ECONOMIC INTELLIGENCE WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00702A000900030002-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 54
• Document Creation Date: December 15, 2016
• Document Release Date: July 7, 2004
• Sequence Number: 2
• Publication Date: October 19, 1978
• Content Type: REPORT

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Foreign
assessment
e ter
Economic Intelligence
Weekly Review
On file Department of
Agriculture release
instructions apply.
ER EtWR 79-042
19 October 1978
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ECONOMIC INTELLIGENCE WEEKLY REVIEW
I Current Survey .....................................................................................
Major Recent Developments Affecting the International Economy
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Turkey: Ecevit Riding Out Economic Troubles and Political Violence ..........
The Prime Minister reaps the benefits from his take-charge attitude, a
high-visibility foreign policy, and divisions among his political opponents.
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China: Fundamental Change in Foreign Economic Policy ........................... 17
Peking is exploring hitherto proscribed credit arrangements and joint
ventures with major trading partners.
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Spain: Solid Improvement in Financial Situation ......................................
At a cost in short-term growth and employment, Prime Minister Adolfo
Suarez' centrist government is putting the Spanish financial house in
order.
Iran: Nuclear and Military Programs Victims of Political Unrest ................. 25
The Shah has agreed to free funds from these cherished programs to
boost rural development, transportation, and social welfare projects.
Notes ....................................................................................................
China Continues Expansion of Merchant Fleet
Indian Floods Curtail Industrial Growth
Soviet Official Hints at Bigger Grain Buy
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Current Survey
MAJOR RECENT DEVELOPMENTS AFFECTING THE
INTERNATIONAL ECONOMY
OECD Unemployment
Both CIA/OER and the Organization for Economic Cooperation and Develop-
ment see little prospect for improvement in the unemployment picture in key
industrial countries this year or next. Generally speaking, unemployment rates are
double the rates prevailing in the decade before the oil price hike, with the situation
particularly serious in steel, textiles, footwear, and consumer electronics. Only Bonn
and, to a lesser degree, Tokyo have launched stimulation programs that will at least
prevent their jobless rolls from swelling further. Most other OECD countries are more
concerned with trimming their inflation rates.
Selected Industrial Countries: Unemployment Rates'
1965-74
Annual Average Current Rate 2 1979 Prospects
(Percent) (Percent)
Japan 1.2 2.3 Level.
West Germany ...... 1.2 4.4 Slight decrease.
France 1.9 5.8 Increase.
United Kingdom ......... 2.5 5.8 Increase.
Canada 5.0 8.5 Increase.
Italy" ........ ....:........ 7.5 Increase.
Rates do not permit cross-country comparisons.
2 Latest rate available.
a Change from current rate.
Flistorial' data for Italy are not comparable with current rate.
The momentum built up prior to the Bonn Summit to complete Multilateral
Trade Negotiations discussions by yearend 1978 is in danger of losing steam.
Supporters of the trade negotiations still hope-in meetings scheduled in Geneva,
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Florida, and Washington-to settle the major issues between developed countries by
the self-imposed deadline of 15 November. The Economic Community is having
trouble keeping individual countries in line. Paris-never a strong backer of the trade
discussions-wants the EC to impose new restrictions on US exports of grain
substitutes. Denmark is pushing for retaliatory action if the US Congress refuses to
extend the waiver on countervailing duties for EC food shipments to the ljnited States.
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The oil market has tightened in recent weeks because of advanced liftings by oil
companies in anticipation of the likely 1 January 1979 price hike by the Organization
of Oil Exporting Countries and because of strategic stockbuilding in OECD countries.
So far labor unrest in Iran has not affected oil production or exports although
prolonged strikes which delay necessary maintenance would increase the probability
of output-crippling accidents. Kuwait, among others, is arguing that the recent
upswing in liftings justifies a sizable hike-10 to 15 percent at least-in crude oil
prices on 1 January 1979.
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TURKEY: ECEVIT RIDING OUT ECONOMIC TROUBLES
AND POLITICAL VIOLENCE
The nine-month-old government of Prime Minister Bulent Ecevit seems likely to
remain in power for several more months, even though it has failed to get on top of
Turkey's economic crisis or stop the spread of political violence. The electorate and
the military are bothered less than outsiders might think by the government's
shortcomings. Moreover, Ecevit reaps political benefits from a take-charge attitude, a
high-visibility foreign policy, and divisions among his political opponents. If Ecevit's
Republican Peoples Party government eventually falls, internal strains-factional
squabbles, personality clashes, and sheer political opportunism as well as policy
differences-will play key roles.
The Economy: Payments and Debt Problems
Last January Prime Minister Ecevit inherited an economy badly weakened by
general mismanagement, which had culminated in a yearlong payments crunch.
Turkey, with an annual GNP of roughly $45 billion, had short-term foreign debt of $5
billion to $6 billion overdue or falling due in less than a year. The current account
deficit had reached $3.4 billion in 1977. Inflation was running at an annual rate of 40
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to 50 percent. Unemployment exceeded 15 percent and was rising. Private foreign
banks had tied prospective loans, needed to maintain imports, to conclusion of an
agreement between Ankara and the International Monetary Fund (IMF) that would
obligate the Turks to implement stabilization measures. Yet negotiations leading
toward such an agreement had moved only haltingly.
Turkey: Balance of Payments
1974
1975
1976
19771
19782
Trade balance ...............................................................
-2,245
-3,338
-3,168
-4;043
-2,700
Exports, f.o.b. ..._.......... ........... ............ ._ ..................
1,532
1,401
1,960
1,753
2,300
Imports, c.i.f..._ .........................................................
3,777
4,739
5,128
5,796
5,000
Invisibles balance .......... ............. ..... ..._._ ....................
1,527
1,458
868
658
800
Interest payments ............... ............ .......... ........ ......
-102
-124
-217
-320
NA
Worker remittances .............. ..................... ............ ..
1,426
1,312
983
982
NA
Other ............... ............................ .................... ..........
203
270
-102
-4
NA
Current account balance ............................................
-718
-1,880
- 2,300
- 3,385
-1,900
Long-term capital account balance ........... ........_.....
290
520
619
457
550
Principal repayments ................................................
-126
-118
-119
-214
NA
Project credits _ ....................... .......... ...._..._.............
268
381
570
499
NA
Other (net) ....._....... ...._........ .._ ............... ........ ......
148
257
168
172
NA
Basic balance .... .._ ..................... ...._............................. .
-428
-1,360
-1,681
-2,928
-1,350
Short-term capital account balance' ....................
-60
-666
--1,520
-2,719
-300
Balancing items ........... ...................... _._...._------ ......
-368
-694
-161
-209
-200
Reserve movements .......... ..................... ..............
-259
-797
59
-350
IMF drawings ......_ ...................._.....__.._._...._....
-287
-150
-200'
Errors & ommissions ............................................
-109
390
- 70
141
Financing gap ....................:......._....................:......_
-850
Potential additional resources ......................................
5351
Remaining financing gap .................. ._._................. .
-315
The Ecevit government got off to a good start in the economic area. Last
February and March it sharply devalued the lira, trimmed the 1978 budget, and
tightened credit and travel restrictions. A two-year standby agreement for SDR 300
million (roughly $370 million) was approved by the IMF in April, and the first
disbursement followed soon thereafter.
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Although Ankara did succeed in rescheduling $1.0 billion to 1.5 billion of official
and officially guaranteed loans with OECD governments in May, its performance on
private debt has been another matter. Turkey's insistence on softer repayment terms
for one grouping of $2.5 billion in outstanding short-term private debt prolonged
refinancing negotiations, and major banks declined to consider new credits until
outstanding obligations had been cleared. Refinancing arrangements are only now
being concluded, with all correspondent banks expected to agree to the terms
sometime this month or next. Nothing has been done about still another $1.5 billion to
2.0 billion in private debt, consisting mostly of trade arrears with individual foreign
suppliers. New credits are unlikely to amount to more than $500 million, in contrast to
the $1.0 billion to 1.5 billion that had been widely expected to follow an IMF accord.
Ankara's evident lack of urgency in dealing with the foreign exchange problem
has exhausted the patience of many foreign suppliers and banks. Imports, which held
up well in 1977 despite mounting payments arrears, have fallen sharply this year.
Many industries are operating at half capacity for lack of imported machine parts,
packaging materials, or product components. Unemployment is nearing 20 percent,
and inflation is still running at over 50 percent.
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Worsening Violence
Turkish political violence, something of a way of life even before Ecevit became
Prime Minister, is accelerating. Clashes between left and the right extremists in the
cities are now causing more than twice as many deaths as they did a year ago; deaths
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now average well over one per day. Moreover, clashes no longer are confined mainly
to university campuses, nor did violence abate much when the students went home for
the summer vacation. To the violence that has become a standard part of the urban
scene must be added the frequent clashes among Kurdish factions and between Kurds
and government forces in remote eastern Turkey.
Political Dynamics
Neither his failure to reduce violence nor his weak economic record seems to
have seriously damaged Ecevit's domestic political standing. Although many Turks
find the pace of violence disturbing, they do not seem to blame Ecevit for failing to
stop it. Indeed, political partisanship runs so deep that even those who condemn the
fighting in the abstract often condone the actions of one side or the other.
The political impact of economic troubles is hard to predict, but Ecevit is under
if-Ss re than outsiders would think.
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To spur the acquisition of foreign technology under the 10-year modernization
plan (1976-85), China is exploring hitherto proscribed forms of economic cooperation
involving long-term credits and joint ventures. Although self-reliance is still pro-
claimed as a fundamental national policy, its definition is being stretched to embrace
almost any economic activity that does not openly infringe national sovereignty.
Flexibility With a Vengeance
In order to acquire foreign equipment and technology for its modernization
drive, Peking is now exploring an unusually wide variety of commercial arrangements
that would not have been possible in the years of political turmoil surrounding Mao's
last illness and death:
? Greater use of foreign credits than at any time in the past, including direct
loans from Western banks and borrowing for more than five years.
? Barter and compensation deals to finance imports of foreign machinery,
whole plants, and technology.
? Various forms of joint ventures with foreign firms for resource develop-
ment and manufacturing facilities.
? Establishment of specified export bases in various parts of China, with
local areas permitted to retain a greater share of the hard currency earnings.
? Liberalized export practices which permit the use of customer-supplied
labels, designs, packaging, raw materials, and even machinery needed to
produce goods up to customer specification.
Most of these activities are still in the negotiating stage. On credits, the Chinese
have reportedly agreed in principle to accept loans for capital purchases from the
Japan Export-Import Bank and from British and West German banks. These loans
eventually may total several billion dollars. Barter and compensation deals have been
discussed over the last few months with a number of Western firms, but no contracts
have been signed. Proposals have included repayment in kind for projects in coal
mining, petrochemicals, metals, electronic components, and consumer goods. At the
1978 spring Canton Fair, Chinese officials volunteered to discuss reprocessing
arrangements, involving customer-supplied materials and equipment; among firms
from developed countries, only Japanese companies have shown interest in the
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Chinese Proposal. According to a Chinese-controlled newspaper in Hong Kong, this
kind of arrangement is already under way with Hong Kong firms, in the fields of
textiles and light manufactures.
The status of joint venture arrangements-Peking's most far-reaching proposal-
is difficult to pin down. Reporting on the type and location of joint ventures the
Chinese are willing to entertain has been contradictory. Joint ventures with Western
oil companies for offshore oil development is the one fairly clear proposal. Peking
appears willing to permit oil companies to develop offshore oil resources on a risk
capital basis in return for a share of the output.
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These new trade and financial policies are still unfolding. In view of the
multibillion dollar capital import program now under way, China will require large
amounts of import financing and on longer terms. Barter and compensation deals have
appeal to the Chinese because the import costs are self-liquidating. Ultimately, higher
levels of exports will be needed to repay the credits so that Chinese efforts to boost
exports through cooperation with Western firms make sense. Still, both internal and
external problems may affect the scope and implementation of these policies.
Internally, opposition may persist both to the content of the new policies and to
the pace at which past policies are being modified. The Chinese press continues to
extol the wisdom of technology imports in an effort to win over the unconvinced. To
bolster the theoretical argument, the national Kwangming Daily in August 1978
published an article on Lenin's New Economic Policy in the 1920s, citing with
approval his use of foreign capital and technical assistance, joint ventures, and leases
and concessions to rebuild the Soviet economy. Ideological appearances are still
important to the Chinese. Direct government-to-government loans and direct foreign
investment in China remain absolutely prohibited.
cautioned by Peking to avoid terms such as joint venture and foreign investment in
drawing up proposals for the People's Republic. As for borrowing from foreign
sources, Chinese officials have created the facade of interest-bearing deposits by
foreign banks with the Bank of China. And by redefining terms, China can treat the
Japan Export-Import Bank as a private bank to justify the proposed resource
development loan.
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Even with domestic opposition placated, China will face problems in implement-
ing these measures on a large scale. Because Peking has not spelled out the details, both
Western firms and Chinese officialdom may be overestimating the possibilities for
agreement on compensation deals and joint ventures. For instance, Peking may prove
unwilling to permit sufficient managerial and technical control by the foreign partner
to assure adequate levels of output and quality of the products to be used for
repayment. The rapid and monumental shift in trade and financial policies has given
the leadership little time to think through all the implications. In several cases, notably
the offshore oil negotiations, Chinese officials have appeared unaware of the
complexity of these ventures and have seemed disappointed at the lengthy develop-
ment and payback period involved.
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SPAIN: SOLID IMPROVEMENT IN FINANCIAL SITUATION
Prime Minister Adolfo Suarez' centrist government is putting the Spanish
financial house in order by reining in foreign borrowing, building reserves, and
moving to improve domestic financial practices and institutions. Spain's growing
creditworthiness is reflected in the lower interest rates and longer repayment periods
that both official and private borrowers have been getting from foreign lenders. The
principal factor behind the reduction of net borrowing abroad has been Madrid's
success in cutting the current account deficit from $4.3 billion in 1976 to less than
$500 million this year. In addition to giving top priority to narrowing the current
account gap and slowing inflation, the government is admitting foreign banks,
decontrolling interest rates, and taking other steps to increase the efficiency and
capability of the banking system and the capital market. These changes should
improve the allocation of capital, particularly to new and small firms, and further
reduce demand for financing abroad.
The government carefully weighed the potential political and economic costs of
its stabilization measures and financial reforms. By gaining the support of all major
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political parties, Suarez has effectively neutralized the political fallout from slow
economic growth and high unemployment. Only strong growth in public spending and
exports is permitting even a small increase in gross national product.
Checking Foreign Borrowing
Spain borrowed heavily abroad beginning in 1974 to cover mounting current
account deficits caused by the quadrupling of oil prices and global recession. Total
foreign debt, public and private, rose from about $5.5 billion at yearend 1974 to $13.9
billion at yearend 1977. The increase in debt and other serious economic problems
went largely unattended because of the political uncertainty that had prevailed since
before Generalissimo Franco's death in 1975. By mid-1977 Spain was in desperate
financial straits, with the current account in record deficit and foreign reserves
dwindling. The inflation rate exceeded 30 percent, and the peseta was clearly
overvalued against other currencies.
1974 1975 1976 1977
Total ........ ............ 5,500 ' 8,082 10,767 13,857
Public Debt .... .:..........:..... 1,959 3,269 5,133 7,032
State ................. 575 949 1,771 2,871
Railroad ......... .......... 431 681 815 949
National Institute of Industry (INI) .......... 415 503 522 529
INI enterprises ...; ...... ... ........... 538 738 1,529 2,144
Other public organizations ...... ... 0 398 496 539
Private Debt ..: .. . .. ........... ............ 3,541 4,813 5,634 6,825
With public guarantee _............... 648 792 928 1,095
Toll roads................................................. 507 672 825 1,007
Other ......... ............ 141 120 103 88
Without public guarantee ....... 2,893' 4,021 4,706 5,730
Toll roads ........ ......... NA 383 484 506
Other ...:.. ........ .......... NA 3,638 4,222 5,224
Elections in June 1977 gave the country a more broadly based government and
confirmed the trend toward democracy under Suarez. His new Union of the
Democratic Center government wasted little time in devaluing the peseta by 20
percent. Next, it launched a far-reaching stabilization program embodied in the
Moncloa Pact, which was signed by representatives of all major political parties in
October 1977. Moncloa Pact restrictions on money supply growth and wage increases
helped Madrid get the inflation rate down to the target level of 17 percent by yearend.
GNP growth, however, amounted to only 2.4 percent last year, and unemployment
continued to rise.
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Spanish exports surged after the July 1977 devaluation and were up 12 percent in
volume for the year. Exports are continuing to increase at a fast clip in 1978, while
weak domestic demand is containing imports. Import volume grew only 6 percent in
1977 and has leveled off so far in 1978. As a result, the trade deficit in 1978 should
decline to about $4 billion, the lowest level since 1973. Meanwhile, tourism has been
booming. The current account deficit was down to $2.5 billion in 1977 from a peak of
$4.3 billion in 1976. The 1978 current account deficit probably will be less than $500
million. GNP growth is expected to slow to about 2 percent this year; the unemploy-
ment rate, currently more than 8 percent, continues to edge upward.
Spanish authorities expect gross foreign borrowing to total $4.0 billion this year,
down from the original projection of $4.5 billion. Heavy borrowing in second-half
1977 and early 1978 exceeded requirements, thanks to the vigorous improvement in
the current account. As a result, foreign reserves have approximately doubled over the
past 12 months, to $9.3 billion. The central government is cutting its foreign borrowing
by about two-thirds from the level earlier planned for 1978; public enterprises are
reducing their borrowing as well. Private foreign borrowing probably is rising as
companies take advantage of a decline in Eurodollar rates and respond to an
anticipated moderate pickup in growth in 1979. All told, Madrid now expects foreign
debt to increase $1.4 billion this year, to $15.3 billion, the smallest increase in five
years.
The share of Spain's external debt owed by government agencies has grown from
less than one-third in the early 1970s to more than one-half today. Madrid is shifting
its foreign financing from medium-term commercial credit lines to longer term
Eurodollar, deutschemark, and yen instruments. Over the next four to five years,
Madrid plans to tap the US capital market for an increasing share of loan funds and is
optimistically soliciting a triple-A bond rating from US financial firms. The share of
loans from official sources, either multilateral or national, has declined from two-
thirds of public external debt just a decade ago to one-quarter today.
Terms offered Spain have improved considerably over the last few years because
of the strong improvement in the current account, the slowing of inflation, and the
unexpectedly smooth transition to democracy.
Movement toward structural reform of the financial system has helped to
enhance Spain's international financial standing. Prompted in part by the prospect of
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European Community membership, Madrid is intent on moving away from the old
Falangist bureaucratization and protectionism. A key element in the strategy is
liberalization of banking. Historically, Spanish banking has been characterized by
monopolistic practices, interlocking directories with big industrial firms, and a
combination of lax regulation and pervasive government intervention.
Last July, Madrid began to lower the mandatory quotas for bank purchases of
government securities and for bank lending to public and privileged private borrowers
at concessionary rates. The combined quota for savings banks, for example, is to be
reduced from a past high of 70 percent of total deposits to 35 percent by 1983. The
quotas for commercial banks and industrial banks will be lowered to 21 and 17
percent, respectively. Moreover, interest rates on state-directed loans have been
allowed to rise. Rigid interest rate controls on other loans and deposits of more than
two years were loosened in 1974. Last summer, the liberalization was extended to
transactions of more than one year.
The Bank of Spain has been given wider powers to inspect banks and to take
action to correct irregularities. New conflict-of-interest rules have been imposed to
guarantee the independence of the Bank of Spain itself; past governors of the Bank
have had very close ties with both government and industry.
The boldest move to increase competition in banking was the June decision to
allow foreign banks into Spain for the first time since the Civil War of the 1930s. The
government hopes competition from foreign banks will reduce the interest rates
demanded of nonprivileged borrowers, make more money available to small firms and
new industrial ventures, and generally upgrade banking services. Nevertheless,
stringent terms-a high initial capital requirement and strict limits on repatriation of
profits and dividends and on dealings in pesetas-are being applied to foreign banks to
prevent a destabilizing increase in competition. Madrid is expected to sanction the
establishment of eight to 10 foreign bank branches this year, giving preference to
banks that are big lenders to Spain and banks based in trading partner countries. Banks
from the United States, West Germany, the United Kingdom, France, Japan, and
perhaps Switzerland should figure in the first round of approvals.
The presence of foreign banks will increase Spain's attractiveness to outside
business firms, which have long been welcomed foreign firms on comparatively liberal
terms. Last year the government streamlined bureaucratic procedures faced by
international investors and reduced obstacles to expansion by foreign companies
already in Spain. While domestic investment has been falling over the last four years,
foreign direct investment rose sharply in 1977 and is headed for a record high in 1978.
The United States is by far the largest single source.
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A comprehensive fiscal reform package now is moving through parliament.
While the package includes guidelines on budget and accounting procedures, its heart
is tax reform. Up to now, Spain has relied on a regressive tax system that has produced
one of the lowest ratios of tax revenue to GNP in Western Europe. The system also has
one of the lowest elasticities of revenue to GNP growth. Tax evasion by both
individuals and firms is widespread. The new legislation will make direct taxes more
progressive and initiate value-added taxation along EC lines. Tax auditing will be
tightened, and prosecution of tax offenders will be toughened.
Madrid is moving to broaden the domestic capital market to improve the
efficiency of the economy and reduce the need for would-be borrowers to resort to
foreign financing. In the past, most firms have relied heavily on reinvested earnings
and/or funds brought in from abroad. Fixed income instruments like bonds and
mortgages have not been popular with suppliers of capital because of inflation, the
inflexibility of interest rates, and low liquidity stemming from the absence of well-
functioning secondary markets. Madrid is promoting development of the capital
market by decontrolling interest rates, relaxing oppressive financial regulations, and
moving away from state-direction of lending. The closer financial surveillance aimed
at reducing tax evasion will help indirectly; in the past, many firms stayed out of the
public capital market to avoid making financial disclosures that would have revealed
tax liability. The anti-inflation program should have the side effect of making lending
more attractive.
Looking Ahead
Gross public and private external borrowing is likely to grow only moderately
over the next few years, with much being used to refinance existing debt. Several
factors will hold down demand for foreign credit: current account deficits probably
will stabilize near the present low level; prospects are bright for foreign investment in
Spain; and the domestic capital market will expand gradually. Foreign reserves, now
at a record high, will provide a big cushion.
Spain should have no difficulty raising funds abroad. While hope for a triple-A
rating in the US bond market probably is premature, its creditworthiness is better now
than at any time in many years and continues to improve. Annual debt service of $3.3
billion to $3.8 billion seems in prospect over the next three years. The debt service
ratio probably will peak at a manageable 15 percent in 1979 and decline thereafter.
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IRAN: NUCLEAR/MILITARY PROGRAMS VICTIM TO POLITICAL UNREST
Tehran is being forced to reorder its economic priorities in light of continuing
political unrest. The expensive nuclear power and military programs-traditionally
most dear to the Shah and hitherto immune to cutbacks-are to bear the brunt of
shifts in the allocation of resources. Although the decision has been made to free funds
from these programs for rural development, improved transportation, and more social
welfare projects, most of the cutbacks will not impact until the early 1980s. Indeed, in
the short run both budget expenditures and the import bill will rise faster than
expected previously because of substantial wage and fringe benefit increases granted
to striking public sector workers.
Bread-and-butter issues apparently have been at the heart of the recent
widespread labor unrest, and observers in Iran see the hand of the Shah's religious and
political opposition acting behind the scenes to manipulate workers' grievances into
mass political protest against the Shah. Neither the conservatives nor the militant
leftists, who also participated in recent disorders, will take much solace from the
government's acknowledgment that it now finds it expedient to reconsider long-term
economic goals.
The Nuclear Program
Original Iranian plans called for construction of more than 20 nuclear power
reactors with a total installed capacity of 23,000 MW by 1993. With the recent
cutbacks, the nuclear power construction program apparently will be limited to two
reactors now being built by the West Germans at Bushehr on the Persian Gulf and two
more that the French have started on the Karun River. These four plants will provide
4,200 MW of capacity. The curtailment comes months after public calls by a member
of Iran's OPEC delegation, a government consultant on energy matters, and others for
a reevaluation of the program, Iranian officials also reportedly doubted the need for
such an ambitious program but were afraid to tell the Shah of their views.
The nuclear reactor plan was based on an unrealistic estimate of Iran's future
electric power requirements and was clearly unrealizable by 1993 even with massive
foreign help. The power plan, calling for 56,000 MW of electric power capacity in
place by the mid-1990s, was drawn up in 1974 in conjunction with the long-term
development plan and while Tehran was experiencing the heady days of bountiful oil
revenues. At that time, Iran was projecting an average annual growth rate of 31
percent in electricity consumption. Instead, annual consumption increases probably
have been on the order of 19 percent, and Iran probably will be able to meet demand
in the early 1990s with 25,000 to 28,000 MW of installed electric generating capacity.
19 October 1978 SECRET
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
Nevertheless, until recent weeks Tehran was proceeding with its nuclear power
programs, and the Shah was continuing to push the concept of Iranian energy
independence when the oil runs out. In addition to the four plants under construction,
a letter of intent had been signed with a West German supplier for four more plants
and negotiations for up to eight others were under way with French, US, and other
Western suppliers. Thus far, the West German company has not received official
notification of the cutback; it continues to work on site selection and related activities.
The Military Program
Iran's top military procurement official has told US officials that there will be
changes and postponements in miltiary equipment acquisition schedules. Tehran will
not go ahead with the purchase of 140 additional F-16 and 70 additional F-14 fighter
aircraft, which it has been pressing the US Government to approve. Iran also has
decided to forego the purchase of other fighter aircraft and several hundred self-
propelled howitzers, equipment for which US sellers had provided specifications and
price offers that Iran was expected to accept.
Budget and Payment Implications
Former Prime Minister Amuzegar has estimated that the nuclear/ military
cutbacks as well as some whittling down of an ambitious petrochemical program could
save the government some $8 billion to $10 billion. But such savings would not be felt
in the short term when Iran will have to meet the costs of increased benefits promised
public sector employees and may have to step up imports of consumer goods to mollify
unhappy workers hit by resurgent inflation. Moreover, Tehran already is committed to
pay out over the next five years an estimated $6 billion to $8 billion for the four
nuclear reactors under construction and $10 billion to $11 billion in military
equipment purchases from the United States.
Savings over the longer term could be substantial. Postponement or cancellation
of sophisticated new military programs would save several billion dollars. Using gas,
the most likely alternative to nuclear power, could result in considerable savings in
investment costs. Although fuel costs for nuclear facilities generally are substantially
below those for conventional power plants, the advantages are eliminated when
capital charges, including interest costs, are taken into account. For instance, a 1,384
MW gas-fired power station commissioned in July 1978 cost just $340 million, whereas
the 1,200 MW nuclear plants under construction will cost Iran $1.5 billion to $2.0
billion each, and additional ones could have cost almost double that. Iran's gas reserves
are so large-an estimated 600 trillion cubic feet-that substantial amounts should be
available to produce electric power as long as 40 to 50 years, even after other priority
requirements are met.
* Other priority areas for the gas include injection in oilfields to extend their life, exports to the USSR- through a
pipeline in operation since 1970 and a second to be completed in the early 1980s-and domestic household and
industrial use.
26 SECRET 19 October 1978
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
China Continues Expansion of Merchant Fleet
In the first nine months of this year, the People's Republic of China spent roughly
$500 million for more than 100 ships totaling 2.4 million deadweight tons, expanding
its international merchant fleet * by 32 percent. Of this total, around 500,000 DWT
have been assigned to the PRC-flag fleet, 385,000 DWT have been given to the Hong
Kong fleet, and 1.5 million DWT have not yet been assigned to one of the fleets. The
international fleet, making allowances for retirements and the comparatively minor
additions from China's own yards, now totals about 8.4 million DWT, ranking
approximately 15th among the world's merchant fleets. The Chinese have continued
an aggressive buying policy begun in May of last year, which added 1.7 million DWT
to the international fleet in 1977.
Bulk carriers for grain, ore, and fertilizer represent most of the new tonnage
acquired in 1978. General cargo ships represent the second largest category of ships
purchased. These latter ships are used in China's liner services ** to Western Europe,
South Asia, and Japan. Manned by low-wage crews, they are becoming increasingly
competitive in international shipping markets.
China has cautiously begun to purchase ships with more advanced maritime
technology, notably containerships and roll-on/roll-off. As part of its 10-year (1976-85)
development program, the government plans to modernize certain Chinese ports to
handle these types of ships. To date we have seen few major port improvements along
these lines. Ten second-hand Danish containerships and two roll-on/roll-off ships (one
from Japan and one from Denmark) have been purchased in 1978.
Indian Floods Curtail Industrial Growth
Recent exceptionally heavy flooding of industrial areas in and near Calcutta is
curtailing domestic industrial growth this year. Factories in parts of the states of West
Bengal and Bihar, which together account for about a quarter of national manufactur-
ing output, will be closed for several weeks. The flooding of mines may cost 7 million
to 8 million tons of coal, about 7 percent of national production, with resulting cuts in
electric power and steel output. The government is moving in scarce heavy-duty
pumps from other parts of India to restore production in the eastern mines and is
simultaneously pushing coal output in other parts of the country. New Delhi is also
trying to speed up imports of coking coal from Canada and Australia under existing
contracts calling for shipments totaling 1 million tons over the next year. However,
* For purposes of this note, China's international merchant fleet consists of (a) PRC-flag vessels and (b) ships assigned
by Peking to its controlled shipping companies in Hong Kong.
** Liner services are scheduled services for the movement of small consignments of both general cargo and bulk goods
on a fixed itinerary.
19 October 1978 SECRET 27
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25X1'
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
port and rail facilities may not be able to handle imports rapidly enough to
compensate for lost domestic production.
Losses in agriculture have proved far less severe. A quarter of the jute crop was
damaged, which will reduce exports of manufactured jute goods. (Most of India's jute
is produced in the areas hit by floods.)
Even before the flooding, industrial production was sluggish and New Delhi's 8-
percent growth target for fiscal year 1979 (ending 31 March) seemed out of reach.
Shortages of coal, cement, and some types of steel, together with continuing labor
disputes and erratic electric power supplies limited industrial growth earlier in the
year. As matters now stand, industrial growth in FY 1979 will probably be held to 4 to
5 percent, slightly better than in FY 1978 but less than half the 11-percent spurt in FY
Soviet Official Hints at Bigger Grain Buy
Viktor Pershin, Chairman of Eksportkhleb,
has said that the USSR could use the 15 million tons of grain offered by the United
States at the bilateral grain consultations concluded last week and that any purchases
over the 6-million-ton minimum set in the Long-Term Grain Agreement (LTA) would
be corn. He also stated, however, that obtaining the necessary hard currency would be
a problem. (On 12 October, the United States raised the maximum the USSR could
buy for delivery during the current year of the LTA, October 1978-September 1979,
without prior consultation from 8 million tons to 15 million tons, or about the same
amount bought in the LTA year ending 30 September 1978.)
So far in the current LTA year, only 200,000 tons of wheat and 812,500 tons of
corn have been registered with USDA. Trade rumors persist that considerably more
has been bought. We believe a large portion of the 3.4 million tons of corn exports
registered in the "unknown destination" category are ultimately destined, as in the
past, to the USSR.
Unless the current harvest is substantially above our estimate, we continue to
expect Moscow to purchase 15 million to 20 million tons of foreign grain for delivery
this LTA year, reflecting in large part the anticipated needs of the livestock sector.
In the near term, Moscow is in a strong balance-of-payments position, and we
therefore find it difficult to believe that the USSR cannot afford the $2.0 billion to
$2.6 billion cost implied by our import projection. Pershin's comment regarding hard
currency stringencies, if not merely a dig at US Commodity Credit Corporation credit
policy, more likely reflects debate over how to allocate hard currency than immediate
balance-of-payments problems.
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 25X1 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
 ret Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
Approved For Release 2004/07/2&: C1A-RDP80T00702A000900030002-7
 kr Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
Assessment
Center
Economic Indicators
Weekly Review
ER EI 78-042
19 October 1978
Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
This publication is prepared for the use of U.S. Government
officials. The format, coverage and contents of the publication are
designed to meet the specific requirements of 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 2004/07/28 : CIA-RDP80T00702A000900030002-7
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
1. The Economic Indicators Weekly Review provides up-to-date information
on changes in the domestic and external economic activities of the major non-
Communist developed countries. To the extent possible, the Economic Indicators
Weekly Review is updated from press ticker and Embassy reporting, so that the
results are made available to the reader weeks-or sometimes months-before receipt
of official statistical publications. US data are provided by US government agencies.
2. Source notes for the Economic Indicators Weekly Review are revised every
few months. The most recent date of publication of source notes is 16 February 1978.
Comments and queries regarding the Economic Indicators Weekly Review are
welcomed.
Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
 BIG SIX FOREproved For IGN Release I 6MP?TSI INDolG0iB-QT26RS
140
130
Unemployment Rate
Big Five
Percent
4.5
JAN APR JUL OCT JA APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1973 proved or Release12 ?/07/28: CIA-a0T00702A0pg9p030002-7 1978
INDEX: 1970=100, seasonally adjusted
Semilogarlthmic Scale
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
Industrial
Production
Big Six
United States
Consumer Prices'
Percent Change GROWTH RATE SINCE
from Previous 1 Year 3 Months.
Month 1970 Earlier Earlier2
Percent, seasonally adjusted, annual rate
Unemployment Rate
Big Five JUL 78 4.5
United States JUL 78 6.2
Big Six
United States
9.2
6.8
6.6
7.9
11.0
Trade Balance
Big Six
JUL 70
3,095
31,597
United States
JUL 78
-2,987
-19,355
2Average for latest 3 morPpXPgrpdthFo aReleases3004/07/2811: aCIARDP80T00702A000900030002-7
4.4
4.4
6.9
6.0
16,184
15,413
-13,623
5,732
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
INDUSTRIAL PRODUCTION INDEX: 1970=100, seasonally adjusted
United States
Japan
West Germany
130
120
France
JAN APR JUL OCT JA APR JU OCT J APR L OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
d or Releasel~i /07/28: CIA,-F/ / 0T00702AQ10891pp030002-7 1978
974
1973 ~ppro e
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
United Kingdom
JAN APR JUL OCT JAN APR JUL OCT JANAPR JUL OCT JAN APR JULY OCT JAN APR JUL OCT JAN APR JUL OCT
Percent AVERAGE ANNUAL
Change GROWTH RATE SINCE
from
1976 1977 1978
Italy
0.6 0.5 -0.1
2.3 3.2 8.0
4.2 5.4 3.0
1-Average for latest 3 monthsAp d.F~QreReAsarse32QO4/07/28 : CIA-RDP80T00702A000900030002-7
A-5
LATEST Previous 1 Year 3 Months
MONTH . Month 1970 Earlier Earlierl
Percent AVERAGE ANNUAL
Change GROWTH RATE SINCE
from
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
UNEMPLOYMENT RATE
United States
Japan
JAN APR JUL OCT JAN APR JUL OCT
1973 1974
APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1975 1976 1977 1978
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
United Kingdom
Italy (quarterly)
3
A labor force survey based on new definitions of economic activity sharply raised the official estimate of Italian unemployment in first quarter 1977. Date for earlier periods thus are notcomparable.
Italian data are not seasonally adjusted.
8.5
THOUSANDS OF PERSONS UNEMPLOYED
JAN APR JUL OCT
1978
LATEST MONTH
1 Year
Earlier
3 Months
Earlier
1 Year
Earlier
3 Months
Earlier
United States
SEP 78
6,002
6,668
5,754
United Kingdom
SEP 78
1,378
1,435
1,365
Japan
JUL 78
1,260
1,200
1,220
Italy
78 III
1,658
1,692
1,455
West Germany
SEP 78
986
1,035
986
Canada
AUG 78
941
881
949
France
AUG 78
1,277
1,174
1,132
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 20percent to be roughly comparable with US rates. Beginning in
1977, Italian rates should be decreased by 50 percent to be roughly comparable to US rates.
Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
CONSUMER PRICE INFLATION Percent, seasonally adjusted,
annual rate'
Japan
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
1Three-month average compared with previous three months.
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A-8
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
United Kingdom
4.7!
JAN APR JUL OCT JAN
LATEST
MONTH
Percent
Change
from
Previous
Month
AVERAGE ANNUAL
GROWTH RATE SINCE
1 Year
Earlier
3 Months
Earlier2
LATEST
MONTH
Percent
Change
AVERAGE ANNUAL
GROWTH RATE SINCE
from
' Previous
1970
1 Year
3 Months
Month
Earlier
Earlier2
United States AUG 78 0.5 6.7 7.9 10.1 tUnited Kingdom AUG 78 1.4
Japan JUL 78 0.7 9.8 4.1 6.8 jItaly AUG 78 0.6
West Germany
France
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A-9
 GNP ' Approved For Release 2004/07/28 1 Ckl-ARP58lj 9702A000900030002-7
Average
Annual Growth Rate Since
Average
Annual Growth Rote Since
Average
Annual Growth Rate Since
Percent C
Latest from Pre
Quarter Quart
hange
vious 1 Year Previous
er 1970 Earlier Quarter
Latest
Month
Perc
fro
ent Change
m Previous
Month
1970
1 Year
Earlier
3 Months
Earlier '
United States
Jul 78
-0.3
3.1
3.5
1.9
United States
Japan
Apr 78
4.0
9.9
4.3
24.8
Japan
West Germany
Jun 78
1.6
2.6
3.3
-3.2
West Germany
78 II
F
n 78
J
9
9
0
1
0
10
5
France
78 I
rance
a
.
.
.
United King
dom
Aug 78
0.4
1.5
6.8
12.7
United Kingdom
77 IV
Italy
May 78
12.1
3.5
3.5
12.1
Italy
78 I
Canada
Jul 78
-1.2 ;
3.8
3.2
1.6
Canada
78 II
' 5Jeataally adiwted.
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
' Seasonally' adjusted.
Percent Charge -_... -
Latest from Previous 1 Year Previous
Quarter Quarter 1970 Earlier Quarter
78 I
78 II
77 IV
78 I
United States
Japan
West Germany
franca
United Kingdom
Canada
Eurodollars
Commercial paper
Call money
Interbank loans (3 months)
Call money
Sterling interbank loans (3 months)
Finance paper
Three-month deposits
Seasonally adjusted.
' Average for latest 3 months compared with average for previous 3 months.
WAGES IN MANUFACTURING'
8.83 6.43
4.13 5.00
3.97 4.06
7.00 8.38
7.6
8.2
4.3
12.0
20.5
15.5
' Hourly earnings (seasonally 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 far latest 3 months compared with that for previous 3 months.
1 Year 3 Months 1 Month
Latest Date Earlier Earlier Earlier
Oct 11
Oct 13
Oct 11
Oct 13
Oct 11
Oct 11
Oct 11
Average
Annual Growth Rote Since
Percent Charge! -
from Previous 1 Year 3 Months
Period Period 1970 Earlier Earlier '
7.6
16.1
8.9
14.1
16.3
20.1
10.7
Approved or a ease 4/07128: CIA-RD 007tT m
A-10
United States Jul 78
Japan Apr 78
West Germany 78 I
France 77 IV
United Kingdom Jun 78
Italy Jun 78
Canada Jul 78
 EXPORT PRICApproved For Release 2004/07/28
CI& 8p * r02A000900030002-7
us $
National Currency
Average
Average
Annual Growth Rate
Since
Annual Growth Rate Since
Percent Change
Percent Change
Latest from Previous
1 Year
3 Months
Latest from Previous 1 Year 3 Months
Month Month
1970 Earlier
Earlier
Month Month 1970 Earlier Earlier
United States
Jul 78 -0.4
9.6 9.5
15.7
United States Jul 78 -0.4 9.6 9.5 15.7
Japan
Jul 78 1.2
11.7 27.0
39.1
Japan Jul 78 -5.8 3.8 -4.3 -8.8
West Germany
Jun 78 1.7
11.5 12.9
-4.0
West Germany Jun 78 0.7 3.9 -0.1 4.9
France
Jun 78 2.2
11.5 13.6
7.8
France Jun 78 0.6 8.8 5.3 - 2.8
United Kingdom
Aug 78 3.5
12.2 20.9
38.7
United Kingdom Aug 78 1.0 15.1 8.4 6.9
Italy
Jun 78 0.5
10.8 8.1
2.7
Italy Jun 78 -0.8 15.3 4.9 4.6
Canada
Jun 78 -0.3
8.3 1.9
5.0
Canada Jun 78 -0.3 9.2 7.7 2.2
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 Jun 78 18.9 14.5 19.2 19.2
United States
Jul 78 0.6
12.6 7.3
2.9
Japan Aug 78 29.2 4.1 17.8 27.7
Japan
Jul 78 -6.6
5.8 -20.9
-22.7
West Germany Jul 78 41.1 8.8 35.1 41.3
West Germany
Jun 78 -1.6
3.0 -5.9
-12.5
France Apr 78 10.6 4.4 10.0 10.2
France
Jun 78 -0.6
9.1 0.2
-9.1
United Kingdom Jul 78 17.6 2.8 13.6 17.7
United Kingdom
Aug 78 -0.1
17.2 3.0
5.0
Italy Aug 78 14.9 4.7 10.5 12.2
Italy
Jun 78 -0.7
18.7 1.8
2.4
Canada Aug 78 4.2 9.1 4.8 4.7
Canada
Jun 78 -0.2
9.5 11.7
13.9
CURRENT ACCOUNT BALANCE'
BASIC BALANCE '
Current Account and Long-Term Capital Transactions
Cumulative (Million US $)
Cumulative (Million US $)
Latest
Latest
Period Million US $ 1978 1977
Change
Period Million US $ 1978 1977 Chonge
United States'
78 1 -6,954 -
6,954 -4,158
-2,796
United States No longer published'
Japan
Jul 78 2,050 10,879 4,630
6,249
Japan Jul 78 650 6,231 3,513 2,718
West Germany
Jul 78 -868
2,831 1,406
1,425
West Germany Jul 78 -881 1,915 -2,363 4,278
France
78 I -84
-84-1,628
1,543
France 78 I -863 -863 -1,889 1,025
United Kingdom
78 I -803
-803 -896
94
United Kingdom 78 I -326 -326 543 -869
Italy
78 I 288
288 - 1,025
1,313
Italy 77 III 2,427 N.A. N.A. N.A.
Canada
78 II -1,201 -2,381 -2,658
277
Canada 78 II 883 327 -557 884
' Converted to US dollars at the current market rates of exchange.
' Converted- to US dollars at the current market rates of exchange.
c As recommended by the Advisory Committee on the Presentation of Balance of Payments
' Seasonally adjusted.
Statistics, the Department of Commerce no longer publishes a basic balance.
TRADE-WEIGHTED EXCHANGE RATES'
EXCHANGE RATES
Spot Rate
As of 13 Oct 78
Percent Change from
Percent Change from
As of 13 Oct 78
US S
1 Year 3 Months
1 Year 3 Months
Per Unit 19 Mar 73
Earlier Earlier
6 Oct 78
19 Mar 73 Earlier Earlier 6 Oct 78
Japan (yen)
0.0054 40.25
38.43 8.05
0.49
United States - 4.03 - 9.52 - 2.44 -0.60
West Germany
0.5368 51.00
22.90 10.15
2.47
Japan 42.81 33.44 6.59 0.14
(Deutsche mark)
West Germany 34.51 6.10 3.58 1.11
France (franc)
0.2351 5.94
14.44 4.17
1.03
France - 10.66 -2.91 -3.22 -0.62
United Kingdom
1.9825 -19.81
12.73 3.71
0.08
United Kingdom -29.71 -0.76 -1.71 -1.19
(pound sterling)
Italy -42.91 -7.32 -2.60 -0.77
Italy (lira)
0.0012 -30.19
8.28 3.89
0.74
Canada -17.56 -11.77 -6.25 -0.40
Canada (dollar)
0.8450 -15.78
-8.07 -4.97
-0.20
+ Weighting is based an each listed country's Made with 16 other Industrialized countries to
Approved For Release 2004/07/28
IA-Kt1F 'af fliC1'7C17Add d6Nd613`'2 g7"'g the molar currencies.
 Approved For Release 2004/07/28 : CIA-RDP80TOO702AO00900030002-7
Developed Countries: Direction of Trade'
Billion US
Exports to (f.o.b.)
World
Big
Seven
Other
OECD
OPEC
Com-
munist
Other
UNITED STATES
1975 ..........................
107.65
46.94
16.25
10.77
3.37
29.82
1976 ..........................
115.01
51.30
17.68
12.57
3.64
29.44
1977 ..........................
120.17
53.92
18.53
14.02
2.72
30.98
1978 ..........................
1st Qtr ................
30.94
13.65
4.60
3.76
1.00
7.93
Apr
12.06
5.40
1.68
1.38
0.42
3.17
JAPAN
1975 ..........................
55.73
16.56
6.07
8.42
5.16
15.87
1976 ..........................
67.32
22.61
8.59
9.27
4.93
17.84
1977 ..........................
81.11
28.02
9.73
12.03
5.32
26.01
1978
1st Qtr
22.11
7.83
2.39
3.35
1.32
7.22
Apr ......................
7.89
2.80
0.80
1.19
0.57
2.53
WEST GERMANY
1975 ..........................
91.70
28.33
36.44
6.78
8.81
11.05
1976 ..........................
103.63
33.44
41.86
8.25
8.72
11.04
1977 ..........................
119.28
39.01
48.00
10.78
8.59
12.90
1978
1st Qtr ................
32.45
"11.17
13.05
FRANCE
1975 ..........................
52.87
20.00
15.50
4.90
3.13
8.61
1976 ..........................
57.05
22.49
16.15
5.08
3.23
8.75
1977 ..........................
65.00
25.90
18.19
5.97
3.00
11.94
1978
1st Qtr ................
18.49
7.66
5.07
1.57
0.66
3.53
Apr ......................
6.74
2.82
1.90
0.56
0.28
1.18
UNITED KINGDOM
1975 ..........................
44.03
12.55
16.59
4.55
1.56
8.64
1976 ..........................
46.12
14.03
17.53
5.13
1.39
7.92
1977 ..........................
57.44
16.99
22.56
6.78
1.63
9.48
1978
1st Qtr ................
16.86
5.09
6.27
2.03
0.55
2:92
Apr ......................
5.75
1.73
2.19
0.74
0.18
0.91
ITALY
1975 ..........................
34.82
15.61
7.86
3.72
2.46
4.67
1976 ..........................
36.96
17.41
8.69
4.23
2.18
3.96
1977 ..........................
45.04
20.92
10.20
5.85
2.45
5.62
1978
1st Qtr ................
10.80
CANADA
1975 ..........................
33.84
26.30
1.73
0.71
1.20
2.00
1976 ..........................
40.18
32.01
2.03
0.81
1.25
2.09
1977 ..........................
1978
42.98
34.77
2.13
0.94
1.06
4.08
1st Qtr ................
10.75
8.78
0.55
0.23
0.22
0.97
Apr ......................
4.20
3.44
0.16
0.08
0.07
0.45
1 Source: International Monetary Fund, Direction of
Trade.
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
Big Other Com-
World Seven OECD OPEC munist Other
UNITED STATES
1975 ..........................
103.42
49.81
8.83
18.70
0.98
25.08
1976 ..........................
129.57
60.39
9.75
27.17
1.16
31.09
1977 ..........................
156.70
70.48
11.08
35.45
1.22
38.47
1978
1st Qtr ................
43.14
20.39
3.51
8.15
0.47
10.62
Apr ......................
15.42
7.54
1.27
2.73
0.18
3.70
JAPAN
1975 ..........................
57.85
16.93
6.08
19.40
3.36
12.05
1976 ..........................
64.89
17.58
7.78
21.88
2.91
14.72
1977 ..........................
71.33
18.87
7.93
24.33
3.41
16.79
1978
1st Qtr ................
18.32
5.04
2.06
6.46
0.87
3.89
Apr ......................
6.28
1.64
0.74
2.01
0.36
1.53
WEST GERMANY
1975
76.28
27.09
27.78
8.24
4.87
8.21
1976 ..........................
89.68
31.28
32.64
9.73
5.93
10.01
1977 ..........................
102.63
36.38
37.37
10.12
6.14
12.62
1978
1st Qtr ................
FRANCE
1975 ..........................
53.99
23.04
14.33
9.43
1.94
5.21
1976 ..........................
64.38
27.81
16.93
11.36
2.24
6.01
1977 ..........................
70.50
30.28
18.24
11.82
2.46
7.70
1978
1st Qtr ................
19.76
8.58
5.40
3.05
0.64
2.09
Apr ......................
6.79
3.02
1.84
1.00
0.23
0.70
UNITED KINGDOM
1975 ..........................
53.35
18.47
18.52
6.91
1.68
7.67
1976 ..........................
55.56
19.66
18.81
7.29
2.08
7.65
1977 ..........................
63.29
24.02
21.34
6.31
2.40
9.22
1978
1st Qtr ................
18.87
7.44
6.68
1.80
0.55
2.40
Apr ......................
5.67
2.27
2.04
0.39
0.16
0.81
ITALY
1975 ..........................
38.36
17.32
6.75
7.85
2.09
4.34
1976 ..........................
43.42
19.35
8.04
8.12
2.65
5.24
1977 ..........................
47.56
20.80
8.67
9.03
2.80
6.26
1978
1st Qtr ................
CANADA
1975 ..........................
38.59
29.78
1.70
3.43
0.32
2.02
1976 .:........................
43.05
33.55
1.82
3.48
0.38
2.56
1977 ..........................
44.67
35.67
1.77
3.05
0.33
3.85
1978
1st Qtr ................
10.80
8.60
0.44
0.77
0.08
0.91
Apr ......................
4.61
3.84
0.18
0.03
0.19
0.37
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
FOREIGN TRADE BILLION US $, f.o.b., seasonally adjusted
United States
14.0
12.0
10.0
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A-14
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
United Kingdom
AUG 78
LATEST
MONTH
MILLION
US $ 1978
1977
CHANGE
;'.
5,865
43,965
36
250
21.3%
United Kingdom
AUG 78
5,752
45,474
,
39,281
15.8%
Balance
113
-1,509 ,
-3,031
1,522
4,096
28,849
25
115
14
9%
Italy
JUL 78
.
4,626
27,456
,
25,501
.
7.7%
Balance
-529
1,394
-386
1,780
3
985
26
467
24
385
5%
8
Canada
JUL 78
,
,
,
.
Balance.
12,469
90,625
80,316
12.8%
14,090
111,601
96,366
15.8%
-1,621
-20,976
-16,050
-4,926
8,146
62,499
51,820
20.6%
6,023
43,994
41,055
7.2%
2,123
18,505
10,765
7,740
10,890
78,259
66,376
17.9%
9.203
64.604 .
55.039
17.4%
1,687
13,655
11,337
2,318
6,598
50,854
41,993
21.1%
6,842
50.735
44,401
1
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
FOREIGN TRADE PRICES IN US $1
United States INDEX: JAN 1975 =100
West Germany
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
19Jdproved For MIa9se 2004/07/19'?CiA-RDP80T lZYA00090003dt
lExport and impor plots are based on five-month weighted moving averages.
A-16
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1974 Approved For Release 2004/dM2'8l CIA-RDP8d9%3-702A000900c atP2-7
577558 1078
 Approved LFor ECTEDeDEVELOPIN~;DPC,$&7 k?@1x00030002-7
Average
Annual Growth Rate Since
Percent Change
Latest from Previous 1 Year 3 Months
Perim! Period 1970 Earlier Earlier'
India May 78
South Korea Jun 78
Mexico Apr 78
Nigeria 78 l
Taiwan Jul 78
1.3 5.6 9.1 20.8
-1.2 22.5 20.1 26.5
13.1 6.7 14.1 8.6
6.8 11.0 0.2 29.9
1.9 16.1 36.1 46.6
' Seasonally adjusted.
' Average for latest 3 months compared with average for previous 3 months.
Average
Annual Growth Rate Since
Percent Change
Latest from Previous 1 Year 3 Months
Month Month 1970 Earlier Earlier'
Brazil Mar 78 2.7 36.4 43.3 34.7
India Mar 78 2.0 13.8 14.5 15.3
Iran May 78 0.4 29.0 21.4 66.2
South Korea Jun 78 4.3 31.6 30.4 20.9
Mexico May 78 3.9 20.8 33.0 24.9
Nigeria Mar 78 5.6 35.3 18.9 3.3
Taiwan May 78 0.6 25.1 32.8 40.8
Thailand Apr 78 -3.2 13.3 12.5 I 32.3
Seasonally odpnted.
' Average for latest 3 months compared with average for previous 3 months.
Average
Avera
e
Si
g
nce
Annual Growth Rote
Annual Growth Rote Since
Percent
Change
Latest from Pr
evious 1 Year
Percent Change
Latest from Previous
1 Year
Month Mon
th 1970 Earlier
Month Month 1970
Earlier
Brazil
Jun 78
4
.1
28.3
38.0
Brazil
May 78
3.4
28.4
34.5
India
May 78
0
.3
7.4
1.6
India
May 78
0.6
8.0
-2.8
Iran
Jun 78
-0
.1
12.2
10.2
Iran
Jun 78
- 1.3
10.7
9.3
South
Korea
Aug 78
0
.3
14.5
13.5
South
Korea
Aug 78
0.1
15.7
10.9
Mexico
Jun 78
1
.4
15.0
17.3
Mexico
Jun 78
1.3
16.6
16.8
Ni
eria
Doc 77
2
.9
16.5
30.6
g
Taiwan
Jul 78
0
8.1
1.6
Taiwan
Jul 78
-0
.3
9.7
3.0
Thailand
Mar 78
-0.1
9.4
5.8
Thailand
Jun 78
0.9
8.7
8.4
EXPORT PRICES
us $
Average
Latest Month
Annual Growth Rate Sims
1 Year 3 Moths
-
Percent Change
End of Million US $ Jun 1970 Earlier Earlier
Latest from Previous 1 Year
Month Month 1970 Earlier
Brazil
Feb 78
6,733
1,013
5,878
5,994
Brazil
Feb 78
0.4
14.0
1.5
India
May 78
6,123
1,006
4,431
5,563
India
Aug 77
-2.9
10.6
17.1
Iran
Aug 78
11,949
208
11,561
12,468
Iran
Jun 78
0
30.8
0
South Korea
Jul 78
4,298
602
3,656
4,138
South Korea
78 i
0.7
8.7
7.7
Mexico
Mar 78
1,766
695
1,422
1,723
Nigeria
May 76
-0.1
27.3
12.3
Nigeria
Aug 78
1,872
148
4,611
2,609
Taiwan
Jun 78
8.2
12.1
9.6
Taiwan
Jun 78
1,462
531
1,411
1,433
Thailand
Dec 76
2.0
13.3
13.1
Thailand
Aug 78
2,295
978
1,992
2,129
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
FOREIGN TRADE, f.o.b.
Latest 3 Months
Percent Change from
3 Months 1 Year
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
Mar 78 Exports
-19.6
-13.5
1,476
1,707
-13.5%
Mar 78 Imports
-24.1
9.7
1,444
1,316
9.7%
Mar 78 Balance
32
391
-358
Iran
Jul 78 Exports
49.4
14.0
13,913
13,562
2.6%
May 78 Imports
-1.6
1.6
5,705
5,259
8.5%
May 78 Balance
4,087
4,871
-783
South Korea
Jul 78 Exports
39.3
23.5
6,749
5,351
26.1%
Jul 78 Imports
83.0
29.2
7,284
5,695
27.9%
Jul 78 Balance
-535
-344
-191
Mexico
May 78 Exports
-2.2
6.5
2,037
1,773
14.9%
May 78 Imports
11.6
25.7
2,340
1,868
25.3%
May 78 Balance
-304
- 95
-209
Nigeria
Jul 78 Exports
127.0
-17.4
2,187
2,854
-23.4%
Mar 78 Imports
579.9
115.0
1,808
841
115.0%
Mar 78 Balance
-976
359
-1,335
Taiwan
Jul 78 Exports
206.6
33.8
6,733
5,056
33.2%
Jul 78 Imports
116.8
24.1
5,474
4,439
23.3%
Jul 78 Balance
1,259
617
641
Thailand
May 78 Exports
21.9
4.5
1,609
1,506
6.8%
May 78 Imports
105.7
21.3
1,908
1,624
17.5%
May 78 Balance
-299
-117
-182
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
AGRICULTURAL PRICES MONTHLY AVERAGE CASH PRICE
WHEAT
$ PER BUSHEL
$ PER METRIC TON SUGAR
75 o PER POUND
800
1-11 OCT II 1-11 OCT
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
5 $ PER BUSHEL
Chicago No. 2 Yellow
11 OCT 9.07
4 OCT 8.92
SEP 78 8.12
OCT 77 6.31
,1,000
1-2 OCT II
1974 1975 1976 1977 1978
COTTON
1.0 $ PER POUND
COFFEE/TEA
$ PER METRIC TON 400 C PER POUND
Memphis Middling 1/16 Inch
2,000
COFFEE
Other Milds Arabicas, ex-dock New York
350
11 OCT
155.59
0.8
4 OCT
155.33
300
SEP 78
155.32
0.6384
1,500
OCT 77
170.90
0.6
0.4
11 OCT 0.6440
4 OCT 0.6310
SEP 78 0.6101
OCT 77 0.5003
1-11 OCT_II
1974 1975 1976 1977 1978
1-11 OCT II
8.98'
/
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
SOYBEANS
$ PER BUSHEL
15-.:..
11 OCT : 6.64
4 OCT 6.62
SEP 78 6.47
10 OCT 77 5.05
E
$ PER METRIC TON
SOYBEAN OIL/PALM OIL
0.5 1$ PER POUND
SOYBEAN OIL
Crude, Tank Cars, f.o.b. Decatur
0.4?
11 OCT. 0.3050
4 OCT 0.3050
SEP 78 0.2975
OCT 77 0.2017
c PER POUND
11 OCT 0.2673
4 OCT 0.2792
SEP 78 0.2780
OCT 77 0.1876
AUSTRALIA
Boneless Beef,
f.o.b., New York
UNITED STATES
Wholesale Steer Beef,
Midwest Markets
29 SEP
106.88
7 OCT
83.25
25 SEP
105.50
30 SEP
81.90
SEP 78
101.57
SEP 78
81.66
OCT 77 '
66.37
OCT 77
65.87
1-11 OCT II
1978
$ PER METRIC TON
ouu 400.
11 OCT
176.40
4 OCT
170.00
400
SEP 78
164.03
320
OCT 77
136.41
FOOD INDEX
500,
1,000 1970=100
1-29 SEP
101.57
40 1974 1975
1-30 SEP
1-3 OCT I I 1
1974 1975 1976 1977 1978
577560 10-78
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 2004/07/28 : CIA-RDP80T00702A000900030002-7
INDUSTRIAL MATERIALS PRICES MONTHLY AVERAGE CASH PRICE
LEAD
5 PER METRIC TON C PER POUND
1-11 OCT 11 1,000
10 -
1974 1975 1976 1977 1978 1974
LME US
11 OCT 32.8 35.0
27 SEP 29.9 33.0
SEP 78 28.8 , 33.0
OCT 77 23.1 32.3
TIN
$ PER METRIC TON 750 c PER POUND
$ PER METRIC TON
...:. '...y 1,
1-11 OCT 11 _ 0 250
1974 1975 1976 1977 1978
150 $ PER ,LONG TON
PLATINUM
$ PER METRIC TON150 350 $ PER TROY OUNCE
1-5 OCT tl
1974 1975 1976 1977 1978
1-11 OCT
1977 1978
$ PER METRIC TON
16,000
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900030002-7
SELECTED MATERIALS
ALUMINUM
US STEEL
IRON ORE
CHROME ORE
CHROME ORE
FERROCHROME
NICKEL
I MANGANESE ORE
TUNGSTEN ORE
MERCURY
SILVER
GOLD
RUBBER
60 C PER POUND
LUMBER INDEX6
160 ,
1973=100
1,200
INDUSTRIAL MATERIALS INDEX
300 _
1970=100
250
Major US Producer
C per pound
55.25
53.00
53.00
48.00
Composite
$ per long ton
419.31
395.81
359.36
327.00
Non-Bessemer Old Range
$ per long ton
22.55
21.43
21.43
20.51
Russian, Metallurgical Grade
$ per metric ton
NA
NA
150.00
150.00
S. Africa, Chemical Grade
$ per long ton
56.00
56.00
58.50
42.00
US Producer, 66-70 Percent
t per pound
42.00
41.00
41.00
44.00
Composite US Producer
$ per pound
2.02
2.06
2.11
2.41
48 Percent Mn
$ per long ton
67.20
67.20
72.28
72.00
Contained Metal
$ per metric ton
18,222.00
18,372.00
20,236.00
16,340.00
New York
$ per 78 pound flask
151.00
151.00
141.14
132.45
LME Cash
t per troy ounce
580.17
515.88
476.67
421.55
London Afternoon Fixing Price $ per troy ounce
221.56
175.28
158.86
116.12
$ PER METRIC TON
56.4
1-6 OCT
Il_vE
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 lb 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.
7Composite price for Chicago, Philadelphia, and Pittsburgh.
NOTE: The industrial materials index is compiled by the Economist for 19 raw
materials which enter international trade. Commodities are weighted by
3-year moving averages of imports into industrialized countries.
577559 10-78
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