SOVIET INDUSTRIAL GROWTH LOWEST SINCE 1946

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-03061A000300010012-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 9, 2016
• Document Release Date: July 29, 1998
• Sequence Number: 12
• Publication Date: July 18, 1964
• Content Type: REPORT

Approved For Release 2001/08/08 : CIA-RDP78-03061A000300010012-6
Fact Sheet
August 1961+
Soviet Industrial Growth Lowest Since 1946
The steady deceleration of the growth of Soviet industry which has
been evident since 1962 continued during the first six months of 1961-.
This is the main conclusion to be drawn from the Soviet statistical re-
port published in Pravda July 23, 1961+ (released by ass July 22d),
which claims an industrial output growth compared with mid-1963 of 7.5
per cent - the lowest figure since the year of 1916. The average indus-
trial growth planned for 19611. and 1965 is 8.11. per cent.
Industrial growth in the USSR is still appreciably faster than in
most Western economies, but the margin in favor of the USSR is shrink-
ing fast :
Year
Growth of Soviet
Industrial Output
mid 58-59
+ 12%
It 59-60
+ 10%
it 6o-61
+ 8.4%
61-62
"nearly io%i"
62-63
+ 8.5%
63-61.
+ 7.5%
Industrial countries in which industry is now expanding faster in-
clude Germany, producing 8 per cent more than in may 1963,1('.. Great
Britain (10.5 per cent up in April 61+ by comparison with a year earlierl)
and most conspicuously Japan, where industrial production is reported as
18 per cent greater in April than in the same month of 1963. 1
Even in good years, the Soviets usually stress industrial growth
figures, rather than over-all _national product or national income data,
because they do much better in industry than in agriculture. While more
reliable than Soviet agricultural statistics, Soviet industrial produc-
tion claims are inflated by double counting: avoiding this, "Annual Eco-
nomic Indicators for the USSR" (issued by the Joint Economic Committee
of the US Congress) estimates Soviet annual industrial growth at 6.3,
6.7, and 7.2 per cent for 1960, 1961 and 1962 respectively, in contrast
to Soviet official figures of 9.6, 9.3, and 9.5 per cent for those years.
Judging by these precedents, Soviet industrial growth in the first half
of 1964 may have actually been about 5 .per cent.
A year ago, one of the main reasons for the deceleration of the
growth rate of industrial output reported then was the exceptionally
harsh winter of 1962-63. Because of that development, and the fact that
the winter of 1963-61E was unusually mild, it would have been logical to
expect an acceleration of growth in industry this year. Indeed there
may have been some such sequence of events in the exclusively industrial
sector of the economy because the Central Statistical Administration
(C.S.A.) reports that:
1 Economist, July 15,,1961+
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(Cont.)
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The bad harvest of last year had an adverse effect on
the food industry and on a number of branches of light
industry. Without these branches the volume of indus-
trial production rose by more than 10 per cent.
This explanation is not fully supported, however, by the growth
rates of individual industries when they are compared with last year. The
total output of the chemical industry expanded at a rate of 14 per cent;
but expansion had been 17 per cent in 1962 and 1963. On 30 July Pravda
pointed to more than a dozen chemical plants spread out across the country
which were behind schedule in going into operation. Even though fertiliz-
er production (a priority task of the Soviet economy) represented an in-
crease of nearly a quarter over the same period in 1963, the 11.6 million
tons produced came to well under half of the 1964 target of 25 million tons.
The engineering industry, which has no connection with agri-
cultural inputs, shows the same decelerating trend as chemicals:
Mid Year
Growth
1962 over 1961
15%
1963 over 1962
14%
1964 over 1963
"almost 11%"
1964 is the third consecutive year in which the chemical in-
dustry has shown the fastest rate of growth within the economy. Other
sectors which did well were ferrous and non-ferrous metals (+ 8%), elec-
trical power (+ 11%), the fuel industry (+ 8%) and building materials
(+10%). As usual the main laggard was the light and food industries
which grew by only 2% (little more than needed to keep pace with the
growth of the population), and even this rate was due in part to the im-
ports of U.S. and Canadian wheat.
Among individual products, the highest growth rates were main-
ly recorded in the industries working for agriculture, e.g. mineral fer-
tilizers (+ 26%), insecticides and weed-killers (+ 46%), tractor ploughs
(+ 22%). But there were also outstanding performances in plastics (+ 27%),
natural gas (+ 20%), window glass (+ 21%), washing machines (+ 27%), re-
frigerators (+ 20%) and TV sets (+19%). Most of these lag far behind con-
sumer demand.
By comparison with these rates, the growth of the "metal-
eaters" groups (pig-iron, steel,rolled metal and iron ore) was a sober
and uniform 6%.
The major decline in the Soviet growth rate (mid-1963-64) ap.
pears to have been not the backwash from the agricultural failures of
1963 but among other things, the falling-off in the growth of labor pro-
ductivity which is shown as only 4 per cent compared with 6 per cent
gains in 1963 and 1962. The target for 1964 had been dropped noticeably
to 4.5%. Some explanation for the decrease might be found in disloca-
tions caused by the increasingly widespread change-over to a five-day,
40 hour week from the present six-day week.
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(Cant.)
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The state labor force (workers, employees and state farmers)
which grew at an extremely high rate during the year has apparently not
made itself felt in production. It added 2.4 million people to its books,
making the total now 71.4 million. Since last year the growth over 1962
was 2 million, the evidence suggests that there may have been an increase
in the rate of flight from the land. during 1963-64, due to the harvest
failure. Another likely explanation is that the reduction in the Soviet
armed forces discussed by Khrushchev last winter is now taking effect in
the labor statistics.
The foreign trade of the USSR has resumed its trend towards
brisk expansion, growing by 9% in 1964, compared with only 2% in 1963.
But a substantial proportion of this growth may be due to the large-
scale wheat imports and the concomitant sales of gold.
An early, major improvement in the Soviet economy does not
seem likely. First, there is the decline reported at mid-year and the
labor productivity drop to 4 per cent. Although the harvest is likely
to be better than in 1963, the weight of agriculture in the national in-
come is only around 20% and cannot boost the total greatly. Further,
last year's crop failure brought on a distress slaughter of pigs (i July
1962 -- 52.9 million; 1 July 1964 -- 36 million) and it will take time
to recover old levels in meat processing and related industries (Khru-
shchev has recently tried to persuade Kazakhstani to raise for human con-
sumption and eat horse meat). The 5 per cent increase in over-all in-
vestment (as opposed to 16.2 per cent in 1958 and 13.2 per cent in 1959)
-- is a small improvement over the low of 4% last year but not enough to
ensure rapid growth in the future.
Soviet production figures might be more impressive if data on
the Soviet arms industry were included, but Khrushchev keeps this inform-
ation secret. The increase in Soviet arms production after 1958 explains
the decline in (civilian) investment and in some part the consequent drop
in the industrial growth rate.
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