THE SOVIET ECONOMY 1974 RESULTS AND 1975 PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500110003-3
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 31
• Document Creation Date: December 15, 2016
• Document Release Date: August 18, 2003
• Sequence Number: 3
• Publication Date: March 1, 1975
• Content Type: REPORT

 Approved For Release 2003/09/29,_ CIA-RDP86T00608R000500110003-3
-Kese~wch Ain
The Soviet Economy
1974 Results and 1975 Pro peat
A (ER) 75-62
March 1975
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 Approved For Release 2003/09/29 : -C-iA.RDP86T00608R000500110003-3
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Approved For Release 2003/09/29 : CIA-RDP86T00608R000500110003-3
 Approved For Release 2003/09/29 : CIA-RDP86T00608R000500110003-3
The Soviet Economy:
1974 Results and 1975 Prospects
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 Approved For Release 2003/09/29 : CIA-RDP86T00608R000500110003-3
The Soviet Economy:
1974 Results
and 1975 Prospects
Moscow feels more secure about its position in the international economy
than ever before. Soviet economic growth continues, at a moderate rate, while
output is declining in many Western economies. Because of its centrally controlled
economy and its economic self-sufficiency, the USSR has been shielded from the
recession and double-digit inflation plaguing the West. Thanks to an export surplus
in cil and raw materials, the Soviet balance of payments has benefited from high
world market prices. But basic problems of low efficiency and an inability to
quickly apply new technology remain, and Moscow cannot readily translate its
temporary advantages in dealing with the West into remedies for its long-term
economic ills.
? Overall Soviet growth slowed to 3% in 1974.
? A slump in farm output caused by poor weather was the major cause
of last year's slowdown; still, agriculture enjoyed its second best year
ever.
? Although consumers made smaller gains in living standards than in 1973,
the regime's commitment to improving levels of living remains firm. Prices
continued stable, although, as usual, not all goods and services were
regularly available at official prices.
s Trade with the West boomed in 1974, with price increases for Soviet
oil and other raw materials far outweighing price increases for imports;
the result was a major turnabout in Moscow's hard currency position.
? The trade deficit with the United States fell tc one-fourth of its 1973
level, largely because of smaller grain imports and larger exports of
platinum and oil.
Soviet leaders anticipate a rebound in economic growth in 1975. This
expectation is reasonable, although major goals of the five-year planning period
(1971-75) are unattainable.
? Overall economic growth is scheduled to rise by 7%, twice the 1974
rate. The Soviet Union could narrow the economic gap with the United
States by a record amount.
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Agricultural production is listed for an 11% increase, after last year's
disappointing performance. So far, weather and soil conditions look good
for a bumper grain crop.
o Industrial growth is to match last year's pace; success will depend on
the timely completion and equipping of investment projects.
o Consumers retain a high priority. Notwithstanding, many five-year
consumption goals will not be met, because of the disappointing harvests
of 1972 and 1974 and the lagging construction of new consumer goods
capacity.
o Trade with the West will continue to boom, with Moscow well able to
step up purchases of machinery and technology; the Soviet hard currency
position will remain strong because of exports of high-priced nil and other
raw materials and of possible gold sales.
From a longer run perspective, the Soviet economy cor?.tinues to be restrained
by endemic problems which are largely responsible for the failure to meet major
five-year plan goals.
? Increases in productivity remain below expectations, particularly in the
farm sector.
? The slow introduction of new techniques and new products into
large-scale production continues to characterize Soviet industry and is
unlikely to be remedied by the piecemeal reforms under consideration.
? The poor assortment and quality of consumer goods, unresponsive
services, and limited housing persist.
We belly 'e that the relatively good internal growth and the greatly strengthened
external economic position will allow the leadership to put off bold innovative
reforms needed to solve these basic problems.
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Economic Performance in 1974
1. Soviet economic growth slowed markedly in 1974. According to our
preliminary calculations, gross national product (GNP) rose by 3.2%, 1;ss than
one-half the 1973 rate. A 3.3% dip in agricultural output exerted a serious drag
on overall economic growth because agriculture represents almost one-fourth of
GPNP. Industrial growth, the largest component of GNP, had its best year since
1970 (see Table 1).
USSR: Growth of GNP, by Sector of ^riginl
Average
Prelun-
Annual
inary
1966-70
1971
1972
1973
1974
Gross national product,
by producing sector
A
i
l
2
5.5
4.2
1.8
7.S
3.2
gr
cu
turc
Ci
ili
4.6
0.1
-7.0
16.4
-3.3
v
an industry
C
6.8
6.5
5.6
6.2
6.8
onstruction
7.0
8.7
6.4
2.2
5
0
Transportation and
communications
D
6.2
6.6
4.9
7.3
.
6.6
omestic trade
S
i
8.2
6.8
6.9
5.4
5.9
erv
ces
4.4
4.0
4.2
3.7
3.7
1. Calculated at factor cost.
2. This measure of agricultur,'d output excludes intra-agricultural use of farm products but does not make an
adjustment for purchases by agrir;aturc from -ther sectors. Value added in agriculture grew by an average of
4.1% in 1966-70, (1.6% in 1971, -9.170 in 172, 16.5% in 1973, and -5.2% in 1974.
2. The Soviet leadership seems generally satisfied with economic
performance. The tone of the economic report of last December's Communist Party
plenum was much less critical of economic planning and management than the
previous year's report. Although old problems were recounted - low pri,