ECONOMIC INTELLIGENCE WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00702A000700060006-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 54
• Document Creation Date: December 20, 2016
• Document Release Date: May 26, 2006
• Sequence Number: 6
• Publication Date: July 27, 1978
• Content Type: REPORT

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Foreign
~;timent
Assessment
Venter
Economic Intelligence
Weekly Review,
27 July 1978
On file Department of Agriculture release
instructions apply.
State Dept. review completed
ER EINVR 78-030
27 July 1978
copy NQ
655
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ECONOMIC INTELLIGENCE WEEKLY REVIEW
27 July 1978
Current Survey ..................................................................................... 1
Major Recent Developments Affecting the International Economy
Cuba: Rising Manpower Resources ..........................................................
Productive employment will become more difficult to obtain In Cuba for
the large Influx of well-prepared job seekers entering the market in the
next decade.
Jamaica: Struggling To Keep on the IMF Track ....................................... 19
Jamaica is further intensifying economic austerity under a three-year IMF
stabilization program; prognosis Is only fair for the short run, poor for the
longer run.
The Philippines: Rising Foreign Debt ........................................................ 24
The Marcos administration has aggressively tapped both private capital
markets and official development assistance programs to finance eco-
nomic growth and to strengthen government control over the economy.
Notes ................................................................................................... 28
Japanese Current Account Continues To Soar
Quebec Moderates Minimum Wage Hike
International Cocoa Agreement May be Renegotiated
Polish Meat Scarce and Diverted to Expensive Stores
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MAJOR RECENT DEVELOPMENTS AFFECTING
THE INTERNATIONAL ECONOMY
European Monetary System
Some of the momentum that West German Chancellor Schmidt and French
President Giscard hoped to impart to construction of a European Monetary System
may be lost as the EC grapples with the broad guidelines from the Community
Summit in Bremen. Still, monetary discussions will dominate EC deliberations for the
rest of the year, and new arrangements could emerge by the December target date.
The British, who are worried about the potential deflationary impact on the
United Kingdom of a new currency arrangement, nevertheless want to participate
fully in the EC discussions. They will seek to avoid tying sterling too tightly to the
stronger European currencies, however, and they probably will insist on both revision
of the Common Agricultural Policy and an increase in regional development
payments. In addition, London will seek to make surplus as well as deficit countries
responsible for correcting imbalances in their international payments position. In any
case, the British will be reluctant to make any commitment before the elections,
presumably to be held this fall.
The British will not be the only hard bargainers. The Italians are likely to follow a
similar path. Moreover, there is substantial domestic West German opposition to the
Schmidt-Giscard proposal, on grounds of the potential cost of the foreign exchange
intervention and the probable inflationary pressures that would result from German
support of the weaker European currencies. Another key question, the new system's
relation to the dollar, has yet to be addressed. France and West Germany may be
willing initially to establish a system without the British or Italians, despite the evident
problems this poses for EC unity.
Note: Comments and queries regarding the Economic Intelligence Weekly Review
are welcome.
27 July 1978
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Multilateral Trade Negotiations
France
The French believe that the EC Commission exceeded its mandate in agreeing to
a statement on the current status of the MTN for the Bonn Summit. The French also
had several other reservations, in particular what they saw as the statement's stronger
commitment to tariff reduction and nontariff reform. They probably also object to the
prominence given in the statement to the major US views, and they fear that French
agricultural interests will be sacrificed in ensuing negotiations.
I
The Canadians, while acknowledging the progress made at the last Geneva
session, are stressing their disappointment with the tariff offers from the EC and
Japan. Ottawa fears that it will be pressed to concur in an agreement that meets few of
its needs.
Economic Indicators
Composite industrial output in the six largest foreign economies grew at an
estimated 4.3 percent seasonally adjusted annual rate in the second quarter of 1978,
compared with the preceding quarter, according to preliminary data. Although
growth was less than in the first quarter, second quarter 1978 is the third consecutive
quarter in which industrial production has increased; there were declines in industrial
output in the second and third quarters of 1977. The Japanese and British industrial
performances in second quarter 1978 were the most impressive of the six, with their
respective outputs projected at 7.8 and 7.0 percent above the first quarter on an
annual basis. (Japanese production grew at an even faster pace in the first quarter.)
Industrial growth in France and Italy in the second quarter was sharply lower than in
the first quarter.
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Japan and West Germany continued to run large trade surpluses in second
quarter 1978. Although Japanese export volume dropped, import volume rose only
slightly, and the surplus of $6.8 billion was almost equal to that in the first quarter.
Despite the falloff in export volume, dollar receipts were up sharply, owing to higher
yen prices combined with continuing yen appreciation. The German trade surplus
rose to about $6 billion-primarily because of deutsche mark appreciation. Second
quarter trade of the other members in the Big Six was essentially in balance.
Big Seven: Key Economic Trends'
Industrial production
United States ................................
Big Six ............................................
Japan ........................................
West Germany ........................
France ......................................
United Kingdom ......................
Italy ..........................................
Canada ......................................
Consumer price inflation
United States ................................
Big Six ............................................
Japan ........................................
West Germany ........................
France ......................................
United Kingdom ......................
Italy ..........................................
Canada ......................................
Trade balance
United States ................................
Big Six ............................................
Japan ........................................
West Germany ........................
France ......................................
United Kingdom ......................
Italy ..........................................
Canada ......................................
1st
Qtr
2d
Qtr
3rd
Qtr
4th
Qtr
1st
Qtr
2d
Qtr
Percent Change'
5.7
10.5
4.4
2.4
1.0
12.2
4.4
-5.5
-2.8
3.5
7.7
4.3
2.2
-0.6
-0.5
4.2
12.8
7.8
5.9
-4.5
1.2
4.7
-1.1
1.1
8.8
-9.0
-2.1
-1.1
11.2
4.2
2.3
-9.4
3.0
-3.3
5.0
7.0
6.6
-17.9
-27.3
16.3
17.4
0.4
-0.4
1.3
-0.1
3.3
1.6
1.5
Percent Change 8
8.2
8.7
5.4
4.3
7.9
10.3
10.3
9.8
8.1
5.5
4.0
7.3
7.8
8.9
6.1
2.1
0.5
6.4
5.2
3.8
3.6
2.0
2.9
2.1
6.5
12.2
10.4
7.9
6.4
11.5
21.0
12.4
11.6
7.6
6.5
5.1
20.8
16.4
14.5
11.4
11.1
12.5
9.9
$.4
7.3
10.0
8.6
9.8
Billion US $
-5.8
-5.8
-6.4
-8.6
-9.7'
-7.7
5.9
8.5
10.4
12.2
13.2
14.7
4.2
4.4
4.2
4.6
7.3
6.8
4.5
5.6
5.4
6.1
5.1
6.0
-1.0
-0.6
-0.5
-0.2
-0.1
0.2
-1.6
-1.2
-0.1
0.1
-1.1
-0.2
-0.7
0.1
1.0
0.5
0.5
0.5
0.7
0.1
0.6
0.8
1.3
0.4
' Seasonally adjusted.
2 Estimated.
? Change over previous quarter at an annual rate.
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After declining for five consecutive quarters, the composite inflation rate of the
Big Six accelerated sharply in the second quarter. The largest jump in consumer prices
occurred in Japan, where the estimated annual rate of increase over the preceding
quarter, seasonally adjusted, was more than 6 percent compared with 0.5 percent in
the first quarter. France also experienced a pronounced acceleration. The West
German second quarter rate was only 2.1 percent.
The unemployment rate declined in only one of the Big Six countries (the United
Kingdom) in the second quarter. Four of the Six had shown improvement in the first
quarter.
Trade and Payments
Despite a $1.5 billion hard currency trade deficit in first quarter 1978, the Soviet
hard currency trade deficit this year is expected to be between $2 billion and $3
billion-about what it was in 1977. A deficit of this magnitude, accompanied by
substantial gold and arms sales, should enable Moscow to balance its current account
for the second straight year and to mini rrowing from Western commercial
banks.
Grain Imports
Although prospects for the 1978 Soviet grain harvest have improved, Soviet grain
imports in support of its livestock program could amount to 15 million tons for
delivery during the October 1978-September 1979 marketing year. (CIA and the
Department of Agriculture project a 1978 grain crop of 21.5 million tons, almost 20
million tons more than in 1977.) Only about 1 million tons of US grain have been
ordered so far for delivery in this period; the Soviets must buy at least 6 million tons of
corn and wheat annually from the United States over five years beginning 1 October
1976. Meat production targets announced at a Central Committee plenum last week
imply that the USSR will continue as a m r in the first half of the
1980s.
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Cuba's military and working-age manpower resources will increase sharply over
the next decade as the 1960s "baby boom" generation comes of age. Given the modest
prospects for economic growth in the foreseeable future, the Castro government may
find it difficult to provide productive employment at home for the large influx of
relatively well-educated jobseekers. As a result, Havana will have not only the
capacity but perhaps an added incentive to increase significantly its armed forces and
its foreign assistance programs.
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Manpower Resources
Cuba's "able-bodied" population (males between the ages of 17 and 59, and
females between 17 and 54) will increase from 4.7 million at the end of 1977 to 6.2
million in 1987. Assuming male and female participation rates continue at present
levels, the labor force will grow from approximately 2.8 million to nearly 3.7 million
by 1987. The average annual increase of 90,000 is 44 percent greater than the 1972-77
Cuba: Population by Major Age Category
Over
able-bodied
Over
able-bodied
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average and represents an acceleration in the annual labor force growth rate from 2.5
percent to 2.9 percent, with the bulk of the increase coming in the first half of the
decade. If the participation rate for females rises, as may well be the case, the annual
growth in the labor force would be even greater, perhaps rising to or exceeding
106,000 or 3.3 percent per annum.
The manpower increase will be even more evident in the "males of military age"
category (arbitrarily defined to include males from 17 to 19). The number of these
military-age males, which was relatively stable in the early to mid-1970s, began to rise
rapidly after 1975 and will reach 383,000 by 1983-a 45-percent increase over the
1977 figure. A gradual decline thereafter will reduce the number to 345,000 by
1987-a figure that is still 31 percent above the 1977 level. The Castro government
relies heavily on new recruits to sustain its active armed forces, which currently
numbers about 120,000 men, plus 60,000 reservists who can be mobilized within 24
hours.
Cuba: Military Aged Males
In thousands
400 -------
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The expansion reflects a sharp increase in Cuban fertility in the 1960s. The crude
birth rate rose from 26.1 per 1,000 persons in 1958-the last pre-Castro year-to 35.1
in 1963-64, before dropping to 29.2 in 1969 and subsequently plummeting to 20.7 in
1975. The Castro government, unlike the governments of many less developed
countries, did not attempt to enforce family planning programs stringently because of
its overriding interest in building a base for the continuation of the Revolution in the
face of a massive exodus of the Cuban population and perceived foreign economic and
military threats to the island. In the early years of the Revolution, at least 5 percent of
the Cuban population left the island, including the bulk of the middle class with its
technical and administrative expertise, at the same time the economy was being
subjected to various degrees of economic sanctions by the developed countries of the
Western world.
Asset or Liability?
The pending expansion of the labor force is potentially both an asset and a
liability for the Cuban Government. In contrast to the early Castro years, the new
entrants are generally well educated by both Cuban and Third World standards. Most
have received a high school education, and a growing number are university or
technical school graduates. They also are instilled with a high degree of nationalism,
motivation, and self-esteem that heightens their perceived abilities and potential roles
in the continuation of the Revolution. The assimilation of these relatively well-
educated personnel into the labor force could significantly expand productive capacity
by raising the ratio of "able-bodied" to total population and by providing the high-
quality worker necessary for an increasingly complex economy.
Havana, however, may have difficulty finding productive employment for the
large influx of new workers, given the reduced prospects for economic growth. Over
the past two years, Cuba has been forced to reduce planned investment and make at
least two major downward revisions in its 1976-80 Five-Year Plan because of low
world sugar prices. The bleak prospects for any rise in sugar prices in the near future
will continue to restrain imports from non-Communist countries, which traditionally
supply a large portion of Cuba's capital equipment and intermediate goods. Projected
increases in deliveries of capital goods from Communist countries are unlikely to make
up all of the shortfall.
The need to increase economic growth is particularly important given the poor
prospects for increased employment in the traditional, labor-intensive agriculture
sector. Employment in the sugar industry has steadily diminished since the early 1970s
because of the increased mechanization of the sugarcane harvest, government efforts
to reduce redundant workers in the milling sector, and the continuing trend toward
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Cuba: Populaion by Age and Sex
Male Female
00 0
000 0
0 N r
65
and
over
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
Under
5
65
and
over
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
Under
00 0 0 0 0 00 00
N 0 -h 0 CD h
Cuba: Labor Force
In thousands
4,000
*Actual
**Projection based on current participation rates of 84%
of civilian "able-bodied" males and 35% of "able-bodied"
females and no change in active armed forces.
***Projection based on participation rates of 84% of
civilian "able-bodied" males and 40% of "able-bodied"
females and no change in active armed forces.
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Cuba: Employment by Economic Sector
Total ..............................................................
1,823
1,885
1,993
2,402
2,426
2,526
2,573
2,623
2,712
State sector ..................................................
1,083
1,369
1,517
2,082
2,126
2,246
2,313
2,391
2,492
Agriculture ........ _ ....................................
297
386
450
604
637
645
646
685
679
Manufacturing, mining, and utilities ....
267
303
323
440
438
453
469
472
478
Construction ............................................
104
108
118
133
154
177
183
208
250
Transportation and communication ......
74
82
82
175
177
179
185
187
205
Commerce ................................................
132
216
235
168
166
177
184
179
179
Services and administration .............. ....
209
274
309
562
554
615
646
660
701
Private sector ' ............................................
740
516
476
320
300
280
260
232
220
' Following the nationalization of virtually all the remaining vestiges of nonagriculture private enterprise in
1968, private-sector employment has been subsequently restricted almost totally to agriculture.
exporting bulk rather than bagged sugar. The reduction of harvest workers will
continue, since Havana is planning to increase the level of mechanization from the
present 40 percent of the harvest to 60 percent by 1980. The potential for employment
in nonsugar agricultural sectors is limited by the extensive reliance on part-time
school-age labor and by the gradual collectivization of small private farms.
The ability of the domestic economy to absorb new entrants to the labor market is
further strained by the small pockets of unemployment and underemployment-a
result of government reorganization and economic rationalization measures under-
taken in the early 1970s and of the continued mismanagement of resources. The
existence of some 80,000 unemployed-equal to 2.9 percent of the Cuban labor
force-was acknowledged by Cuban officials at the National People's Assembly held
in June 1978.
Havana's Policy Options
Should Cuba be unable to accommodate the large influx of workers domestically,
it will have not only the capability but perhaps the incentive to divert a significant
portion of these people to its expanding foreign assistance programs and/or increase its
armed forces. Cuba currently has an estimated 7,000 to 9,000 civilians overseas, and
President Castro has announced that this number will be increased by 4,000 to 5,000
by the end of the year. About 90 percent of the Cuban technicians are stationed in
Africa-the majority in Angola-where they are primarily involved in rural develop-
ment, education, and public health projects-all areas in which Cuba has accumulated
expertise at home.
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Diversion of such services abroad would both enhance what has proved to be an
effective instrument of Cuban foreign policy and provide an outlet for the possible
manpower surplus. Foreign service on behalf of the Revolution affords a meaningful
opportunity for idealistic young Cubans to prove their revolutionary credentials while
at the same time blunting the pressure of the "rising expectations" syndrome at home.
This outlet is particularly important because in the past, misuse of well-educated
workers due to mismanagement and political favoritism has led to disgruntlement,
lowered morale, and even caused some questioning of the system itself.
With an expanded manpower pool, Havana would also have the capability over
the next five years to increase sharply the size of its military forces if it chose to do so.
During the 1960s, when Cuba's military manpower pool was much smaller * and
when the country was preoccupied with the defense of the island, it maintained an
active military force of over 300,000. The number of active-duty personnel was
reduced in the early 1970s to the present 120,000 largely in response to Soviet
pressures to rationalize the economy, but arguments against an expansion of forces
may seem less compelling as Cuban manpower resources increase.
JAMAICA: STRUGGLING TO KEEP ON THE IMF TRACK
Jamaica is further intensifying economic austerity under a new three-year IMF
stabilization program. Kingston probably can line up sufficient foreign funds to meet
essential debt service and pay for the imports needed to avert another drop in real
output in 1978. We doubt, however, that the Manley government can muster the
Herculean effort needed to impose the further drop in Jamaican living standards
required by the IMF program over the longer term. In any case, the country will
remain dependent on substantial foreign aid over the next several years.
Problems Mount in 1977
Jamaica's payments difficulties emerged with the completion of major foreign
bauxite/alumina investments in the early 1970s. These difficulties worsened as oil
import prices climbed and investor confidence eroded because of the government's
leftward drift. With its foreign reserves and credit practically exhausted, Kingston
imposed harsh belt-tightening measures in 1977 to secure a two-year IMF standby.
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Real GDP Growth
Percent
Inflation Rate
Percent
International Reserves
Million US S, Yearend
Unemployment Rate
Percent
Bauxite Production
Million Tons
77
Est.
78
Proj.
Central Government Deficit
Percent of GDP
77
Est.
78
Proj.
1974/75 75/76 76/77 77/78 78/79
Est. Proj.
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Imports were slashed 31 percent (39 percent in real terms) below the peak 1975 level;
real GDP fell at least 4 percent, to 84 percent of the 1972 level.
The IMF standby, secured in July, came unglued in December when Jamaica
failed to pass specified performance tests. Fearing heightened civil unrest if austerity
were tightened, the government continued to draw down foreign reserves and to
default on selected foreign debt, rather than cut imports further. At the same time, to
limit the drop in private consumption, wage increases and current public spending
exceeded IMF target levels. Although the accord helped Kingston secure about $250
million in foreign capital commitments, disbursements during 1977 held well below
this level.
The New IMF Agreement
Following difficult negotiations, Kingston accepted even tougher austerity mea-
sures in May 1978. The new three-year stabilization program under the extended fund
facility will furnish Jamaica $240 million in IMF credits, of which about $50 million
will be available in 1978. Under the program, Kingston must:
? Devalue its currency by 12 percent over the next 12 months, on top of
devaluations totaling 41 percent since April 1977.
? Limit wage hikes to 15 percent annually over the next two years.
? Balance the government's current budget this year and achieve a surplus in
subsequent years.
? Sharply raise taxes on consumer goods this year.
? Eliminate arrearages on most private transactions by mid-1979, with
amortization of overdue foreign debt to be spread over the next three years.
The program seeks to ease foreign payments strains and to revive the economy by
sharply curtailing private consumption while increasing investment in export indus-
tries and in import-substitution activities. Total consumption is to be cut 11 percentage
points, to 80 percent of national output by 1980. The rise in government consumption
is to be restricted and higher tax revenues are to be used to provide domestic
counterpart funds to allow greatly increased use of foreign project loans. Success of the
program will depend heavily on whether private direct investment responds to
improved cost-price relations induced by wage restraint, relaxation of price controls,
and more realistic currency valuation. The IMF hopes that this strategy will restore
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limited economic growth and allow sufficient easing of payments strains to gradually
eliminate import and exchange controls.
Chances of Staying on the IMF Track
We doubt that the Manley government has the will or ability to stick to a
program that imposes further substantial cuts in already lowered Jamaican living
levels. As real wages plummet and high unemployment continues, labor strife can be
expected to worsen, making the country increasingly difficult to govern. Manley is
already in a poor position to cope with these problems; his political stock with the
public and with leftists and moderates in the ruling party is at its lowest point since his
election in 1972. Even the National Workers Union-Jamaica's largest union and
Manley's political base-has joined the rest of organized labor in rejecting the IMF
wage ceiling.
Although Manley recognizes that he must try to adhere closely to the agreed
program, substantial slippage can be expected. The first real test could come in the
next few weeks when the government will confront bauxite worker demands for a 25-
percent wage hike. We believe that Jamaica probably can squeak through the initial
Million US $
Trade balance ...................................................... -117 -160 -132 93 40
Exports, f.o.b . .................................................. 694 810 660 760 790
Imports, f.o.b ................................................... -811 -970 -792 -667 -750
Net services and transfers .................................. - 50 -123 -171 -161 -190
Current account balance ........................ _...... -167 -283 - 303 - 68 -150
Debt amortization ' .......................................... - 20 - 28 - 49 - 83 -117
Financial gap .................................................... -187 -311 -352 -151 -267
Medium- and long-term capital inflows .......... 226 223 204 130 245
Direct investment ............................................ 23 -2 -1 -7 -5
Other inflows .................................................. 203 225 205 137 250
Net short-term capital' ...................................... 24 24 54 37 22
Change in reserves ...... .............. ............... ._....... 63 -64 -94 16 0
Other financial items:
External debt, yearend ...................................... 491 645 832 865 914
Percent
Debt service ratio * .............................................. 5.2 6.6 10.9 14.5 17.4
' Projected on the basis of a 12-percent increase in imports needed to avert a further decline in real GDP
and sufficient capital inflows to cover the financial gap.
' Public and publicly guaranteed medium- and long-term debt.
' Including errors and omission.
* Debt service divided by exports of goods and services.
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IMF performance review, scheduled for late September 1978, but it will have great
difficulty passing the second performance test in late June 1979.
Prospects for 1978
Payments strains and stagnant economic growth will continue to plague the
economy in 1978. Jamaica can cover its international financial gap and meet short-
term debt obligations only by restraining import growth. Rising interest charges and
slowed export growth have hurt the current account. Falling sugar sales and sugar
prices have partly canceled out increased earnings from bauxite and alumina exports
resulting from higher world aluminum prices. As a result, exports will grow less than 5
percent this year, compared with a 15 percent expansion in 1977. Kingston will have
to hold the rise in imports to 10 to 12 percent to keep the financial gap at a
manageable $270 million for the full year.
Although new private direct investment is unlikely to materialize this year,
Jamaica has lined up most of the funds needed to cover a financial gap of this
magnitude. As a result, Kingston has apparently dropped its plan to seek prepayments
on the remaining 1978 tax liabilities of US aluminum companies. These companies
have agreed to apply $40 million in savings from the recent currency devaluation to
increasing their equity and loan exposure on the island.
To cover the 1978 financial gap, Jamaica still needs roughly $50 million in
payments support. Kingston has begun talks with foreign banks on a $40 million loan,
part of which could become available late this year. The country's poor credit rating
will preclude much new financing from commercial sources, however. As a result,
Jamaica probably will depend on a quick disbursement of much of the approximately
$50 million pledged last month by the United States, Venezuela, Canada, the United
Kingdom, and other Western donors to help cover payments needs through March
1979.
Import restraint will likely hold real output in 1978 to about the 1977 level. The
inflation rate can be expected to escalate to about 30 percent this year as currency
devaluations and higher consumption taxes begin to take hold. The result will be a
sharp decline in real wages.
Longer Term Outlook
Jamaica's economic prospects for 1979-80 are almost as bleak, even though export
earnings should do well. Despite capacity constraints, prospective rises in bauxite
prices together with recent devaluations should help boost total export earnings about
10 percent annually during 1979-80. Sugar sales will not provide much help; slow
27 July 1978 SECRET
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growth in world sugar demand and increasing supplies of sugar substitutes should
continue to depress sugar prices over the near term. Import capacity will not keep
pace with export earnings because of rising debt service obligations.
In view of the uncertain political situation, direct private investment is unlikely to
pick up much. Even if Jamaica is able to retain IMF support, it will need $50 million
to $100 million in foreign aid annually to cover payments requirements and sustain
moderate economic growth during 1979-80. Little possibility exists that Jamaica can
achieve the real growth rate of 10 percent annually during 1979-80 that would be
required to restore output to the 1972 level.
Heavy borrowing by the Marcos administration to finance economic growth has
further strengthened governmental control over the economy.
The Philippines has more than doubled its foreign borrowing since 1974.
Outstanding foreign debt had reached about $6.5 billion by the end of 1977 and will
hit $7.5 billion by the end of 1978. Manila has aggressively tapped both private capital
markets and official development assistance programs.
The rapid growth of foreign debt has raised questions as to the country's debt
servicing capability, particularly since prospects for export growth are not good.
Although the level of debt will continue to rise over the next two to three years, we
expect the rate of increase to slow as the international banking community becomes
less willing to increase its exposure in the Philippines. Manila should be able to meet
debt service obligations, albeit with some strain.
Prelude to Heavy Borrowing
Persistent balance-of-payments difficulties throughout the 1960s reached crisis
proportions by 1970 when a bunching of short- and medium-term debt maturities
precipitated massive reorganization of the debt by creditor nations and commercial
banks. The introduction of martial law in 1972 speeded economic reform and
provided a modicum of political stability that induced an upswing in foreign capital
imports.
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The Philippines: Outstanding Foreign Debt
Million US$, Yearend
Medium- & Long-term
2,030 1,960 2,078
2,392
1,680 1,620 1,757 2,025
1970 1971 1972 1973 1974 1975 1976 1977 1978
Projected
By 1975, however, Manila's trade and current account had deteriorated sharply,
as exports declined in the face of world recession and imports rose, due largely to a
tripled oil import bill. A record $900 million current account deficit that year required
an unprecedented level of borrowing, a large part of which had been lined up the
previous year when world markets for Philippine exports were still buoyant.
Again in 1976, and to a lesser extent in 1977, large current account deficits ($1.1
billion and $0.7 billion, respectively) required new borrowing. External debt rose by
$2.7 billion during the two-year period, nearly all in medium- and long-term loans
from a combination of commercial and official sources. In 1976 a series of balance-of-
payments loans from private Euromarket syndications supplemented longer-term
27 July 1978 SECRET
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official project loans. Further, Manila took full advantage of IMF credit lines, drawing
on both the Compensatory, Oil, and Extended Fund Facilities (EFF). Use of the last
imposed a rigorous set of economic policy criteria on the government, including
overall borrowing ceilings through the three-year term of the agreement.
Net foreign borrowing more than offset the current account deficit in 1976,
permitting nearly a $300 million increase in foreign reserves. Improved export
performance in 1977, accompanied by a less-than-expected import growth, yielded a
$160 million balance-of-payments surplus.
As a result, in late 1977 Manila was able to renegotiate $1.2 billion commercial,
standby, and fixed term credits to obtain lower interest rates and lengthened
maturities. Real economic growth during 1976 and 1977 amounted to a respectable 6.7
and 6.1 percent.
Change in Debt Structure
The structure of Philippine foreign debt has changed markedly since the
uncertain early 1970s. The share of government-held medium- and long-term
obligations has greatly surpassed privately held loans. During 1973-77 publicly held
debt rose by 35 percent annually, while private debt increased by only 15 percent per
year. In large measure this reflects the increasingly strong role played by the
government in the economy following the introduction of martial law. Long-neglected
infrastructure projects have been initiated under favorable terms with World Bank
and the Asian Development Bank financing. Although short-term debt has also risen
sharply in recent years, the increase has been mainly attributable to the growth in
imports, particularly the high payments for oil import financing since 1973. On
balance, trends in the Philippine debt structure are characterized by a shift toward
longer maturing, publicly held loans.
Despite the rapid growth in foreign debt, repayment obligations on medium- and
long-term credits rose only gradually through 1976. A number of medium-term loans
began to mature by 1977, pushing debt service payments to about $750 million, 30
percent over 1976, yet still within manageable limits.
Developments in 1978
The improved payments position in 1977 rekindled lender interest early this year.
Manila capitalized on the high degree of international liquidity by reentering the
commercial market for new credits at rates more favorable than in 1976-77. It also
renegotiated a two-year-old, $256 million nuclear power plant loan.
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The Philippines: Medium- and
Long-Term Foreign Debt, by Holder
Million US $, Yearend
4,384 4,000
Publicly-held
3,254
1973 1974 1975 1976 1977 1978
Projected
A $100-million revolving credit-for seven years at 1 percentage point above the
London Inter-Bank rate-was lined up by the Central Bank in :February. This was
followed by two quickly subscribed, $250 million syndications with 10-year maturi-
ties, also to the Central Bank. As part of Marcos' attempt to provide stronger
government control over the economy, the bulk of these new credits will be reloaned
to government agencies and corporations. This funding will allow the government to
expand its role in development projects at the expense of the private sector. Some of
the loan proceeds, for example, are to be used to acquire equity in a large nickel
smelting plant that has been in financial trouble since opening two years ago. Another
candidate for these funds is the Philippines Air Lines, recently government acquired.
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The government has not entirely dominated the borrowing picture. The privately
held San Miguel Corporation obtained a $130-million credit from a consortium of US
banks for a 10-year term at spreads of 1 to 1.25 points over the London rate.
The upswing in Philippine borrowing during the first six months of 1978 is a
product of easy terms in international capital markets and is not likely to continue.
Government projections of 1978 exports have already been substantially trimmed
from earlier in the year-from $3.6 billion to $3.1 billion-and the expected current
account deficit will probably amount to about $1 billion, based on trade returns for the
first quarter. In these circumstances, international banks will be increasingly reluctant
to expand their already high exposure in the Philippines. Moreover, the IMF EFF
ceiling on new borrowings, set at $950 million, will also act as a constraint to potential
credit overextensions.
We estimate that the total Philippine outstanding debt by yearend will be about
$7.5 billion, of which $6.4 billion will be in medium- and long- term loans. Debt
service payments are estimated at about $900 million or roughly 20 percent of
estimated foreign exchange earnings. Manila should be able to meet its foreign
obligations without inordinate difficulty, given the past record of adroit debt
management and timely use of commercial loans.
Down the road, however, Manila will have to demonstrate a greater capacity to
increase exports before incurring higher debt service payments. Government forecasts
of export growth calling for annual increases of 18 percent through 1982 are clearly
too optimistic. Accordingly, Manila will be forced to reduce borrowing, to increase
imports, and to trim growth targets.
Japanese Current Account Continues to Soar
The record-breaking $3.0 billion trade surplus for June, released last week,
propelled Tokyo's current account $10.6 billion into the black during the first half of
1978, nearly equaling the full year 1977 surplus. Export earnings in dollar terms
declined negligibly last month, to $7.9 billion, despite a continuing slide in seasonally
adjusted export volume. Imports, however, plunged by 17 percent to $5 billion
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Japan: Current Account'
Trade balance ..............................................
8.6
8.8
14.2
Exports, f.o.b . ..........................................
38.9
40.3
46.6
Imports, f.o.b ...........................................
30.3
31.5
32.4
Net services ..................................................
-3.5
-3.0
-3.6
Current account balance ........................
5.1
5.8
10.6
because of lower landings of oil. Oil imports had been unusually high in May as oil
companies raced to beat new taxes that were to be put into effect on 1 June.
Quebec Moderates Minimum Wage Hike
The PQ government has announced that Quebec's minimum wage-currently
the highest in North America at C$3.27-will be increased to C$3.37 on 1 October
1978 and to C$3.47 on 1 April 1979. The hikes represent a compromise between the
government's commitment to index the minimum wage and the hard realities of
unemployment and inflation in Quebec. The increases allow for only a 6.1-percent
boost since the last increase on 1 January 1978, compared with an anticipated 12-
percent rise in the consumer price index. This is a sharp change in PQ policy, which
lifted minimum wages by 14 percent in its first year.
Rene Levesque, the PQ leader, apparently is attempting to slow the upward push
of wages in Quebec to avoid widening the wage gap between Quebec and neighboring
Ontario-its major manufacturing goods competitor. Ontario's minimum wage now
stands at C$2.85 but will increase to C$3.00 in January.
International Cocoa Agreement May Be Renegotiated
Members of the International Cocoa Agreement are meeting in London this week
to decide whether to renegotiate the current pact, which expires in 1979. A favorable
decision on renegotiation is likely because of strong producer support for the move and
the desire by most current members to have the United States join the agreement.
Negotiations for a new agreement would likely occur in early 1979.
Producers have expressed a strong desire to renegotiate in an effort to boost prices
and protect earnings. The Ivory Coast and Brazil have also pressed for renegotiation to
include the United States.
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The United States, the world's largest consumer and not a member of the current
pact, has expressed interest in joining a new agreement if it provides for creation of a
buffer stock. The US proposal for renegotiation has been well received by both
producers and consumers.
Polish Meat Scarce and Diverted to Expensive Stores
Warsaw's apparent effort to surreptitiously raise meat prices by channeling large
supplies to the new network of "commercial" shops has exacerbated meat shortages in
the regular retail outlets that supply the majority of the Polish consumers despite an
apparent increase in production. Embassy Warsaw describes the situation as "ex-
tremely bad and getting worse." Acute shortages have been reported in a number of
Polish cities, and Warsaw also is threatened. In recent weeks even Party officials have
had to depend on the commercial shops-and pay the higher prices-for quality
meat, which has been absent from their special commissaries.
The network of commercial shops was established shortly after the abortive
attempt to raise meat prices in June 1976 and now accounts for upwards of 10 percent
of total retail meat sales. They offer large supplies and better cuts of meat, but at
about double the price in the regular butcher shops where prices have been frozen
since 1967. In an attempt to increase revenues from meat sales and cut subsidies-said
to represent 74 percent of the cost of meat, a figure that will rise to 83 percent next
year-the regime has been channeling an increasing share of meat production to the
more expensive commercial shops. As a result, supplies to the regular stores, where
lower income Poles must shop, appear to have been cut back. Increased exports to earn
hard currency probably have aggravated the situation also. Prolonged shortages in the
regular shops could lead to worker disturbances.
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 Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
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 National
oy@A r Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
Assessment
Center
Economic Indicators
Weekly Review
27 July 1978
ER EI 78-030
27 July 1978
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 Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
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 tho.,:e 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 2007/03/08 : CIA-RDP80T00702A000700060006-2
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 F rftJNTRIESI CCf MPn4z T000 A 0r 110'- A rnr-% e-
INDEX: 1970=100, seasonally adjusted
Semilogarithmic Scale
Unemployment Rate
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1973 1974 1975
1Including Japan, West Germany, France, the United Kingdom, Italy, and Canada.
Percent
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1976 1977 1978
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Consumer Price Inflation
-3.0
Note: Five-month weighted moving average.
JAN APR JUL OCT
1973
JAN APR JUL OCT
1974
Percent Change
LATEST
from Previous
MONTH
Month
Industrial
Production
Big Six
APR 78
0.7
United States
APR 78
1.5
Big Six
MAY 78
0.8
United States
MAY 78
0.8
APR JUL OCT
1975
AVERAGE ANNUAL
GROWTH RATE SINCE
1 Year 3 Months
1970 Earlier Earlier2
3.0 3.1 4.4
3.7 5.1 5.2
9.2 6.3 7.1
6.7 7.0 9.9
4.3
JAN APR JUL OCT JAN APR JUL OCT JAF4! APR JUL OCT
1976 1977 1978
Unemployment Rate
Big Five
United States
Trade Balance
Big Six
2Average for latest 3 months compared with average for previous 3 months, seasonally adjusted at annual rate.
A-3
Percent, seasonally adjusted, annual rate
Billion US $, f.o.b., seasonally adjusted
3 Months
LATEST MONTH 1, Year Earlier Earlier
MAY 78 4.4 4.2 4.3
MAY 78 6.1 7.1 6.1
LATEST
MILLION CUMULATIVE (MILLION US $)
MONTH
US $ 1978
1977
Change
MAY 78
3,483 22,493
11,298
11,195
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INDUSTRIAL PRODUCTION INDEX: 1970=100, seasonally adjusted
United States
Semilogarithmic Scale
-120-
Japan
West Germany
130
120
-120 R --r-- - N,
121 `V
'^'? - ern ULI JAN APR JUL
1973 1974
APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
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United Kingdom
Italy
Canada
130
7; 123
20
JAN APR JUL OCT
1973
1 34
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR1 ~J77 OCT JAN
1974 1975 1976
APR JUL OCT
1978
Percent
AVERAGE ANNUAL
Percent AVERAGE ANNUAL
Change GROWTH RATE SINCE
Change
GROWTH RATE SINCE
from
s 1 Year 3 Months
i
from
LATEST Previous
MONTH Month
1970
1 Year
Earlier
3 Months
Earlierl
LATEST
MONTH
ou
Prev
Month 1970 Earlier Earlierl
United Kingdom
APR 78
1.0
United States
JUN 78
4.0
6.7
11.4
Italy
MAY 78
5.5
Japan
MAY 78
1.9
G.9
-6.6
Canada
A.PR 78
-0.2
West Germany
IJAY 78
1
3
3.3
13.4
France
MAY 78
.
lAverage for latest 3 months compared with average for previous 3 months.
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 UNEMPLQYpargeLe,;k2007/03/08: CIA-RDP80T00702A000700060006-2
United States
Japan
West Germany
APR JUL OCT JAN
1973
JAN APR JUL OCT
1975
APR JUL OCT
1977
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JN
A -APR
APR JUL OCT
1978
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United Kingdom
Italy (quarterly)
ant in first quarter 1977. Data for earlier periods
A labor force survey based on new definitions of economic activity sharply raised the official estimate of Italian unemploym thus are not comparable.
Italian data are not seasonally adjusted.
Canada
19J77 OCT JAN APR1 JUL OCT
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR
1973 1974 1975 1976
THOUSANDS OF PERSONS UNEMPLOYED,
LATEST MONTH
1 Year
Earlier
3 Months
Earlier
United States
JUN 78
5,754
6,904
6,148
United Kingdom
Japan
MAY 78
1,270
1,140
1,160
Italy
West Germany
JUN 78
984
1,044
1,014
Canada
France
MAY 78
1,113
1,066
1,042
1 Year 3 Months
Earlier Earlier
JUL 78 1,371 1,402 1,387
II 78 1,455 1,432 1,520
MAY 78 949 e540 901
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
comparable to be US ratey comparable with US rates. Beginning in
roughl percent
15
Italian rates respectively,
should be decreased by 50 percent to be roughly 20
1977,
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CONSUMER PRICE INFLATION Percent, seasonally adjusted,
United States annual rate'
15
10
Japan
45
40
35
30
2.9 Average Annual Rate of Inflation 1961-1972
West Germany
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 1
974 1975
'Three-month average compared with previous three months.
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1977 1978
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United Kingdom
Italy
Canada
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1973 1974 1975
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1976 1977 1978
AVERAGE ANNUAL
Percent
Change GROWTH RATE SINCE.
from LATEST
LATEST Previous 1970 1 year 3 Months
MONTH Month Earlier Earlier2 MONTH
AVERAGE ANNUAL
Percent GROWTH RATE SINCE
Change
from
Previous 1970 1 Year 3 Months
Month Earlier Earlier2
United States MAY 78 0.8 6.7 1.0 9.9 ?United Kingdom JUN 78 0.8 13.1 7.4 5.2
JUN 78 1.2 13.1 12.2 12.4
Japan MAY 78 1.0 9.8 3.5 6.0 Italy
West Germany JUN 78 u 5.2 2.4 2.1 Canada JUN 78 0.8 1.7 9.2 9.8
France MAY 78 1.0 9.0 9.1 10.2
2Average for latest 3 months compared with average for previous 3 months, seasonally adjusted at annual rate.
A-9
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 Approved For Release 2007/03TQ8
I--RDPtM
RETAIL SALES '
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
' Seasonally adjusted.
Average
Annual Growth Rate Since
Percent Charge
Latest from Previous 1 Year Previous
Quarter Quarter 1970 Earlier Quarter
78 I
78 I
77 IV
78 I
FIXED INVESTMENT'
Nonresidential; constant prices
Average
Annual Growth Rate Since
Percent Charge
Latest from Previous 1 Year 3 Months
Month Month 1970 Earlier Earlier s
United States May 78
Japan Jan 78
West Germany Apr 78
France Jan 78
United Kingdom Jun 78
Italy Mar 78
Canada , May 781 1.0 1 4.1 I 3.5 ~ 2.2
'Seasonally adjusted.
'Average far latest 3 months compared with average for previous 3 months.
WAGES IN MANUFACTURING'
Average
Average
Annual Growth Rate Since
Annual Growth Rate Since
Percent Change __-
Latest from Previous
1 Year 3 Months
Latest from Previous 1 Year Previous
Period Period
1970 Earlier Earlier r
United States
Japan
Quarter
78 I
Quarter
1970
Earlier
Quarter
United States
Japan
Jun 78
Mar 78
0.5 '
-0.2
7.6
16.2
7.6
7.7
7.2
8.3
West Germany
78 I
West Germany
78 I
0,9
8.9
4.3
3.9
France
77 IV
France
77 IV
3.1
14.1
12.0
12.9
United Kingdom
77 IV
United Kingdom
Jan 78
0.5
14.7
3.3
2.7
Italy
Canada
-3.7 i
4.8I
- 12.7 I
-14.1
Italy
Canada
Apr 78
0
20.1
17.4
13.4
'Seasonally adjusted.
MONEY MARKET RATES
' Hourly earnings (seasonagy adjusted) for the United States, Japan, and Canada; hourly wage
rates far others. West German and French data refer to the beginning of the quarter.
' Average for latest 3 months compared with that far previous 3 months.
Percent Rate of Interest
I Year 3 Months 1 Month
Latest Date Earlier Earlier Earlier
United States
Commercial paper
~ Jul 19
Japan
Call money
Jul 21
West Germany
Interbank loans (3 months)
Jul 19
France
Call money
Jul 21
United Kingdom
Sterling interbank loans (3 months)
Jul 19
Canada
Finance paper
Jul 19
Eurodollars
Three-month deposits
Jul 19
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 or a ease ~
EXPORT PRICE 07/03/08
us $
Average
Annual Growth Rate Since
Percent Change
Latest from Previous 1 Year 3 Months
Month Month 1970 Earlier Earlier
CI-9T89~1Qq~02A000700060006-2
National Currency
Latest
Month
Percent Change
from Previous
Month
Average
Annual Growth Rate Since
1970
1 Year
Earlier
3 Months
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
Jun
78
1.2
11.4
16.7
-3.8
United Kingdom
Jun
78
0.1
15.2
9.2
13.1
Italy
Dec
77
0.9
10.7
8.6
- 1.3
Italy
Dec
77
0.6
15.8
9.6
-4.7
Canada
Apr
78
-
0.2
8.3
-1.2
-13.6
Canada
Apr
78
1.2
9.5
7.3
-0.2
IMPORT PRICES
National Currency
Average
Annual Growth Rate Since
Percen
t Change
- - " -
1 Year 3 Months
Latest from
Previous
1 Year 3 Months
En
d of
Billion US $ Jun 1970 Earlier Earlier
Month M
onth
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
Jun
78
4.1
27.3
17.4
29.2
Japan
May 78
5.3
7.1
-17.0
-12.3
West Germany
May
78
8.8
40.0
34.8
41.9
West Germany
Apr 78
-3.1
3.1
-6.3
- 11.1
France
Apr
78
4.4
10.6
10.0
0.1
France
Apr 78
-2.2
9.3
0.2
-1.6
United Kingdom
Ma
y 78
2.8
17.3
10.0
21.4
United Kingdom
Jun 78
1.1
17.6
3.0
16.3
Italy
Ma
y 78
4.7
12.2
7.9
11.4
Italy
Dec 77
-0.7
19.5
9.7
-13.1
Canada
Jun
78
9.1
4.7
5.1
4.0
Canada
Apr 78
1.5
8.9
10.6
-2.1
'
CURRENT ACCOUNT BALANCE'
BASIC BALANCE
Current Account and Long-Term Capital Transactions
Cumulative (Million US $)
Latest
Period Million US $ 1977 Change
Latest
Period
ublished'
er
No lon
430
2
115 - 1
954 -20
-6
-18,685
United States
p
g
United States
Japan
78 I
Jun 78
78
Ma
,
2,330
323
,
19,925
3,584
,
6,756
2,659
13,169
926
Japan
West Germany
Jun 78
May 713
1,280
-722
13,460
-1,648
4,841
2,472
8,619
-4,120
West Germany
France
United Kingdom
Italy
y
78 I
77 IV
77 III
0
682
2,390
-3,179
-14
1,629
- 5,721
-2,172
- 2,028
4
2,541
2,157
3,657
120
France
United Kingdom
Italy
Canada
78 I
77 IV
77 III
78 I
-1
1,389
2,520
-668
-3,218
5,353
2,128
-496
-6,842
-2,254
-2,083
3,557
3,624
7,607
4,211
-4,053
Canada
78 I
-1,273
- 5,204 - 5,32
' Converted to U5 dollars at the current market rates of exchange.
han
e
f
I As recommended by the Advisory Committee an the Presentation of Balance of Payments
g
.
exc
Converted to US dollars at the current market rates o
Statistics, the Department of Commerce no longer publishes a basic balance.
s Seasonally adjusted.
'
EXCHANGE RATES
TRADE-WEIGHTED EXCHANGE RATES
Spot Rate
As of 21 Jul 78
us $ 1 Year 3 Months
Per Unit 19 Mar 73 Earlier Earlier 14 Jul 78
1 Year 3 Months
19 Mar 73 Earlier Earlier 14 Jul 78
Japan (yen)
0.0050
30.34
31.4
9 10.9
9 0.49
United States
- 1.92 - 6.8
2 -120 -0,21
West Germany
0.4873
37.62
11.2
1 0.7
5 -0.05
Japan
34.81 28.
89 10.16 0.38
(Deutsche mark)
West Germany
30.31 2.
33 -1.24 - 0.43
France (franc)
0.2257
2.39
9.6
2 4.0
0 0.43
France
- 7.14 0.
12 2.35 0.14
United Kingdom
1.9115
-22.33
11.1
7 4.7
4 1.41
United Kingdom
- 28.17 4.
21 3.00 1.15
(pound sterling)
Italy
-41.87 -4.
57 0.52 -0.03
Italy (lira)
0.0012
-33.16
4.4
1 2.5
1 0.25
Canada
-11.59 -8.
54 -0.50 -0.33
Canada (dollar)
0.8892
-10.88
-5.8
3 0.5
2 -0.20
based on each listed country's trade with 16 other industrialized countries to
i
hti
' W
i
s
ng
e
g
reflect the competitive impact of exchange rate variations among the major currencies.
Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
 Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
UNITED STATES
1975 ..........................
1976 ..........................
1977 ..........................
1st Qtr ................
2d Qtr ...............
3d Qtr ................
4th Qtr ................
JAPAN
1975 ..........................
1976 ..........................
1977 ..........................
1st Qtr ...............
2d Qtr ................
3d Qtr ................
4th Qtr ................
1978 ..........................
Jan ........................
WEST GERMANY
1975 ..........................
1976 ..........................
1977 ..........................
1st Qtr ................
2d Qtr ................
3d Qtr ................
4th Qtr ................
FRANCE
1975 ..........................
1976 ..........................
1977 ..........................
1st Qtr ................
2d Qtr ................
3d Qtr ................
4th Qtr ................
1978
Jon ........................
UNITED KINGDOM
Exports to (f.o.b.)
Big Other
Seven OECD OPEC
Com-
munist Other
107.65 46.94 16.25 10.77 3.37 29.82
115.01 51.30 17.68 12.57 3.64 29.44
120.17 53.92 18.53 14.02 2.72 30.98
29.46 13.75 4.73 3.13 0.86 6.99
31.67 14.39 4.81 3.69 0.71 8.07
28.75 12.23 4.39 3.58 0.47 8.08
30.29 13.55 4.60 3.62 0.68 7.84
55.73 16.56 6.07 8.42
67.32 22.61 8.59 9.27
81.11 28.02 9.73 12.03
17.89 5.89 2.45 2.46
19.73 6.73 2.41 2.91
20.63 7.40 2.47 3.05
22.86 8.00 2.40 3.61
5.16 15.87
4.93 17.84
5.32 26.01
1.36 5.73
1.19 6.49
1.33 6.38
1.44 7.41
91.70 28.33 36.44 6.78 8.81 11.05
103.63 33.44 41.86 8.25 8.72 11.04
119.28 39.01 48.00 10.78 8.59 12.90
28.19 9.28 11.62 2.31 2.11 2.87
29.20 9.59 11.79 2.69 2.07 3.06
28.75 9.20 11.45 2.71 2.26 3.13
33.14 10.94 13.14 3.07 2.15 3.84
52.87 20.00 15.50 4.90
57.05 22.49 16.15 5.68
65.00 25.90 18.19 5.97
15.68 6.25 4.55 1.40
16.69 6.60 4.79 1.57
14.75 6.02 4.08 1.32
17.88 7.03 4.77 1.68
3.13 8.61
3.23 8.75
3.00 11.94
0.75 2.73
0.83 2.90
0.67 2.66
0.75 3.65
Imports from (c.i.f.)
Big Other Com-
World Seven OECD OPEC munist Other
103.42 49.81 8.83 18.70 0.98 25.08
129.57 60.39 9.75 27.17 1.16 31.09
156.70 70.48 1 T.08 35.45 1.22 38.47
37.37 16.07 .2.76 8.97 0.30 9.27
40.45 18.14 2.77 9.31 0.35 9.88
39.50 17.73 2.78 8.92 0.32 9.75
39.38 18.54 2.77 8.25 0.25 9.57
57.85 16.93 6.08 19.40 3.36
64.89 17.58 7.78 21.88 2.91
71.33 18.87 7.93 24.33 3.41
17.44 4.72 1.84 6.24 0.79
17.88 4.88 2.10 5.74 0.86
17.63 4.68 1.84 5.88 0.84
18.38 4.59 2.15 6.47 0.92
12.05
14.72
16.79
3.85
4.30
4.39
4.25
76.28 27.09 27.78 8.24 4.87 8.21
89.68 31.28 32.64 9.73 5.93 10.01
102.63 36.38 37.37 10.12 6.14 12.62
24.45 8.46 8.85 2.58 1.42 3.14
25.21 9.09 9.04 2.43 1.54 3.11
25.27 8.99 8.97 2.54 1.65 3.12
27.70 9.84 10.51 2.57 1.53 3.25
53.99 23.04 14.33 9.43 1.94 5.21
64.38 27.81 16.93 11.36 2.24 6.01
70.50 30.28 18.24 11.82 2.46 7.70
17.89 7.50 4.84 3.06 0.52 1.97
17.96 7.84 4.71 2.65 0.61 2.15
16.14 6.99 3.85 2.87 0.62 1.81
18.51 7.95 4.84 3.24 0.71 1.77
1975 ..........................
1976
44.03
12.55
16.59
4.55
1.56
8.64
53.35
18.47
18.52
6
91
1
68
7
67
..........................
1977
46.12
14.03
17.53
5.13
1.39
7.92
55.56
19.66
18.81
.
7
29
.
2
08
.
7
65
..........................
57.44
16.99
22.56
678
1
63
9
48
.
.
.
1
t Qt
.
.
63.29
24.02
21.34
6
31
2
40
9
22
s
r ................
2d
13.14
4.02
5.16
1.51
0.35
2.10
15.45
5.80
5.12
.
1
78
.
0
49
.
2
2
Qtr ...............
3d
14.35
4.20
5.72
1.69
0.44
2.30
16.52
6.02
5.73
.
1
70
.
0
58
.
6
2
49
Qtr ................
14.59
4.47
5.55
1
75
0
46
2
36
.
.
.
4
h
.
.
.
15.20
6.05
4.74
1
44
0
66
2
31
t
Qtr ................
15.36
4.30
6.13
1
83
0
38
2
72
.
.
.
1978
Jan ........................
.
.
.
16.12
6.15
5.75
1.39
0.67
2.16
ITALY
6.27
2.42
2.27
0.64
0.18
0.76
1975
1976
..........................
34.82
15.61
7.86
3.72
2.46
4.67
38.36
17.32
6.75
7
85
2
09
4
34
1977
..........................
36.96
17.41
8.69
4.23
2.18
3.96
43.42
19.35
8.04
.
8.12
.
2
65
.
5
24
.
.
1st
2d
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
3d
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
Qtr ................
10.93
5.01
2.51
1
41
0
63
1
37
.
.
.
O
&
.
.
.
10.55
4.39
1.80
2
10
0
73
1
53
ct
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 2007/03/08 : CIA-RDP80T00702A00070006000
 Approved For Release 2007/03/08 : CIA-RDP80TOO702AO00700060006-2
Developed Countries: Direction of Trade'
(Continued)
Imports from (c.i.f.)
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 2007/03/08 : CIA-RDP80TOO702AO00700060006-2
 Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
FOREIGN TRADE BILLION US $, f.o.b., seasonally adjusted
United States
14.0
12.0
10.0
West Germany
10.0
8.0
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
Approved For Release 2007/03/08: CIA-RDP80TOO702A
 Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
United Kingdom
JAN
APR JUL OCT
JAN APR
JUL
OCT JAN
APR JUL
OCT
MONTH
US $ 1978
1977
CHANGE
11,754 54,237
50,167
8.1%
376
5
32
428
26
583
22
0%
MAY 78
13,892 69.009
58.447
18.1%
.
5.57
,
33.777
,
29.467
.
14
6%
Balance
-2,238 -14,771
-8,280
-6,491
Balance
-195
-1,349
-2,884
.
1,536
Japan
JUN 78
1,794 47,131
38,859
21.3%
Italy
MAY 78
4,276
20,329
17.623
15.4%
4.86 32.365
30.319
6.7
4,358
19,314
18,630
3
7%
Balance
2,930 14,767
8,540
6,227
Balance
-82
1,014
-1,008
.
2,022
West Germany
MAY 78
70,313 55,032
46,735
17.8%
Canada
MAY 78
a ;21
18.983
17 435
8
9%
8.522 45,808
38.60
18.7
3.40 1
17.447
16
713
.
4
4%
Balance
1,791 9,224
8,128
1,096
Balance
.
.
France
MAY 78
5,342 31,008
25,833
20.0%
---6321 .309-73
27083
--t4 x)%
Balance
21 35
-1,200
1,235
Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
 Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
FOREIGN TRADE PRICES IN US $1
United States INDEX: JAN 1975 =100
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1974 1975
1-Export and import plots are based on five-month weighted moving averages.
A-16
Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
 Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
APR JUL OCT JAN APR JUL OCT
1977 1978
576675 7-78
Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
 Approvv$ ftrrtye6p,Q gf8PRdDeBA.Tr0A7A2A?@0700060006-2
MONEY SUPPLY'
INDUSTRIAL
PRODUCT
ION '
Average
Annual
Growth Rate Since
Average
Percent Change
Annual Growth Rate
Since
Latest
from Previous
1 Year
3 Months
Percent Change
Month
Month
1970
Earlier
Earlier'
Latest
from Previous
1 Year 3
Months
I
Period
Period
1970
Earlier
Earlier .
Brazil
Mar 78
2.7
36.4
43.3
34.7
India
Jan 7$
2.5
5.0
5.1 ~
4.6
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
Mar 78
- 5.1
5.1
3.4
-2.0
South Korea
Apr 78
0.4
31.4
33.3
34.4
Nigeria
78 I
6.8
11.0
0.2
29.9
Mexico
Apr 78
1.2
20.4
30.8
28.9
Taiwan
Apr 78
1.5
15.3
17.41
- 2.0
Nigeria
Oct 77
0.6
36.3
46.9
32.6
Taiwan
Mar 78
5.3
25.2
31.0
24.3
Seasonally adjusted.
Thailand
Nov 77
3.3
13.1
12.3
4.7
Average far latest 3 months compared with average far previous 3 months
.
Seasonally adjusted
-
Average for latest 3 months compared with average for previous 3 months.
CONSUMER
PRICES
Average
WHOLESALE
PRICES
Annual Growth Rate
Since
Average
Percent Cho
Latest
from Previous
1 Year 3 Months
Ann
ual Growth
Rate Since
Month
month
1970
Earlier
Earlier `
Percent Cha
nge
Latest
from Previous
1 Year
Brazil
Jun 78
4.1
28.3
38.0
- 46.0
Month
month
1970
Earlier
India
Mar 78
0.3
7.5
2.9
- 10.5
Brazil
May 78
3.4
28.4
34.5
Iran
Apr 78
1.8
12.6
15.3
29.7
India
May 78
0.6
8.0 1
-2.8
South Korea
May 78
1.0
14.4
12.6 1
-
9.0
Iran
Apr 78
1.0
11.1
12.5
Mexico
May 78
1.0
15.0
17.2
13.0
South Korea
May 78
0.8
15.9
11.2
Nigeria
Dec 77
3.2
16.6
31.0
20.3
Mexico
May 78
2.5
16.5
16.3
Taiwan
Apr 78
1.8
10.1
7.6
11.3
Taiwan
Mar 78
1.1
8.2
1.2
Thailand
Apr 78
1.0
8.6
8.8
11.3
Thailand
Jan 78
-0.2
9.5
6.4
EXPORT PRICES
OFFICIAL RESERVES
US$
Average
Million US $
Annual Growth Rate
Since
Latest Month -
---- --
---- -
Percent Charge
------
1 Year
3 Months
Latest
from Previous
1 Year
3 Months
End of
Million US $ Jun 1970
Earlier
Earlier
Month
Month
1970
Earlier
Earlier
Brazil
Feb 78
6,733
1,013
5,8781
5,994
Brazil
Feb 78
I 0.4
14.1
1.5
25.6
India
Mar 78
5,823
1,006
3,747
5,184
India
Mar 77
-0.9
9.6
17.9
36.5
Iran
May 78
12,468
208
11,460
13,728
Iran
Mar 78
0
32.0
0
0
South Korea
Apr 78
4,138
602
3,247
4,418
South Korea
77 IV
4.6
8.9
8.8
19.5
Mexico
Mar 78
1,766
695
1,422
1,723
Nigeria
May 76
-0.1
27.3
12.3
8.7
Nigeria
May 78
2,610
148
4,740
4,186
Taiwan
Dec 78
-0.7 1
11-2
3.8
-2.0
Taiwan
Mar 78
1,433
531
1,349
1,447
Thailand
1 Mar 76
2.0
13.3
13.1
77.7
Thailand
May 78
2,129 i
978
2,005
2,087
Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
 Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
FOREIGN TRADE, f.o.b.
Latest 3 Months
Percent Change from
Cumulative (Million US S)
3 M
th
1 Y
-
on
s
ear
------
Latest Period Earlier' Earlier 1978 1977 Change
May 78 Exports
84.8
-3.7
4,743
4,979
-4.7%
May 78 Imports
26.6
1.4
5,110
4,939
3.5%
May 78 Balance
-367
40
-407
Feb 78 Exports
4.0
12.3
912
917
-0.4%
Feb 78 Imports
-39.6
- 0.2
845
916
-7.7%
Feb 78 Balance
67
1
66
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
Apr 78 Exports
-21.1
-3.1
1,576
1,458
8.1%
Apr 78 Imports
-47.9
16.2
1,809
1,492
21.2%
Apr 78 Balance
-233
- 34
-199
Nigeria
Apr 78 Exports
-55.0
-29.8
1,145
1,597
-28.3%
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
Feb 78 Exports
76.0
8.2
635
574
10.6%
Mar 78 Imports
-8.8
13.7
1,069
940
13.7%
Feb 77 Balance
- 29
- 23
Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
 Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
AGRICULTURAL PRICES MONTHLY AVERAGE CASH PRICE
$ PER BUSHEL
7.5
1-19 JUL II 1-19 JUL II 0
1974 1975 1976 1977 1978 0 0 1974 1975 1976 1977 1978
RICE
37.5 $ PER HUNDRED WEIGHT
No. 2 Medium Grain. 4% Brokens.
f.o.b. mills, Houston, Texas
1-19 JUL II
1-10 JUL II
1974 1975 1976 1977 1978 U U 1974
1.0 S PER POUND
Memphis Middling 1 1/16 inch
19 JUL 0.5990
12 JUL 0.5886
JUN 78 0.5925
JUL 77 0.5938
12 JUL 146.67
300 JUN 78 169.53
1,500 JUL 77 221.52
1,000
200
1975
COFFEE
2,000 Other Milds Arabicas, ex-dock New York
350 19 JUL 127.67
TEA
London Auction
MAY 94.9
APR 97.9
MAR 106.1
JUL 77 133.2
8,000
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SOYBEAN MEAL
$ PER TON
500
400
19 JUL
170.00
12 JUL
176.00
400
JUN 78
189.36
320
JUL 77
163.35
UNITED STATES
Wholesale Steer Beef,
Midwest Markets
24 JUN 85.58 91.46
1-19 JUL II
Crude, Bulk, c.i.f. US Ports
19 JUL 0.3150
0.1 12 JUL 0.3150
1-19 JUL I
1976 1977 1978
19 JUL 0.2505
12 JUL 0.2652
JUN 78 0.2686
JUL 77 0.2377
JUN 78 0.3061
JUL 77 0.2500
p PER POUND
120 ,
AUSTRALIA
Boneless Beef,
f.o.b., New York
80
1974
FOOD INDEX
500
1-11 JUL II
1974 1975 1976 1977 1978
576673 7-78 CIA
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.
1-19 JUL 11 100
1976 1977 1978
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 Approved For Release 2007/03/08 : CIA-RDP80T00702A000700060006-2
INDUSTRIAL MATERIALS PRICES MONTHLY AVERAGE CASH PRICE
140
COPPER WIRE BAR
C PER POUND
LEAD
$ PER METRIC TON 45 C PER POUND
LME
1_JS
3,000
LME
U3
19 JUL
59.6
64.6
19 JUL
25.8
31 0
12 JUL
60.6
65.6
12 JUL
27.0
31 0
JUN 78
60.2
66 3
JUN 78
25.8
31 0
JUL 77
56.4
63.4
2,500
35
JUL 77
25.3
31 0
1-19 JUL 1,000 1-19 JUL II 200
1974 1975 1976 1977 1978 10 1974 1975 1976 1977 1978
1-19 JUL 0 150 1-19 JUL 11 4,000
1974 1975 1976 1977 1978 1974 1975 1976 1977 1978
125 225
100 200
75 175
50 150
MP U'.0 J 241.6
19 JUL 240.0 24c.2
12 JUL 230.0 24'.5
JUN 78 227.7 24' .6
JUL 77 167.0 145 6
~.~ 2 35.0
1-17 JUL I 0 100 1-19 JUL L)
1974 1975 1976 1977 1978 1974 1975 1976 1977 1978
JUL 77 24.5 34.0 1,500 JUL 77 473.2 518.0
TIN
$ PER METRIC TON 650 C PER POUND
- '
LME Us LME US
19 JUL 26.0 31.0 2,000 19 JUL 558.9 605.8 J to 607.3
12 JUL 26.7 31.0 550 12 JUL 566.1 609.6 ?J~,r 560.812,000
JUN 78 ' 1 30 6 JUN 78 558 4 600 6 F
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ALUMINUM
Major US Producer
9 per pound
55.00
53.00
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
4 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
16,772.00
21,549.00
22,821.00
13,954.00
MERCURY
New York
$ per 76 pound flask
155.00
124.33
126.23
110.00
SILVER
LME Cash
t per troy ounce
529.22
472.49
446.93
478.82
GOLD
London Afternoon Fixing Price $ per troy ounce
184.44
160.45
140.78
125.71
RUBBER
60 C PER POUND
LUMBER INDEX6
160
10
1974 1975
1-19 JUL II
1976 1977 1978
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.
6This index is compiled by using the average of 13 types of lumber whose
prices are regarded as bellwethers of US lumber construction costs.
100
1974 1975
1-11 JUL11
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 2007/03/08 : CIA-RDP80T00702A000700060006-2
pprov or efease 2007/037aff -xC1i4-RDP80T00702A000700060006-2