services Net Foreign Demand Total Final Demand Change in Inventories'
1977 1978 1979 1977 1978 1979 1977 1978 1979 1977 1978 1979 1977 1978 1979
Big Six 6.6 4.4 5.0 2.4 4.9 5.2 1.0 Negl 0.1 3.0 3.5 3.6 -0.2 0.1 0.3
Japan 10.4 3.5 7.0 2.0 5.0 8.0 1.5 Negl 0.3 5.0 5.1 4.7 0.2 0.2 0.5
West Germany ............ 4.1 4.5 5.2 4.2 6.2 6.0 0.1 -0.3 -0.1 2.6 2.9 3.4 -0.1 -0.2 0.1
France 6.3 5.1 5.0 1.0 5.0 5.0 1.1 0.1 0.1 3.0 3.0 3.8 0.1 0.5 0.4
United Kingdom _ ......... 6.0 4.4 3.7 3.8 5.9 4.1 0.7 -0.3 Negl -0.5 3.3 2.5 0.6 -0.6 Negl
Canada ............ ......._ ..... 7.4 4.4 4.0 2.5 1.9 2.9 1.0 0.5 0.2 3.2 3.1 3.5 -0.8 0.6 0.6
Italy ...................... 5.8 4.5 4.0 -1.0 4.0 3.8 1.6 0.3 0.2 3.3 1.9 2.2 -1.6 0.1 0.1
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significant expansion in outlays. Net export demand is forecast to rise roughly in
parallel with domestic demand and GNP.
The United Kingdom GNP, after virtually no growth in 1977, is expected to rise
by 2.7 percent in 1978 and. then fall off to 2.5 percent in 1979. Consumption is
growing strongly following recent tax cuts, which bolstered disposable income.
Business investment is rising in response to Britain's improved international payments
position, an easing of government fiscal policy, and more buoyant consumer demand.
But much of the increase in domestic demand is being satisfied by substantial
increases in imports, rather than contributing to the growth of domestic income.
Further, sizable fiscal stimulus is not in the cards for 1979, given the government's
likely reaction to an expected slow upward drift in inflation. Thus, with a slackening
in the growth of disposable income, some possible restrictive fiscal policies, and a
further tightening of monetary policy, growth of both consumption and investment
spending is expected to subside, leading to a mild slowdown in 1979.
In Canada GNP is projected to grow at 3.7 percent in 1978 and 4.1 percent in
1979. The impetus for this growth is expected to come mainly from strengthening of
consumer demand, further improvement in the real balance on goods and services,
and inventory expansion. Private consumption is being spurred by temporary cuts in
federal income and provincial sales taxes. We anticipate a continuation of the sales tax
cuts into 1979. The federal government, on the other hand, continues to follow a
cautious policy, with control of inflation its highest priority. Government consumption
is, therefore, expected to hold near last year's 2.0 percent, rising only slightly higher in
1979. Investment spending continues to be extremely sluggish, although it should pick
up on the strength of higher consumer demand and could be favorably affected in
1979 if Ottawa moves ahead promptly with the Alcan pipeline.
In Italy, GNP growth is forecast at 2.0 percent in 1978 and 2.3 percent in 1979.
Political turmoil and economic uncertainty have sapped business confidence to a
degree that investment is expected to be virtually stagnant in both 1978 and 1979.
Domestic demand is expected to grow very slowly, and the anticipated improvements
in the real balance on goods and services will be needed to raise GNP growth even to
the rates we are projecting. In spite of the government's rhetorical commitment to
austerity, political agreement on spending cuts has not been reached, and the 1978
budget deficit has been increasing rapidly. Unless this deficit is brought under control,
our projections for government spending and probably consumption are likely to be
under the mark. Thus 1978 growth would be higher than forecast, and so would
imports; it is unclear how long the resulting international payments situation could be
sustained.
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Unemployment and Inflation
Unemployment rates generally rose in 1977, and the diffident economic upturn
forecast for 1978-79 is likely to do no more than slow the rise in unemployment in
some countries and stabilize or marginally lower the unemployment rate in others.
Among the Big Six, West Germany may record slight reductions in unemployment in
1978 and 1979. Joblessness should also decline in Britain in 1978 but is likely to rise
again in 1-979. Canada and France will probably see their unemployment rates
worsen in 1978, while in 1979 the deterioration should at least be arrested. Japan may
experience a marginal increase in unemployment in both years but has fairly good
medium-term unemployment prospects due to slower future growth in the working-
age population. The projected Italian growth rates in 1978 and 1979 foreshadow a
continuing rise in unemployment. The smaller OECD countries are generally
experiencing particularly rapid increases in unemployment, which should slow or
come to a halt in 1979.
Inflation is expected to slow down in the non-US OECD from an average 10.3
percent in 1977 to 7.8 percent in 1978 and 7.9 percent in 1979. Weak demand and
excess industrial capacity have been important factors in lowering inflation rates.
Slack labor markets and past successes in slowing inflation have contributed to
lowering wage settlements and to reducing the cost-push element. Currency apprecia-
tions in a number of countries have also served to hold down the local currency prices
of imports. These elements taken together have sufficient momentum in 1978 to lower
inflation rates. However, the projected upturn in growth. as well as an assumed 10-
percent nominal oil price increase next year, should be enough to arrest the current
decline in 1979.
France and Canada are likely to witness an opposite pattern. In the case of
France, the inflationary effects of current measures to reduce the scope of government
price-setting should be felt principally in 1978. In Canada, substantial increases in the
domestic price of crude oil, the effects of significant currency depreciation, and a
strong rise in food prices have all contributed to raising the inflation rate in 1978.
None of these is expected to be as important in 1979.
The Big Six current account surplus seems certain to grow substantially this year
from $10.1 billion to $18.7 billion. Concurrently, the enormous $21.9 billion deficit in
1977 of the smaller developed countries should drop to $12.5 billion, and the US
deficit probably will rise by about $5 billion over its record 1977 level of $15.2 billion.
The steep increase in the Big Six surplus and sharp decline in the deficit of the smaller
developed countries should lead to a swing in the non-US OECD current account
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balance from a $11.8 billion deficit in 1977 to a $6.2 billion surplus in 1978. This shift
in balance, in spite of the anticipated deterioration of the US balance, should produce
a decline in the total OECD deficit with the rest of the world from $27.0 billion to
$14.2 billion.
1977
1978
1979
OECD ...............................................
-27.0
-14.2
-9.7
United States ' ..............................
-15.2
-20.4
-12.7
Non-US OECD ............................
-11.8
6.2
3.0
Big Six ........................................
10.1
18.7
13.0
Japan ....................................
11.1
17.0
13.0
West Germany ..............
3.8
4.1
3.0
France ..................................
-3.2
-1.8
-2.0
United Kingdom ...............
0.3
0.7
2.0
Canada ..................................
-4.0
-4.0
-4.0
Italy ......................................
2.1
2.7
1.0
Smaller OECD ........................
-21.9
-12.5
-10.0
' Data Resources Inc. forecast, adjusted to include estimated net reinvested earnings, in
accordance with new definition of the US current account.
The outlook in 1979 is for a decline in the Big Six surplus, to $13.0 billion;
continued reduction of the deficit of the smaller developed countries to $10.0 billion;
and improvement of the US deficit, bringing it down to $12.7 billion. As a result of the
offsetting directions of movement in the Big Six and smaller developed country
balances, the non-US OECD 1978 surplus of $6.2 billion is expected to decline to $3.0
billion. This decrease, in combination with the reduction of the US deficit, implies a
further drop in the total OECD deficit to about $9.7 billion.
Two strands of consistency stand out: Both the OECD as a whole and the smaller
developed countries reduce their deficits in each of the forecast years. The first
development is related to an anticipated sharp decline in the OPEC surplus, owing to
a drop in oil revenues in 1978 and an increase in the OPEC import bill. Volume and
price factors each play a part on both the export and the import side, with OPEC oil
export volume down and price increasing by less than world inflation rates, while
import volume as well as prices are rising.
The intra-OECD swings in international balances between 1978 and 1979 are
explained by the significant changes in currency values, which have taken place over
the past 18 months, as well as by the moderate convergence in growth rates within the
OECD. The widely known "J-curve" effect-whereby currency depreciations tempo-
rarily cause larger deficits measured in money terms, and conversely, appreciations
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Selected Foreign Currencies: Exchange Rate Fluctuations
Shifts Against the US Dollar 1
Percent
40
Trade-Weighted Changes 2
Percent
30
Japan
--?r~, .1
Switzerland
West Germany
Netherlands
United Kingdom
France
-20 I . I I I . 1 1 I
J F M A M J J A S O N D J F M A M J
1977 1978
1 Percent change in US cents per foreign currency unit from January 1977 to month indicated.
2 Percent change in bilateral-trade-weighted value of currency from January 1977 to month indicated.
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cause temporary increases in surpluses (an inverted "J")-is exercising an important
influence on the balances of many of the major countries, particularly Japan. Dollar
prices of Japanese exports have risen considerably, while dollar prices of Japanese
imports have remained relatively constant. Thus, even though the Japanese foreign
balance is forecast to remain constant in volume terms, in 1978, its value in dollars is
expected to reach $17.0 billion. Similar effects are in process in West Germany and
other countries with appreciating currencies. By 1979, a combination of the lagged
effects on demand of the changed currency values, some reversal of import and export
price movements, and the slowly converging US and non-US OECD growth rates are
expected to make headway in reducing the prevailing intra-OECD imbalances.
Uncertainties in the Forecast
Barring a further major slowdown in US growth, we think there is relatively little
downside risk in this forecast.
The base from which most countries are moving is low. The upward direction of
movement is already generally clear. The policy conditions necessary for improve-
ments are largely in place. Among the biggest countries, the projected Japanese growth
rate depends on the government achieving its ambitious public investment target, and
the Japanese commitment is quite strong. West German growth should be facilitated
by an already ample growth of the money supply and by recent moderate wage
settlements. Balance-of-payments and inflation constraints have eased in most other
countries so that a sharp tightening of present demand management policies does not
seem particularly likely. Our forecast assumption of a 10-percent increase in the
nominal oil price in 1979 may be on the high side; if so, the task of monetary
authorities would be somewhat eased.
Inventory changes, one of the most volatile elements of the major GNP
components, are a particularly vulnerable aspect of any forecast. In most cases where
total final demand (which excludes stock-building) is rising, we have forecast increases
in inventories. If these increases are not realized, actual output will be less than
projected. In no country, however, is inventory change the major force in projected
growth.
Prospective exchange rate changes constitute another area of uncertainty. It is
conceivable that exchange markets could overcorrect and that countries with strongly
appreciating currencies, such as Japan and West Germany, could experience signifi-
cantly greater impact on their exports than we have forecast. It is also possible that the
psychological effects of further currency changes, if they occur, could inhibit private
spending. We have seen no convincing evidence to date that these possibilities
represent serious threats. In fact, there is some reason to believe that significant
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Big Seven: Forecasts of Real GNP Growth
OECD
1978
1)RI 2
Chase-Econometric
Big Seven ' .........................
............. 3.8
3.6
3.9
3.7
United States . _.. _ ........................
4.01
3.9
4.0
3.4
Big Six' ........................................
3.6
3.4
3.9
4.1
Japan ........................................
5.3
4.5
5.4
6.0
West Germany ........................
2.7
2.8
3.0
3.0
France ......................................
3.4
3.3
3.4
3.8
United Kingdom ......................
2.7
2.6
2.9
2.7
Canada ..._...... ........ .._ ...............
3.7
4.0
4.4
3.9
Italy ..........................................
2.0
1.5
3.0
2.9
Big Seven' _...._........... ......_..........
4.1
3.4
3.8
3.8
United States ................................
4.31
3.3
3.6
3.0
Big Six' ........ ............ ...................
3.9
3.5
4.0
4,5
Japan ............... ............ ...........
5.1
4.5
5,2
5.6
West Germany
3.5
3.1
3.5
3.9
France ......................................
4.1
3.7
3.7
4,7
United Kingdom ........ _...._.....2.5 2.0
2.6
4.0
Canada .... .......... ............_._.....
4.1
3.5
4.3
4.1
Italy ..... ........ ......_......._..........
2.3
3.0
3.8
3.3
Preliminary May 1978 projections. Data for 1979 are projections for the first half.
Projections for Germany and the UK are from the July interim European forecast; France and Italy are
from the June European Outlook; Canada is from the June Canadian Review; Japan is from the June
Japanese Economic Review.
May projections.
For comparability, 1976 GNP weights were used.
Administrative forecast.
changes in currency values are increasingly being accepted by the private sector as a
normal element in the conduct of business and absorbed smoothly into the flow of
economic activity.
Comparison with Other Forecasts
This forecast does not differ greatly from others recently issued. With respect to
real GNP, our expectation for 1978-79 growth in the Big Six economies is for higher
growth than forecast by the OECD, about the same as that called for by Data
Resources Incorporated and lower than that predicted by Chase Econometric. These
other forecasters, as do we, also call for a general bottoming-out of the recent declines
in these countries' inflat' rates and in some cases they project slight accelerations in
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Strong import demand combined with little change in export availabilities have
pushed beef prices to a three-year high. A tight market situation is expected to
continue through 1978 and into 1979 with a good chance of even higher prices,
particularly if the Soviet Union should reenter the world market.
This year total beef exports of the major exporters * are forecast to rise only 5
percent. Export availabilities, however, of those permitted to export beef to the US
market will be down. On the strength of an estimated 12-percent increase in imports
in the United States, import demand by the leading Free World importers-the
United States, EC, and Japan-is forecast to rise about 8 percent or 125,000 tons. * *
Although nearing the bottom of the herd liquidation phase of the beef cycle, numbers
of cattle during 1978 are expected to continue to decline in the United States (the
largest producer and importer) and in Australia and New Zealand, the two most
important exporters to the United States. A nearly synchronous beef cycle-about 10
years from peak to peak-among these three countries is contributing to the current
tight supply situation.
Major exporters
Australia ..........................................
486
744
860
1,087
1,040
New Zealand ..................................
258
305
383
403
370
Mexico ............................................
19
14
23
30
34
Central America and Hispaniola
115
124
133
134
170
Argentina ........................................
289
266
534
605
760
Uruguay ..........................................
120
113
195
129
140
Major importers
United States . .................................
747
808
953
890
1,000
Japan ..............................................
77
64
130
120
135
EC ................................ ............ ......
429
286
458
475
475
USSR ..............................................
350
360
200
345
50
Brazil ..............................................
53
29
27
20
100
' Estimate.
Marginal Increase in Exportable Supplies
World trade in beef and veal in recent years has annually totaled about 3 million
tons, with about 75 percent being supplied by the major exporters. The major beef
* Australia, New Zealand, Mexico, Central America, Hispaniola, Argentina, and Uruguay.
** All quantities in carcass weight equivalents unless otherwise stated.
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exporters can be divided into two groups: (a) those free of foot-and-mouth disease
(Australia, New Zealand, Mexico, and Central America *) and, therefore, having
unlimited access to world markets; and (b) those where the presence of foot-and-
mouth disease (Argentina and Uruguay) limits shipments to markets, such as the
United States, to certain processed meat products.
Within the first group, which is obviously most important to the United States,
only the Central American nations are expected to increase cattle numbers, beef
production, and exports in 1978. Due to dwindling income of ranchers and drought,
Australia, which supplies more than one-half the beef and veal under the US import
quota program, and New Zealand, our second most important supplier, have seen
their herds decline steadily since 1975. We estimate that their combined inventories
by January 1979 will total only 36.9 million head, off 15 percent in 3 years.
Australian beef and veal production, which hit a record of 2.1 million tons in
1.977, is forecast to drop 100,000 tons this year and most likely will decline again in
1979. New Zealand exhibits a similar historical pattern and outlook. The recent jump
in cattle prices and signs that the drought has been broken should stimulate herd
rebuilding in both countries. This will further tighten supplies in the near term by
decreasing cattle available for slaughter. Although Australian exports of beef and veal
in 1978 have been estimated at 4 percent below 1977, inventories in excess of 100,000
tons and higher US import demand could push exports to near last year's level. New
Zealand's 1978 exports are also expected to be lower.
Mexico's cattle population over the past few years has decreased slightly. Beef
production in 1978 is expected to equal the 1.04 million tons produced last year, and
exports should expand. Also, the current drought in northern Mexico has increased the
export of live cattle to the United States this year. Central American herd size, beef
production, and exports have increased steadily since 1974. As with Mexico, virtually
all exports of beef and veal are destined for the United States. Exports are expected to
reach about 170,000 tons in 1978 and should increase moderately in 1979. If it is
determined that these or other suppliers cannot meet their 1978 US quota, we expect
that Australia will be able to cover the shortfall.
Markets for beef and veal from Argentina and Uruguay, the two principal South
American exporters, are limited because of the presence of foot-and-mouth disease.
Traditionally, most of their beef exports have been destined for Western Europe. The
EC, however, has cut beef imports drastically since the early 1970s, causing both of
these countries to look for new markets in Latin America, Asia, and Africa. Exports to
Brazil will be increased this year to compensate for that country's drought. Argentine
and Uruguayan beef production is forecast to reach almost 3.5 million tons in 1978, up
* Including the Dominican Republic and Haiti.
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US Domestic and Imported Beef Prices
US Cents per Pound
V VUS
Wholesale
Steer Beef
(Midwest Markets)
40
Jan Jun Jan Jun Jan Jun Jan Jun Jan Jun
1974 75 76 77 78
39 percent since 1974, the largest increase among major exporters. Together, beef and
veal exports in 1978 are expected to reach about 900,000 tons, more than double the
1974 volume. Cattle numbers in both countries are expected to decline during 1978
and 1979 as slaughtering is stepped up to take advantage of attractive export prices.
Import Demand Strong
Imports of beef and veal by the three major Free World importers in 1978 are
expected to reach 1.61 million tons, 8 percent more than 1977 and the highest level
13 July 1978 SECRET
Australian
Boneless Beef
(fob New York)'
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since 1973. This year's increase is almost solely due to the projected 12-percent
increase in US imports.
On 1 January 1978, the US cattle herd was 116 million head, down for the third
straight year. A further decline is expected this year. This country's cattle population
reached a record 132 million head at the beginning of 1975. The USDA expects US
Cattle Inventory
20
0
1965 66 68 70 72 74 76 78
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beef production in 1978 to total almost 11.0 million tons, off 4 percent from last year
and more than 7 percent below 1976. Despite higher pork and poultry production,
total meat production is expected to be off 1 percent. In June, the United States
announced an increase of more than 90,000 tons in the 1978 beef and veal import
program that should raise 1978 US imports to about 1 million tons, 70 percent supplied
by Australia and New Zealand. The United States imports mostly lean beef that goes
into hamburger, and these imports represent only about 8 percent of all beef
consumed. Herd rebuilding in the United States, which should be well under way in
1979, is expected to drop domestic meat production further. Although beef consump-
tion is estimated to be off about 5 percent in 1978 and could show a further decline
next year, US import demand for foreign beef is expected to remain strong in 1979.
Japan, under pressure from the United States and Australia to increase imports of
quality beef, is expected to take about 135,000 tons in 1978, 15,000 tons more than last
year. The EC, still in a beef surplus position with intervention stocks in excess of
325,000 tons (product weight), will hold 1978 imports at approximately last year's
level of 475,000 tons. Little change is expected in production or consumption.
The Soviet Union imported a record 617,000 tons of meat (all types) in 1977, but
absence of purchases from the Free World so far this year portends a sharp cut in 1978
imports. Total cattle numbers in the socialized and private sectors reached 112.5
million head at the beginning of 1978, up 2 percent over 1977, and growth continues
in 1978. Production of meat in 1977 was 14.8 million tons, and according to
performance so far this year, the 1978 plan level of 15.6 million tons may be achieved.
Beef production in 1977 was up 5 percent, reaching a record 6.9 million tons. Growth
in the pork and poultry sectors was even greater as the program to rebuild numbers,
severely cut as a result of the 1975 harvest shortfall, took effect.
Considering the improved domestic production situation and high world prices,
the Soviets may limit imports to shipments from their traditional East European
suppliers. Nevertheless, given the level of imports in recent years and the unsatisfied
consumer demand for meat, the possibility of Soviet buying of beef and other meat
cannot be excluded.
Outlook for Higher Prices
The US prices of imported beef climbed 30 percent between January and April
1978-even greater than the jump in US cattle and meat prices. An increase in US
marketings of live cattle followed the announcement of an increased import quota and
slightly weakened domestic prices in recent weeks. If this trend of high marketings
continues into the fall months, it will delay herd rebuilding in the United States and
will likely exert greater upward price pressure in 1979. The increase in the United
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States 1978 import quotas, however, will do little to sustain lower domestic prices. It
has also had the effect of raising prices in our major suppliers' domestic markets. For
example, cattle prices in Australia have jumped 40 to 45 percent since April. Nor can
one expect continued high United States beef imports in 1979 to dampen price
strength unless consumer resistance to high retail meat prices
sharply depresses
F7 purchases.
WEST GERMANY: WAGE SETTLEMENTS STRIKE SOUR NOTE
FOR THE FUTURE
The harmony among labor, management, and the goverment that has been the
hallmark of West Germany's "economic miracle" throughout most of the postwar
period was dealt a solid blow by the recent bitter round of wage negotiations. Workers
finally settled for wage increases smaller than those won in 1977, and the antagonism
that surfaced in the bargaining process could have far-reaching effects. Union
militancy is likely to increase in coming years as the formerly docile rank and file
assert themselves in dealings with both management and their own top officials. Even
though wage settlements were close to the government's target, they could contribute
to the shortfall in Germany's expected economic growth this year. Growth in business
investment will likely be more depressed by new job protection clauses than by the
wage settlements.
Prelude to Bargaining
Labor tranquility showed signs of evaporating before this year's round of wage
negotiations began. Real wage increases beginning in 1975 dropped far below the
long-run trend in keeping with slower productivity growth. Union leaders accepted
this deceleration in members' real earnings because (a) the 1975 tax cuts and increases
in family allowances boosted disposable income for a while and (b) they were
persuaded that business profit margins had to be increased to accelerate investment.
Many companies, however, directed most of their new investment into labor-saving
equipment or to foreign sites.
Just as the postwar business/labor consensus was unraveling, the Codetermination
Law was passed in late 1976 to take effect in July 1977. Though labor has gradually
increased its boardroom influence in this decade, all sides expected the national
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West Germany: Trends in Labor Productivity
and Real Earnings
Trend Ratesl
1963-74 1975-78
Labor Productivity 4.7 4.2
Real Earnings 9.2 6.7
501 I I I I I I I I I 1 1 1 I 1 I
1963 65 70 75 78
1 The trend rate is the slope of the line established by regression of the natural logarithm
of a series against time.
2 Index of GNP per person employed.
legislation to mark a turning point in labor/management relations. Unions were
dissatisfied with the law as finally approved since it did not grant them full equality
with stockholder representatives in company management and it contained loopholes,
which effectively cut the number of firms required to participate from 650 to 470.
Employer organizations, fearing that even the diluted law would threaten their
investment policies, filed suit in June 1977 to block implementation. The unions
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responded by walking out of the joint government/business/labor economic planning
group (Concerted Action Group) and by announcing that they would not rejoin until
the suit was withdrawn.
The Codetermination Law took effect as scheduled, and the employers' suit is still
pending. The terrorist murder of Hanns-Martin Schleyer, head of the two largest
employers' organizations, effectively froze management's position. Schleyer had
brought the suit, and his successors have been unwilling to withdraw it.
The Divisive 1978 Wage Round
The 1978 wage round produced a number of unpleasant surprises for both
business and labor leaders, even though most negotiated wage increases, at about 5
percent, were less than last year. The round was characterized by unprecedented
strikes and lockouts. Union voting rules, which make strike motions difficult, were
repeatedly overcome. The first negotiations of the year led to a strike of dock-
workers-their first in 82 years. Business and labor leaders were shocked when the
union membership rejected the initial contract, hammered out at the negotiating
West Germany: Key Wage Settlements of the Trade Union Federation
Negotiated Wage
Membership Increase Over the
(Thousand Previous Year
Persons) (Percent)
1977 1978
Total .................................................. 7,613
Of which:
Metal workers .......................... 2,624 6.9 5.0 Job and pay protection.
Public service and
transport workers ................ 1,078 5.3 4.5 One to 2 days additional
paid leave.
Chemical, paper, and
ceramic workers .................. 651 7.0
Postal workers .......................... 418 5.3
Mining and energy workers .. 317 6.4
Commerce, banking and
insurance workers ................ 292
Printing workers .................... 152
4.3 Two days additional paid
leave, special unemploy-
ment payments.
4.5 NA
4.4 Work week reduced from
42 to 40 hours, 2 additional
paid leave-days.
5.0 One additional day paid
leave.
6.6 5.0 NA
6.6 5.0 joband pay protection.
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table. Similarly, in the next major negotiations, printers rejected a contract worked out
by their leaders and went on strike, temporarily closing 70 percent of the country's
newspapers. Disruptive strikes and lockouts also occurred in the pattern-setting metal
industry. The strike vote of metal union members in North Baden-Wuerttemberg set a
postwar record, 90.2 percent.
Job security was a key issue in this year's wage negotiations. Disagreements over
job protection clauses were directly responsible for the printing and metal workers'
strikes, which have accounted for more than 90 percent of the working days lost thus
far in 1978. The new labor contracts assure metal workers, for example, that if their
jobs are eliminated or downgraded by new technology, they will be retrained or
transferred laterally if possible and paid their original wage for 18 months in any case.
Downgrading of jobs is restricted, and local union works councils have sole responsibil-
ity for implementation of the new provisions, Typesetters in the printers' union won
even more sweeping protection; those displaced by new technology must be retrained
and paid at least their original wage for six years. Further, workers who transfer will
have relocation costs covered by their original employer and be paid a wage
supplement for one year if the new wage is lower than the old.
Fissures between union leadership and the rank and file were also opened during
the 1978 wage round. The membership not only rejected several major contracts
proposed by union leaders but also forced their leaders to support certain policy issues,
such as combatting unemployment by reducing working hours. Top union officials
argue that the basis of their estrangement from the rank and file is the formers' belief
that the market economy as it now exists is the best possible system; many union
members want a more socialized economy and greater worker control over
enterprises.
Impact of Above-Target Wage Settlements
The wage settlements negotiated this year indicate that the government's
guideline for a 5.5 percent increase in total gross earnings may be exceeded only
slightly. Gross earnings for all wage and salary earners, covering more than 80 percent
of the employed labor force, should rise by 5.5 to 6 percent. Though this increase is
below last year's 6.8 percent, it could exceed the government target because of wage
drift, which typically adds 0.5 to 1.0 percentage point to negotiated wage increases.
Little change is expected in total employment.
Even the small above-target increase in earnings would depress economic growth
and augment inflation and unemployment. Our model of the German economy
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indicates that real GNP growth in 1978 may be 0.1 to 0.2 percentage point less than it
would have been if earnings rose at the target rate of 5.5 percent. The growth rates of
real business investment and real government consumption are most sensitive to
higher wage settlements. The model indicates that under conditions prevailing this
year a I percentage point increase in earnings above the government target slows the
growth of business equipment investment by 0.5 percentage point and government
consumption by 0.7 percentage point. Government consumption is sensitive because
wages and salaries constitute such a large share of government purchases. Given a 1
percentage point above-target increase in earnings, the government price deflator
grows 0.8 percentage point faster. Consumer prices, on the other hand, grow only 0.2
percentage point faster. Chances for continued slow growth in consumer prices are
enhanced by the continued parallelism of real wages and productivity gains.
The model also suggests that the effect of above-target wage settlements is
magnified in subsequent years. For example, a wage settlement 1 percentage point
above the government target will boost the number of unemployed workers by 45,000
this year and by 60,000 in 1979. By the same token, the growth of total fixed
investment (including housing) slows by 0.4 percentage point this year and by 0.8
percentage point in 1979. This larger impact would occur even if wage gains were
smaller in 1979 because of the lag in investors' response to expectations of lower
profits. The model cannot measure the longer term impact of reduced business
confidence as a result of the breakdown in the union/business consensus and the
heightened possibility of repeated large-scale work stoppages.
Labor militancy in West Germany seems likely to increase, with growing
negative effects on the economy. Bundesbank president Emminger is only one of
many German analysts who anticipate greater labor turbulence in coming years. Aside
from economic factors, Emminger cites the growing influence of a new generation of
labor leaders. Second-level officials, many of whom have spent their entire careers in
the union bureaucracy, are exceedingly militant and lack the present union leaders'
belief in the efficacy of a free-market economy.
Relations between the unions and the Social Democratic (SPD)/Free Democratic
(FDP) government could deteriorate further. Union leaders rejected FDP Economics
Minister Lambsdorff's call for moderate settlements as unacceptable interference in
the negotiations. The government's policy of encouraging investment and technologi-
cal innovation runs counter to union efforts to increase job projection. Most observers
expect union criticism of government policy to continue. In a recent speech, German
Trade Union Federation head Heinz Vetter lumped the FDP coalition partner
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and the unions, which form the core of the SPD's political support.
together with the opposition parties in identifying those hostile to long-range union
goals. Schmidt's Social Democrats will be hard put to reconcile the views of the FDP
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On 2 July the Arab League in emergency session voted to suspend economic and
technical aid to South Yemen in reprisal for Aden's complicity in the assassination of
North Yemeni President Al-Ghashmi. Although a complete cessation may not be
possible because of South Yemen's strong political ties with left- leaning League
members such as Libya, the Persian Gulf states led by Saudi Arabia seem determined
to pursue several avenues of economic sanctions.
Aid from conservative Arab countries will be halted, and action is under way to
tighten up on other financial flows. A suspension of grants and worker remittances
from the Gulf states alone would deny South Yemen $150 million annually in foreign
exchange-equivalent to about one-third of GNP-leaving Aden in substantial
balance-of-payments deficit and striking a heavy blow at its development program.
An Up-Hill Economy
Prior to independence in 1967, a thriving economy had been built in the
immediate neighborhood of Aden's harbor, but the rest of the Aden Protectorate was
backward in the extreme. The city's prosperity was based on an oil refinery, bunkers
and ship services, trading activities connected with the free port, and services to
British military personnel. Elsewhere, industrial production was almost nonexistent.
Outside Aden, the economy was dependent largely on subsistence agriculture, fishing,
and smuggling, and basic infrastructure was primitive.
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Independence was a severe blow, especially to the economy of the city, and
nearly a decade was required for recovery. Independence coincided with closure of
the Suez Canal, withdrawal of British forces and administrative personnel, and abrupt
cessation of British budgetary support. The new government, as a result, invoked
extreme austerity measures, focusing on cutbacks in civil service wages and other
public expenditures. Initiation of two development plans in the past decade have
induced a slow expansion in the output of agriculture, fisheries, and light industry.
Finally, in 1976, real growth registered a marked upturn, to about 6 percent. GNP in.
1976 was estimated at $470 million, $280 per capita.
A socialist economy was installed in 1969. Today the bulk of the country's
economic life is controlled by public sector companies, state farms, and agricultural
cooperatives. Private enterprise has been confined primarily to trade and handicrafts.
The British Petroleum Corporation oil refinery was taken over by the government in
1977. However, the company allowed the refinery to deteriorate during the 1970s
because of the threat of nationalization.
Precarious Balance of Payments
South Yemen's economy is heavily dependent on imports. The land is mostly
mountainous or coastal desert. Lack of surface water and low precipitation have
limited agricultural development. No oil or minerals of commercial importance have
yet been discovered. All capital goods, most intermediate products, and a large
amount of foodstuff and other consumer goods must be purchased abroad. Food items
typically account for almost 30 percent of imports. Food imports equal the value of
output of domestic agriculture and fishing.
During the past four years, export earnings from goods and services have covered
less than 25 percent of the import bill. Export earnings come mainly from sale of fish,
salt, coffee, and hides. Earnings from ship services and bunkers have picked up
Current account balance ................................ -100 -76 -51 -60
Exports, f.o.b. ....................... _........... ,..... 17 20 44 51
Imports, c.i.f. ........._ .................................. -188 -182 -286 -368
Services (net) ............ ........... ......._........._. 29 20 30 23
Private transfers ................. _.......... _..... 41 56 115 179
Official grants ............ ...._ ..................... .... 1 10 46 55
Official loan drawings ........__.._ ............... .. 48 32 59 90
Other capital, errors and omissions .......... 17 22 -20 4
Overall balance ............................................. -35 -22 -12 34
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somewhat since reopening of the Suez Canal in 1975, but the restructuring of
international shipping that followed the closure militates against substantial future
growth prospects. The Aden oil refinery still operates at only one-sixth of its capacity.
Rapid growth in imports since 1975 has been matched or exceeded by increases
in remittances from Yemeni workers abroad and from official grants. Foreign loans
have also been forthcoming for major investment projects. The government has used
commercial loans sparingly, preferring to rely on concessional lending. To cover the
overall balance-of-payments deficit, however, Aden has had to draw down foreign
exchange reserves as well as use IMF credits, which now stand at about $45 million.
Persian Gulf Economic Leverage
Attempts by Saudi Arabia and the Persian Gulf states to woo South Yemen from
its Communist benefactors began around 1975. In the next two years, financial
support from the Gulf became substantial, although Saudi Arabia had stopped the
flow of its aid in late 1977 because of continuing political differences with South
Project development support also increased markedly. Kuwait was the first Gulf
state to offer bilateral loans, soon followed by Saudi Arabia and the United Arab
Emirates. The Arab Fund for Economic and Social Development, in which Gulf states
control nearly 50 percent of voting shares, was a large contributor to investment
projects. Kuwaiti and Saudi lending institutions and the Arab Fund have been heavy
co-financers of projects with the International Development Association.
rntil 1975, most economic assistance had come from
Communist countries, and this has been heavily drawn down. Only Algeria, Iraq, and
Libya among Arab states had made contributions prior to 1975.
suspension o grants and worker remittances from Gulf states probably would deny
some $150 million annually in foreign exchange proceeds. Aside from the additional
foreign exchange losses that would ensue from cancellation of project loans, a great
deal of time and momentum in South Yemen's development program would be
forfeited, even if radical Arab or the Communist states elected to increase their
support.
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The Saudis are alarmed by recent radicalization of the South Yemeni regime and
appear bent on maximizing economic pressure on Aden. They apparently have firm
backing from Bahrain, North Yemen, UAE, Oman, Kuwait, and possibly from Iraq
and Syria, as well. The Gulf states undoubtedly can use their position in the Arab
Fund to suspend further loan disbursements, although this institution in the past has
made a point of keeping politics out of aid decisions. As for the uncommitted radical
Arab states, particularly Libya, ideological affinity with South Yemen probably would
dominate their stand, and they most likely would refuse to join a boycott.
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China's suspension of all economic aid to Vietnam will trouble but not cripple the
SRV's languishing economy. Postwar Chinese aid had already fallen from its peak
1974 level of $420-435 million to about $300 million annually (on less favorable
repayment terms). Since 1975, Peking has been a reluctant benefactor compared with
the Soviet Union and East European countries. Indeed, even the magnitude of Chinese
aid in the past has been exaggerated-combined Chinese economic and military aid
since 1955 probably totals only one-half of the $10 billion reported in recent press
articles.
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Power, transport, and mining projects can easily be taken up by other aid donors.
The Soviet Union already has large generating projects under way in Vietnam and has
earmarked funds for the transport sector.
Vietnam's 1976-80 five-year development plan focuses primarily on agriculture
and only secondarily on industry. Chinese inputs to the agricultural sector were
limited to the development of a dozen state farms and some small irrigation projects in
the northern part of the country.
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Hanoi's failure to generate adequate postwar growth-GNP last year was only 3
percent above that of 1974-is not connected to inadequate aid receipts. The Soviet
bloc will probably fill the Chinese aid vacuum, especially now that Vietnam has joined
the Moscow-dominated Council for Mutual Economic Assistance (CEMA). Nonethe-
less, foreign capital cannot offset the economic and social disruption inherent in
Hanoi's attempt to socialize the southern economy nor will foreign assistance remedy
the shortage of skilled managers to carry out economic nlnns
CHINA: OIL INDUSTRY NEEDS FOREIGN HELP
For the first time in Communist China's history, there is now a realistic chance
Peking may seek direct foreign participation in the development of its oil industry.
Policy Considerations
Numerous ranking members of the post-Mao Chinese leadership apparently
believe that without increased foreign help their oil industry will be hard pressed to
meet foreign commitments and domestic demand over the medium term. They are
leaning toward enlisting foreign investment, technology, and personnel to accelerate
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growth of production, especially offshore. Peking may, therefore, finally soften its
policy of self-reliance enough to experiment with a few projects beyond the heretofore
permissible limits for foreign help-equipment imports and ad. hoc recruiting of
lecturers and troubleshooters. However, any contractual arrangement with a foreign
firm probably would be preceded by negotiations that are usually long, even for
China, because it would be a precedent-breaking move.
Oil Industry Developments
Anxiety over oil supplies arises from the disappointing performance of the major
oilfields since 1975 and the growing Chinese appreciation of how slowly offshore
exploration will progress if China rigidly clings to its traditional policy of self-reliance.
Annual increases in oil output, which typically exceeded 20 percent before 1975,
declined to 13 percent in 1975 and 1976 and to only 8 percent last year. Although a
Chinese version of a recession has restrained growth.of oil consumption during the past
two years, supplies have tightened so much that new regulations are going into effect
to ration oil and to compel switchovers to coal wherever possible.
In the ocean proper, as opposed to the shallow Pohai Gulf, China has drilled a
small number of test wells along the southern coast and in the Yellow Sea. The Chinese
have had the better part of a year to operate without help the four imported offshore
platforms delivered to them during 1977. Their experience seems to have induced
pessimism about the rate of progress in the continued absence of foreign help. I
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China: Selected Oilfields
LARGE EXISTING OILFIELD
I NEW OILFIELD
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Foreign Participation
For many years, foreign oil firms have been proposing participation schemes to
Peking. Chinese officials listened politely, but whatever the inclinations of the more
pragmatic officials, the Chinese political atmosphere made acceptance of foreign
participation in the oil industry impossible.
The present leadership, although noted for its relatively nonideological approach
to economic planning, obviously feels that even imports of foreign technology, let
alone active foreign participation in a strategic resource industry such as oil, demand
explanation. In its official pronouncements, it has provided broad justification for any
help it may choose to seek from abroad. It has now officially declared that science and
technology do not have class natures and that importing advanced technology is
If barriers against foreign participation in the oil industry are lowered, however
slightly or hesitatingly, it will probably first occur in offshore work. The investment
outlays and technological problems for the Chinese are greatest there, and a foreign
presence would be easiest to hide from the populace. Peking also needs help in onshore
exploration and drilling; it will be a long time, however, before Peking acquiesces to
large numbers of foreigners working in its industry. The leadership may adopt a more
liberal attitude about temporarily admitting foreign technicians to install and break in
new imported equipment, but that would probably be the limit of Peking's tolerance
for some time.
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Turkey-USSR, Trade and Aid To Expand
Turkish Prime Minister Bulent Ecevit's recent visit to the Soviet Union produced
several draft agreements to expand Soviet-Turkish trade over the next three years and
to barter oil for Turkish wheat and tungsten. Moscow also agreed to step up assistance
to Turkey on previously outlined oil, steel, and aluminum projects. The agreements
establish a framework for subsequent implementation without committing either side
to hard numbers and deadlines, and they seem overly optimistic.
The new arrangements envision a near tripling of trade between now and 1981,
from roughly $300 million to more than $800 million. Ankara would offer textiles and
various manufactured goods in exchange for Soviet fertilizer, coking coal, iron ore,
steel, and machinery. To avoid increasing its current account deficit and upsetting
plans for restoring its credit rating with Western lenders, Turkey would have to reduce
hard currency imports, presumably by substituting Soviet goods. Such a shift need not
establish any permanent dependence on the Soviets since Turkey could reenter hard
currency markets for the commodities being traded.
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A final protocol elaborated Soviet technical assistance and equipment for oil
prospecting, refinery construction, and steel and aluminum mill expansion. All of this
aid would be provided under a credit extended in 1975 and raised to $1.2 billion
earlier this year. Drawings are expected over at least 1.0 years.
USSR and Eastern Europe Crop Prospects
We currently estimate the USSR's 1978 grain crop at 215 million tons, up almost
20 million tons from the 1977 crop and only 5 million tons below the 1978 Plan. The
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estimate is the same as that released on 10 July by the US Department of Agriculture.
Prospects for grain production in Eastern Europe also appear good, with a near record
of 93 million tons now forecast. The outlook for other crops-especially potatoes and
sugar beets-in both the USSR and Eastern Europe is less favorable.
Even with the improved Soviet harvest, Soviet grain purchases abroad in support
of its livestock program could amount to 15 million tons for delivery during the
October 1978-September 1979 marketing year.
tons of corn and wheat annually from the United States over five years beginning 1
October 1976.
Brezhnev on Long-Term Grain Outlook
Meat production targets announced at a Central Committee plenum last week
imply that the USSR will continue as a major grain importer in the first half of the
1980s. President Brezhnev's report on agriculture was the highlight of the two-day
plenum. No new initiatives were announced, but the leadership is obviously concerned
with agricultural performance. To keep the food problem from worsening, Brezhnev
said that the 11th Five-Year Plan targets (1981-85) would have to be "rather high,"
with a top priority being given to meat production.
Brezhnev called for average annual grain output of 238 million to 243 million
tons in 1981-85, roughly 15 million tons above CIA estimates of likely output.
Achievement of the target would remove Moscow's present annual import require-
ment, which has averaged 15 million tons since 1972. Even if the 19.5-million-ton
meat target for 1985 were achieved, meat shortages would continue unless consumer
income growth slows or the regime reverses its long-standing policy of stable meat
prices.
Zaire's Mining Operations Reviving
he Soviets must buy at least 6 million
Zaire's huge copper, cobalt, and zinc complex in Kolwezi-in the area of the 13
May invasion-is again operating at a remarkably high level despite the absence of
some 450 expatriate specialists.
25X1
25X1
25X1
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
Zaire probably will not he able to izo it alone for lon without reintroduction o
large numbers of expatriates
cadre now working at Kolwezi are under considerable strain to maintain operations
and will not be able to cope with on-going maintenance requirements. Serious
breakdowns in the complicated processing and refining operations should be expected
before yearend unless expatriates return in considerable numbers.
25X
25X1
EC Summit Produces No Surprises
EC leaders covered all the issues likely to arise at the Bonn summit in their two-
day meeting in Bremen last week. While the Nine agreed on the need to promote
more rapid economic growth, no specific measures were recommended. West
Germany continued to reject EC Commission calls for further economic stimulation
despite growing evidence that Schmidt will announce a reflation package at the Bonn
summit. Paris agreed to participate in a coordinated program only if other non-EC
industrialized countries follow suit.
No new initiatives on trade or North/South issues were announced. Although
West Germany wanted a strong statement for successful conclusion of the Multilateral
Trade Negotiations, the Community called only for "... substantial and balanced
results at the MTN." The Nine reaffirmed their will to balance interests between
North and South and to continue negotiations on a common fund and individual
commodity agreements.
In the energy sphere, the Nine agreed to a general set of 1985 objectives, none of
which is binding.
Monetary discussions dominated the meeting. The Nine agreed to study the
Schmidt-Giscard plan for European monetary cooperation. Both Britain and Italy,
however, emphasized that their agreement to undertake such a study did not imply
any commitment to the guidelines. Prime Minister Callaghan fears the deflationary
impact of such a plan, and the Italians are in no hurry to see the lira strengthen. The
guidelines call for:
? Enlarging the present snake arrangement to include all EC currencies;
membership, however, would not be obligatory.
? Providing a transitional period for new participants that would permit
wider margins of fluctuation than in the present snake.
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
? Using snake currencies instead of dollars for intervention to support the
snake.
? Creating a new European currency unit to be used by EC central banks for
settling intra-EC accounts and providing short-term credit for support
operations; this currency unit will be backed by pooling a portion of snake
country reserves.
? Permitting non-EC countries to become associate members of the system.
? Requiring all snake participants to coordinate their exchange rate policy
toward third countries.
Schmidt and Giscard hope a system can be in place by January 1979.
25X1
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 25X1 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
Next 1 Page(s) In Document Exempt
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
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 41or Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
Foreign
Assessment
Center
Economic Indicators
Weekly Review
13 July 1978
ER El 78-028
13 July 1978
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
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 Gift 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
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
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.
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
 Approved For Release 2005/04/'118 CI -RDP8 T 0
BIG SIX FOREIGN COUNTRIES MP RS
Industrial Production INDEX: 1970=100, seasonally adjusted
140
130
120-..0-
Unemployment Rate
Percent
JAN APR JUL OCT A~pffiket ` dfhei"ease g1066/0V 8'A~I~PRD'p'Lg~TOCT JAN APR OO7O2AO JJUni_nn4OCT JAN 0005-5 APR JUL OCT
1973 1974 1975 1J78 T97T 1978
'Including Japan, West Germany, France, the United Kingdom, Italy, and Canada. A-2
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
Percent, seasonally adjusted, annual rate
Note: Three-month average compared with previous three months.
Trade Balance
4.0
Percent Change
AVERAGE ANNUAL
GROWTH RATE SINCE
LATEST
from Previous
1 Year
3 Months
MONTH
Month
1970
Earlier
Earlier2
Industrial
Big Five
United States
Production
Big Six
Apr 78
0.5
3.0
2.9
4.2
United States
APR 78
1 4
3.7
5.0
5.1
Consumer Prices
Big Six
APR 78
0.3
9.2
6.5
6.0
Trade Balance
United States
APO 78
0.9
6.6
6.6
8.5
Big Six
United States
Billion US $, f.o.b., seasonally adjusted
JAI't. V R JUL OCT
3 Months
LATEST MONTH 1. Year Earlier Earlier
APR 78 4.3 4.2 4.2
APR 78 6.0 7.1 6.3
LATEST MILLION CUMULATIVE (MILLION US $)
MONTH US $ 1978 1977 Change
FEB 78 5,140 7,790 3,178 4,612
i EB 73 -4,518 -6,884 -3,495 -3.389
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5 151,02 6-78
2Average for latest 3 month8 compared with average for previous 3 months, seasonally adjusted at annual rate.
A-3
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
INDUSTRIAL PRODUCTION INDEX: 1970=100, seasonally adjusted
United States
West Germany
L30
120
JAN APR JUL OCT JArAp ffisovi'd :9?f R@Yea`gb 26b5/64/1 V Chid-R 'P8 0f0Ab0df00(640dn-8PR JUL OCT
1973 1974 1975 1976 1977 1978
A-4
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United Kingdom
Italy
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
Percent
AVERAGE ANNUAL
Percent
AVERAGE ANNUAL
Change
GROWTH RATE SINCE
Change
f
GROWTH RATE SINCE
LATEST
from
Previous
1 Year
3 Months
LATEST
rom
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
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lAverage for latest 3 months compared with average for previous 3 months.
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
UNEMPLOYMENT RATE PERCENT
United States
9 ., A
7
1965-74 Average 4.6-
Japan
2 2
West Germany
5
4
3
2
5
4
3
1.9 -
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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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
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.
THOUSANDS OF PERSONS UNEMPLOYED
1976 1977 1978
LATEST MONTH
1 Year
Earlier
3 Months
Earlier
LATEST MONTH
1 Year
Earlier
3 Months
Earlier
United States
JUN 78
5,754
6,904
6,148
United Kingdom
JUN 78
1,365
1,353
1,400
Japan
APR 78
1,220
1,020
1,130
Italy
II 78
1,455
1,432
1,520
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.
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
CONSUMER PRICE INFLATION
United States
Japan
2.9 Average Annual Rate of Inflation 1961-i972
West Germany
Percent, seasonally adjusted,
annual rate1
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
IThree-month average with i-or Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
United Kingdom
Italy
Canada
4.2
1973 1974 1975 1976
Percent
AVERAGE ANNUAL
Percent
AVERAGE ANNUAL
OWTH RATE SINCE
Change
GROWTH RATE SINCE
Change
f
GR
from
rom
LATEST
Previous
1970
1 Year
3 Months
LATEST
Previous
1970
1 Year
3 Months
2
MONTH
Month
Earlier
Earlier2
MONTH
Month
Earlier
Earlier
United States
MAY 78
0.8
6.7
7.0
9.9
United Kingdom
MAY 78
0.4
13.2
7.7
6.0
Japan
APR 78
-0.1
9.8
3.9
4.0
Italy
MAY 78
1.2
13.1
12.3
11.3
West Germany
MAY 78
0.2
5.3
2.7
2.8
Canada
MAY 78
1.2
7.7
9.0
9.8
France
MAY 78
1.0
9.0
9.1
10.2
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A-9
 GNP' Approved For Release 2005/04/18 :
latest
Quarter
Percent Change
from Previous
Quarter
United
Japan
West
States
Germany
78
I
France
77
IV
United
Kingdom
77
IV
Italy
77
IV
Canada
Seasonally adjusted.
Average
Annual Growth Rate Since
--- --- --
1 Year Previous
1970 Earlier Quarter
q"PRjjW702A000700040005-5
Average
Annual Growth Rate Since
nt Ch
P
r
e
ce
ange
Latest from Previous 1 Year 3 Months
Month Month 1970 Earlier Earlier '
United States
May 78
-0.9
3.1
1.9
5.5
Japan
Jan
78
2.9
9.2
1.0
-2.8
West Germany
Apr
78
-0.8
2.5
7.0
-7.3
France
Jan
78
9.9
0
1.0
10.5
United Kingdom
May
78
1.6
1.2
5.0
4.5
Italy
Feb
78
1.3
2.8
2.1
5.9
Canada
Apr
78
2.0
4.2
3.0
5.9
s.,--FV odi-ae.d?
Average far latest 3 months compared with average for previous 3 months.
Nonresidential; constant prices
Average
Average
Annual Growth Rate since
P
t Ch
-
Annual Growth Rate Since
Percent Change
ercen
arge
Latest from Previous I Year 3 Months
United States
Japan
Latest
Quarter
78 I
from Previous
Quarter
1970
1 Year
Earlier
Previous
Quarter
United States
Japan
Period
Jun 78
Jon 78
Period
1970
Earlier
Earlier'
West Germany
78 I
West Germany
78 I
France
77 IV
France
77 IV
4.7
United Kingdom
77 IV
4.1
United Kingdom
Jan 78
Italy
-11.4
Italy
Apr 78
Canada
-
Canada
12.7
' Seasonally adjusted.
'Hourly earnings (seasonally adjusted) far the United States. Japan, and Canada: hourly wage
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.
I Year 3 Months 1 Month
Latest Date Earlier Earlier Earlier
United States
Commercial paper
{ Jun 28
7.75 5.39
Japan
Call money
Jun 30
4.38 5.63
West Germany
Interbank loans (3 months)
Jun 28
3.66 4.22
3.52
3.62
France
Call money
Jun 30
8.62 7.88
United Kingdom
Canada
Eurodollars
Sterling interbank loans (3 months)
Finance paper
Three-month deposits
Jun 28
Jun 28
Jun 28
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A-10
 EXPORT PRICEYproved For Release 2005/04/18:
C&IWIF8&T W02A000700040005-5
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
Apr 78 -0.9
11.8 13.3
8.6
West Germany Apr 78 -0.7 3.7 -2.3 -6.1
France
Apr 78 3.4
12.1 17.9
36.2
France Apr 78 0.9 9.4 8.9 21.0
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
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 Apr 78 18.8 14.5 18.9 19.5
United States
Mar 78 2.0
13.1 7.8
27.5
Japan May 78 27.7 4.1 17.3 24.2
Japan
May 78 5.3
7.1 -17.0
-12.3
West Germany May 78 40.0 8.8 34.8 41.9
West Germany
Apr 78 -3.1
3.1 -6.3
-11.1
France Apr 78 10.6 4.4 10.0 0.1
France
Apr 78 - 2.2
9.3 0.2
- 1.6
United Kingdom Apr 78 17.7 2.8 10.2 21.4
United Kingdom
May 78 1.0
17.6 2.6
14.2
Italy Mar 78 10.6 4.7 6.4 11.6
Italy
Dec 77 -0.7
19.5 9.7
-13.1
Canada May 78 4.7 9.1 5.2 3.7
Canada
Mar 78 -2.7
8.8 10.2
3.5
BASIC BALANCE '
CURRENT ACCOUNT BALANCE
'
Current Account and Long-Term Capital Transactions
Cumulative (Million US $)
Cumulative (Million US $)
Latest
Latest
Period Million US $
1977 1976
Change
Period Million US $ 1977 1976 Change
United States Y
78 1 -6,954 -20,115 - 1,430 -18,685
United States No longer published 2
Japan
May 78 750
11,112 3,680
7,432
Japan May 78 -700 7,876 2,696 5,180
West Germany
May 78 285
3,584 2,659
926
West Germany Apr 78 247 -1,648 2,472 -4,120
France
78 1 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 1 -1,417 -4,020 -4,230
210
Canada 78 I -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 rates of exchange.
' As recommended by the Advisory Committee on the Presentation of Balance of Payments
Statistics, the Department of Commerce no longer publishes a basic balance.
' Seasonally adjusted.
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 $
I Year 3 Months
1 Year 3 Months
Per Unit 19 Mar 73
Earlier Earlier
23 Jun 78
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 -5.54 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
For Release 2005/04/18:
the
I~Rf!?F~lh~~ tlP0~94t~~~PT0~0~4't~~b o major currencies.
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
Imports from (c.i.f.)
World
Big
Seven
Other
OECD
OPEC
Com-
munist
Other
World
Big
Seven
Other
OECD
OPEC
Com-
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
1st Qtr ................
29.46
13.75
4.73
3.13
0.86
6.99
.
37.37
.
16.07
.
2.76
.
8.97
.
0.30
38.47
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
2
JAPAN
1075
.
.
.
.
.
5
0.25
9.57
55.73
16.56
6.07
8.42
5.16
15.87
57.85
67.32
22.61
8.59
9.27
4.93
17.84
64.89
81.11
28.02
9.73
12.03
5.32
26.01
71.33
17.89
5.89
2.45
2
46
1
36
73
5
17
44
19.73
6.73
2.41
.
2.91
.
1.19
.
6.49
.
17.88
20.63
7.40
2.47
3.05
1.33
6.38
17.63
22.86
8.00
2.40
3.61
1.44
7.41
18.38
1978 ..........................
Jan ........................
5.66
2.18
0.65
0.78
0.29
1.76
6
00
1
57
0
73
2
14
0
27
WEST GERMANY
.
.
.
.
.
1.29
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
.
1st Qtr ................
28.19
9.28
11.62
2.31
2.11
2.87
.
24.45
.
8.46
.
8.85
.
2.58
.
1.42
12.62
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
1st Qtr ................
15.68
6.25
4.55
1.40
0.75
2.73
.
17.89
.
7.50
.
4.84
.
3.06
.
0.52
7.70
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
Jon ........................
5.49
2.21
1.49
0.52
0.19
1.08
6
29
2
69
1
71
1
00
UNITED KINGDOM
.
.
.
.
0.21
0.68
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
29
63
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
75
5
1
39
1978
.
.
.
.
.
0.67
2.16
Jan ........................
5.22
1.58
1.92
0.68
0.14
0.90
6
27
2
42
2
27
0
64
18
0
ITALY
.
.
.
.
.
0.76
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
Oct & Nov ........
7.73
3.68
1.66
0.99
0.40
1.00
.
7.97
.
3.52
.
1.48
.
1.34
.
0.53
1.53
1.10
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A-12
 Approved For Release 2005/04/18 : CIA-RDP80TOO702AO00700040005-5
Developed Countries: Direction of Trade 1
(Continued)
Exports to (f.o.b.)
Imports from (c.i.f.)
World
Big
Seven
Other
OECD
OPEC
Com-
munist
Other
World
Big
Seven
Other
OECD
OPEC
Com-
munist
Other
CANADA
59
38
78
29
1
70
3.43
0.32
2.02
1975 ..........................
33.84
26.30
1.73
0.71
1.20
2.00
.
.
.
48
3
38
0
56
2
1976 ..........................
40.18
32.01
2.03
0.81
1.25
2.09
43.05
33.55
1.82
.
05
3
.
33
0
.
85
3
1977 ..........................
42.98
34.77
2.13
0.94
1.06
4.08
44.67
35.67
1.77
.
82
.
09
0
.
94
0
1st Qtr ...
10.35
8.37
0.53
0.23
0.22
1.00
10.92
8.64
0.43
0.
74
.
0
10
.
1
05
..............
2d Qtr ..
11.34
9.23
0.54
0.24
0.29
1.04
12.28
9.92
0.47
0.
82
.
0
07
.
0
89
3d Qtr ..
10.25
8.12
0.54
0.23
0.29
1.07
10.38
8.17
0.43
0.
67
.
0
07
.
97
0
4th Qtr ................
11.04
9.05
0.52
0.24
0.26
0.97
11.09
8.94
0.44
0.
.
.
......................................................... -............................................................................................
I Source: International Monetary Fund, Direction of Trade.
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A-13
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
FOREIGN TRADE BILLION US $, f.o.b., seasonally adjusted
United States
14.0
12.0
Japan
a.3
6.3
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A-14
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
United Kingdom
6.0
5.0
4.0
5.5
5.2
APR JUL OCT
JAN APR
JUL
OCT JAN
APR JUL
OCT
MONTH
US $ 1978
1977
CHANGE
U
i
11
754 54
237
50
167
8
1%
n
ted States
MAY 78
,
,
,
.
United Kingdom
MAY 78
5,231
27,077
21,791
24
3%
13,992 69,009
58,447
18.1%
5,538
27,973
24,164
.
15.8%
Balance
-2,238 -14,771
-8,280
-6,491
Balance
-307
-896
-2,372
1,476
Japan
MAY78
7,848 39,330
32,397
21.4%
5,940 27,515
25,370
8.5%
Italy
MAY 78
4,276
4,358
20,326
19,313
17,623
18,630
15.3%
3.7%
Balance
1
907 11
815
7
027
-4;7W7-
,
,
,
Balance
-82
1,013
-1,008
2,021
West Germany
MAY 78
10,313 55,032
46,735
17.8%
Canada
FEB 78
3,946
7,175
6,761
6
1%
8,522 45,808
38,606
18.7%
3,710
6,680
6,509
.
2.6%
Balance
1,791 9,224
8,128
1,096
Balance
France
MAY 78
6,342 31,008
25,833
20.0%
6,321 30,973
27,033
14.6%
Balance
21 35
-1,200
1,235
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A-15
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
FOREIGN TRADE PRICES IN US $1
United States INDEX: JAN 1975=100
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1 gPcpproved For Reese 2005/04/1M-M-RDP80T0MP(Y1A000700040b -
1Export and import plots are based on five-month weighted moving averages.
A-16
 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
Italy
JAN
1974 proved For Release 2005/04/1897(9A-RDP80TOa27A000700040b?96584 7-78
A-17
 Approgfd kfVysbfffl4(5$ 1,GIAff$QTQ07f2Ap40700040005-5
MONEY SUPPLY'
INDUSTRIAL
PRODUCTION 1
Average
Annual
Growth Rate Since
Average
Percent Charge
Annual Growth Rate Since
Latest
from Previous
1 Year
3 Months
Percent Cha ge
Month
Month
1970
Earlier
Earlier'
Latest
from Previous
1 Year 3 Months
Period
Period
1970
Earler Earner '
Brazil
Jon 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
Taiwan
Mar 78
5.3
25.2
31.0
24.3
Thailand
Nov 77
3.3
13.1
12.3
4.7
'Avrage for latest 3 mantle mmpvd with average
for previous 3 months.
Season* adjusted
.
' Average for latest 3 months compared with average for previous 3 months.
CONSUMER
PRICES
WHOLESALE
PRICES
Average
Annual Growth Rate Since
Average
Percent Change
Annual Growth
Rate Since
Latest
from Pheviws
1 Year
Percent Change -
Month
Month
1970
Earlier
latest
from Previous
1 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
Apr 78
1.8
12.6
15.3
India
Mar 78
0.8
8.1
-0.6
South Korea
May 78
1.0
14.4
12.6
Iron
Apr 78
1.0
11.1
12.5
Mexico
May 78
1.0
15.0
17.2
South Korea
May 78
0.8
15.9
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 $
Million US 3
Average
Latest Month
Annual
Growth Rate Since
--
-
1 Year
3 Months
Percent Chage
----"
End of
Minion US S Jun 1970
Earlier
Earlier
Latest
from Previous
1 year
Period
Period
1970
Earlier
Brazil
Jon 78
6,757
1,013
6,193
6,041
India
Feb 78
5,563
1,006
3,481
5,069
Brazil
Dec 77
2.0
13.7
-15.8
India
Mar 77
-0.9
9.6
17.9
Iran
May 78
12,468
208
11,460
13,728
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
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
Apr 78
2,138
978
2,006
1,950
Thailand
Dec 76
2.0
13.3
13.1
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
Latest 3 Months
Percent Change from
Cumulative (Million US $)
3 Months 1 Year Latest Period Earlier' Earlier 1978 1977 Change
Apr 78 Exports
19.0
0.5
3,693
3,761
-1.8%
Apr 78 Imports
7.7
5.8
4,028
3,840
4.9%
Apr 78 Balance
-335
- 79
-256
Dec 77 Exports
-22.1
13.9
N.A.
6,142
N.A.
Dec 77 Imports
14.4
25.9
N.A.
5,365
N.A.
Dec 77 Balance
N.A.
777
N.A.
Iran
Apr 78 Exports
-30.9
-7.1
7,682
8,012
-4.1%
Mar 78 Imports
105.8
14.2
3,694
3,235
14.2%
Mar 78 Balance
2,025
2,795
-770
South Korea
Apr 78 Exports
-15.7
30.8
3,638
2,832
28.5%
Apr 78 Imports
12.5
25.8
3,849
3,035
26.8%
Apr 78 Balance
-211
-203
-9
Mexico
Mar 78 Exports
91.6
14.9
1,217
1,060
14.9%
Mar 78 Imports
-47.3
23.8
1,348
1,090
23.8%
Mar 78 Balance
-131
- 30
-101
Nigeria
Mar 78 Exports
-28.5
-15.2
1,018
1,200
-15.2%
Dec 76 Imports
Dec 76 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
3,365
2,543
32.3%
Apr 78 Imports
- 14.5
20.4
2,869
2,338
22.7%
Apr 78 Balance
496
205
291
Thailand
Dec 77 Exports
-27.2
-1.6
3,491
2,985
17.0%
Jan 78 Imports
0.6
21.4
362
301
20.4%
Dec 77 Balance
-684
-283
-402
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
AGRICULTURAL PRICES MONTHLY AVERAGE CASH PRICE
1-27 JUN II
0
RICE
.ail 5 $ PER HUNDRED WEIGHT
No. 2 Medium Grain, 4% Brokens,
f.o.b. mills, Houston, Texas
SUGAR
$ PER METRIC TON 75 0 PER POUND
800
0 1-19 JUN II 0
1974 1975 1976 1977 1978
1-27 JUN 11
1974 1975 1976 1977 1978 0
27 JUN 6.96
20 JUN 6.70
MAY 78 7.32
JUN 77 8.08
1-27 JUN 11
1977 1978 0
COFFEE/TEA
400 C PER POUND ...
COFFEE
2,000 Other Milds Arabicas, es-dock New York
350 27 JUN 162.00
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
SOYBEANS
15 $ PER BUSHEL
1-27 JUN 1'
1974 1975 1976 1977 1978
500 400
SOYBEAN OIL
Crude, Tank Cars, f.o.b. Decatur
27 JUN 0.2648
21 JUN 0.2620
MAY 78 0.2879
JUN 77 0.2708
SOYBEAN MEAL
$ PER TON
1974 1975
FOOD INDEX
i97n=1nn
800 400
0.3047
0.2696 600 300
Crude, Bulk, c.i.f. US Ports
27 JUN 0.3150
21 JUN 0.3125
MAY 78 0.2847
JUN 77 0.2830
1-27 JUN I I 0 100 1- 20 JUN 11
$ PER METRIC TON
400
27 JUN 172.00
21 JUN 168.50
MAY 78 176.55
JUN 77 216.57
1-27 JUN 1I
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.
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
INDUSTRIAL MATERIALS PRICES MONTHLY AVERAGE CASH PRICE
140 C PER POUND
COPPER WIRE BAR
LEAD
S PER METRIC TON
C PER POUND
45
LME US
3,000
LME
Ur'
27 JUN
58.8
65.6
27 JUN
25.7
31.
21 JUN
59.4
65.6
40
21 JUN
25.8
31.
MAY 78
59.2
64.6
2
500
MAY 78
24.6
31.
JUN 77
59.4
71 ?6
,
35
JUN 77
25.4
1-27 JUNI1 1,000
1974 1975 1976 1977 1-978
1-27 JUNII 0 150 1-27 JUN II
1974 1975 1976 1977 1978 1974 1975 1976 1977 1978
1-27 JUN I I
1-27 JUN II
200
1974 1975 1976 1977 1978
$ PER METRIC TON 650 c, PER POUND
2,000
550
1,500
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
ALUMINUM
Major US Producer
C per pound
55.00
83.00
51.00
44.00
US STEEL
Composite
$ per long ton
395.81
359.36
339.27
316.36
IRON ORE
Non-Bessemer Old Range
$ per long ton
21.43
21.43
21.43
19.50
CHROME ORE
Russian, Metallurgical Grade
$ per metric ton
NA
150.00
150.00
150.00
CHROME ORE
S. Africa, Chemical Grade
$ per long ton
56.00
58.50
58.50
39.00
FERROCHROME
US Producer, 66-70 Percent
it per pound
42.00
41.00
43.00
45.00
NICKEL
Composite US Producer
$ per pound
2.07
2.06
2.41
2.20
MANGANESE ORE
48 Percent Mn
$ per long ton
67.20
72.24
72.00
72.00
TUNGSTEN ORE
Contained Metal
$ per metric ton
16,961.00
21,549.00
22,821.00
13,954.00
MERCURY
New York
$ per 76 pound flask
153.00
124.33
126.23
110.00
SILVER
LME Cash
i per troy ounce
535.91
472.49
446.93
478.82
GOLD
London Afternoon Fixing Price $ per troy ounce
185.66
160.45
140.76
125.71
LUMBER INDEX6
160
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 Ib composite."
4Quoted on New York market.
5S-type styrene, US export price.
6 This index is compiled by using the average of 13 types of lumber whose
prices are regarded as bellwethers of US lumber construction costs.
1-20 JUNII
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.
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 Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700040005-5