ECONOMIC INTELLIGENCE WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00702A000800010005-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 54
• Document Creation Date: December 12, 2016
• Document Release Date: January 18, 2002
• Sequence Number: 5
• Publication Date: August 17, 1978
• Content Type: REPORT

National
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17 Augur;
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SECRET
NOFORN-NOCONTRACT-ORCON
ECONOMIC INTELLIGENCE WEEKLY REVIEW
17 August 1978
25X6
Agricultural Commodity Prices: Generally Weaker Tone ........................... 6
Because of favorable production prospects for most major commodities,
we expect weaker prices and a buildup in reserves for the remainder of
1978.
USSR: Reduction in Our Estimate of Gold Production ............................... 10
Identification of a key ore-unloading bottleneck at the Muruntau gold
mining and processing facility has resulted in a substantial reduction In
our estimate of Soviet gold production.
Vietnam: Coping With Chinese Pullout ................................................... 15
The USSR is helping out with additional technical personnel and materi-
als, but non-Communist donors are chary of increasing their support to
Vietnam for fear of offending Peking.
The Golden Triangle: New Developments in Narcotics Trafficking ............. 18
We expect production of opium for Illicit purposes to range between 420
and 470 tons in the Burma-Thailand-Laos area this year, well above the
1977 figure of 375 tons.
Angola: Economy Floundering Under Communist Management ................ 20
The government's campaign to Improve relations with the West largely
reflects its mounting frustration with Cuban and Soviet handling of the
economy.
Notes ............................................................ ...................................
South Korean Boom Darkened by Inflation
Eastern Europe Steps Up Euroborrowing
i
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25X6
AGRICULTURAL COMMODITY PRICES: GENERALLY WEAKER TONE
World market prices for most major agricultural commodities are expected to
exhibit a generally weaker tone for the remainder of 1978 because of the present
favorable production outlook and ample world supplies. * A buildup in reserves of a
number of commodities now seems likely unless new international policy actions are
introduced that would stimulate demand and/or restrict supply.
World prices for major grains-wheat, corn, and rice-will likely maintain a
steady to lower level over the next six months. Strong demand for soybeans and
soybean products could firm prices at yearend despite expectations of a bumper US
harvest. Cotton prices may also show a slight increase based on an uncertain
production outlook worldwide. World price movements of most major agricultural
commodities exported by the United States also will be influenced by the outcome of
pending US farm policy decisions and by the extent of producer participation in
several government programs aimed at reducing commercial supplies in the coming
months.
Paralleling the bearish outlook for future world prices of most US exports is the
expectation of a continued decline in prices for major tropical products like coffee,
cocoa, and tea. World sugar prices most likely will remain at low levels for the
remainder of the year Beef prices, on the other hand, are expected to continue strong
in the face of tightening world supplies.
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US Agricultural Commodity Prices
Index: 1974=100
Imports t
Exports 2
0 . . . . . I . . I __L_
J F M A M J J A S O N D J F M A M J J A S O N
1 Weighted average of commodity prices (beef, sugar, coffee, cocoa, and tea) based on import
volume into the United States for 1972-75.
2 Weighted average of commodity prices (wheat, corn, rice, cotton, and soybeans) based on export
volume from the United States for 1972-75.
. 1 1 1
D J F M A M J J
1978
World Outlook for United States Export Commodities
Generally favorable growing conditions have existed in the Northern Hemisphere
for most crops except cotton. The outlook for Southern Hemisphere crops is also better
after a drought plagued harvest in 1977/78. World grain production in 1978/79 could
well exceed the previous record level in 1976/77
World wheat production is presently forecast at about 406 million tons-up 6
percent from last year and the second best harvest on record. Large carryover stocks
and the expected bumper harvest should provide more than ample wheat to meet an
estimated 3 percent rise in wheat use. We expect world trade in wheat will decline
about 6 million tons based on improved production in the USSR and Western Europe
and reduced import demand by China. These factors should serve to keep wheat
prices under pressure for the remainder of the year although extensive farmer
participation in US Government loan, set-aside, and reserve programs would serve as a
price strengthening factor.
17 August 1978 SECRET
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Current prospects for coarse grain production, while less certain than those for
wheat, indicate the potential for a record harvest of about 710 million tons. Coarse
grain use in 1978/79 again will fall short of production, providing for some additional
buildup in world stocks. Large stocks and favorable prospects for the US harvest
should keep prices near or below recent trading ranges during the remainder of 1978.
Soviet buying intentions and weather conditions will weigh more heavily on price
movements in coarse grains than in wheat, Several weeks remain until the important
corn harvest in the Northern Hemisphere; Southern Hemisphere coarse grains will not
be planted until late 197S.
Rice production for 1978/ 7 9 is expected to show a slight increase from last season
to a record 370 million tons. Favorable growing conditions in the Northern Hemi-
sphere and good early season monsoon performance in Asia are major reasons for a
forecast of record production. World rice stocks are estimated at an all time high of
about 19 million tons with the majority of these stocks being held by traditional
importers. World trade in rice is expected to be little changed from 1977/78 even
though consumption is forecast to increase by about two percent. Rice prices are
expected to sag in the corning weeks under the weight of a bumper harvest, a record
carryover, and ample supplies of wheat.
Growing conditions for the 1978/79 cotton crop have been below normal. Early
,season planting difficulties have -)ccurred in the USSR and Sudan while inclement
weather in Texas has threatened a major portion of the US crop. World production
could fall considerably below Iasi: year's 13.9 million ton harvest, the second largest on
record. Carryover stocks of cotton are not large enough to prevent prices from moving
upward in the face of reduced production. An additional factor strengthening prices
would be confirmation of trade reports that China may import up to 500,000 bales of
US cotton in 1978/79. Even if production prospects deteriorate further, however,
sluggish consumption of textiles and excess capacity in synthetic fibers should prevent
a major runup in cotton prices.
World production of soybears for the 1.978/79 season could reach a record level
based on a nine-percent increase in US plantings and an expected recovery in Brazil
from last season's drought-reduced harvest. Trade reports of considerable forward
purchases of soybeans and the weight of a bumper US harvest should cause soybean
prices to weaken in the third quarter. A further decrease beyond the US harvest is not
expected as increased livestock feeding worldwide will keep demand for soybean meal
at a high level. We expect some strengthening of prices by yearend due to the low
level of world carryover stocks, Brazil's absence from the market, and the expected
strong demand.
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World Outlook for US Import Commodities
Increased world production and sluggish demand have caused prices of coffee,
tea, and cocoa to drop sharply in recent months. The current production outlook
indicates a continuation of ample supplies for these commodities as well as sugar.
World coffee production in the 1978/79 season is estimated at 74 million bags,
the highest level in four years. Consumption is expected to begin a slow recovery from
recent depressed levels caused by record high prices in 1977. While we expect prices
to remain under downward pressure in the months ahead, low levels of world coffee
stocks will prevent a continuation of the sharp price decline of recent weeks.
The production outlook for cocoa in 1978/79 is still uncertain although
conditions for the early harvest have been generally favorable. Cocoa consumption is
expected to weaken slightly as manufacturers continue introducing substitutes, raising
prices, or reducing sizes of confectionary production. Prices will continue trading in
the range of recent weeks at $1.35-$1.50 per pound until prospects for the coming
harvest are known. An outlook for even an average harvest will put prices under
downward pressure.
Favorable producer response to the high prices of the past two years has pushed
tea production to an all-time high. We expect tea production in 1978/79 will remain
at a relatively high level with little change in consumption. Tea prices will continue
under downward pressure, tracking closely with coffee prices.
Tremendous world sugar stocks will prevent any appreciable rise in depressed
sugar prices in the second half of 1978. We expect a slightly lower production at about
90 million tons to be more closely in balance with consumption in 1978/79 after five
consecutive years of large surpluses. A major psychological boost to sugar prices would
be the United States' ratification of the International Sugar Agreement before
yearend.
The world beef market faces a period of tightening supplies as strong import
demand has outstripped growth in export availability. The near synchronous arrival of
Australia, New Zealand, and the United States at the bottom of the herd liquidation
phase of the cattle cycle is largely responsible for this situation. Higher cattle
marketings into the fall and some consumer prices resistance could ease price pressures
temporarily. Nonetheless, the need to rebuild herds will likely exert greater price
pressure beginning in late 1978.
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Impact on the United States
The favorable worldwide production outlook and generally weaker prices for
grains in the remaining months of 1978 indicate that the dollar value of US grain
exports in the second half may not match the record performance of the first six
months. Soybean exports will benefit from price strengthening in the fourth quarter
and should maintain a fairly high volume. Cotton export values should at least match
the pace of early 197? due to an expected increase in prices even though volume will
be down slightly.
The import bill for coffee and tea will be reduced by a sizable amount for the
remainder of 1978. Lower coffee prices will more than offset an increase in import
volume to meet a seasonal rise in consumption. Cocoa import values are also expected
to decline, especially if the production outlook proves favorable and prices drop
further. Sugar import values are expected to be lower than the 1977 levels because of
lower volume. While we expect the value of beef imports in second half 1978 to be
lower than in the first half (due to lower import volume), total import value for the
year will be up sharply from 1977; import values in 1979 are also expected to be up
considerably over 1978 as prices stiffen. (Confidential)
Identification of a major ore-unloading bottleneck at the Muruntau gold mining
and processing facility--the largest in the USSR-has resulted in a reassessment of the
plant's output and a reduction in our estimate of recent Soviet gold production. We
now believe that Soviet gold production totaled about 270 tons in 1977 or 100 tons less
than our previous estimate. Soviet gold reserves at the end of 1977 are in turn
calculated at about 1,530 tons instead of 1,865 tons, a difference of about $2 billion at
current market prices. If our estimates are correct, the USSR has been selling
substantially more gold than. it has been producing since 1975.
The revisions reflect only the reassessment of production at Muruntau, which
accounted for one-third of our previous estimate of total Soviet gold production in
1977 and only about 7 percer._t of the revised estimate. Estimates of production in
Magadan Oblast and the Yakutsk ASSR, which account for about one-half of the
revised estimate, have not been changed. We
also are reasonably certain ot the accuracy o the estimate for roughly another one-
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Previous CIA estimates
Total production ........
191
203
222
258
265
275
303
351
371
Muruntau ................
1
5
20
45
45
45
80
110
120
Other ........................
190
198
202
213
220
230
223
241
251
Domestic consumption
37
39
39
40
41
42
43
45
46
Sales ..............................
0
3
19
158
304
131
147
328
332
Yearend reserves ........
1,376
1,537
1,701
1,761
1,681
1,783
1,896
1,874
1,867
Revised CIA estimates
Total production .......
191
203
212
233
240
248
243
261
270
Muruntau ................
1
5
10
20
20
20
20
20
20
Other ........................
190
198
202
213
220
228
223
241
250
Domestic consumption
37
39
39
40
41
42
43
45
46
Sales
0
3
19
158
304
131
147
328
332
Yearend reserves ........
1,376
1,537
1,691
1,726
1,621
1,696
1,749
1,637
1,529
fifth of total output produced as a byproduct of the copper industry. We are much less
certain about production at 17 other gold mining locations scattered throughout the
USSR, which account for the remaining 20 percent of the revised production estimate.
An analysis of the data on these facilities now under way may lead to further revisions
in our estimates of Soviet gold production and reserves.
Processing Capacity at Muruntau
New information has led us to reduce our estimates of both capacity and output
at Muruntau;
e previously believed that the effective processing capacity of
Muruntau had risen from about 45 tons of gold in 1972-74 to 120 tons in 1977 and that
construction under way would have brought capacity to 135 tons in 1979-80. We
estimated production was at capacity levels in 1969 72.
We have now lowered our estimates of annual Muruntau processing capacity to
66 tons of gold * as of July 1978 and 75 tons in 1980.
Unloading Capacity at Muruntau
Since 1972, processing capacity has not been fully utilized because of an ore-
unloading bottleneck. Soviet data and factors derived from the operating experience
* This annual production of 66 tons of gold would require a daily processing capacity of 66,000 tons of ore with ore
content of 0.10 troy ounce per ton, a recovery rate of 90 percent, and a 360-day work year.
25X1 B
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Installed Processing Capacity and Ore-Unloading Capacity
at Muruntau
Thousand Tons
Per Day 75
66 35
Processing Capacity 26
F0
25
5
20
577031 8-78 CIA
Secret NOFORN WN/NTEL
40
December December July Projected
1972 ''5 78 80
25X1 B
ince 69.
been processed s
maximum ore deliveries
of US mining and railroad com;2anies indicate that between the start of operations in
July 1969 and mid-1978, the Soviets could deliver a maximum of only 20,000 tons of
ore per day to the plant, only enough to produce about 20 tons of gold per year, 100
tons less than the production figure we were carrying for 1977. The new estimate of
Ithat an average of 15,000 to 20,000 tons of ore per day have
The Capacity Anomaly
Between the start of operations in 1969 and the end of 1972, unloading capability
of 20,000 tons of ore per day was not significantly below the 25,000-ton capacity of
processing facilities. Between 1973 and mid-1978, however, processing capacity grew
from 25,000 tons per day to about 66,000 tons, but ore-unloading capacity remained at
20,000 tons. A second ore-unloading facility, which doubles the capacity to unload ore,
was completed by mid-1978. With the second facility in place, maximum potential
output from Muruntau has jumped to about 40 tons of gold per year, still well below
the processing capacity.
We do not know why the Soviets have not been expanding ore-unloading facilities
faster. We can think of a number of explanations but have no evidence to support any
of these.
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One possibility is that shortages of chemicals critical in the refining of gold have
been hampering production at plants using Muruntau's technology. And we cannot
rule out the possibility that the. gap between unloading capacity and processing
capacity has been the result of bureaucratic bungling, as when facilities constructed by
one ministry stand idle for lack of raw materials or critical components supplied by
other ministries.
Future Developments
To operate the plant at or near design capacity, the Soviets will have to install at
least two more unloading points using the existing rail transport system or move part
of the ore by truck. We have no evidence they have done either.
With the recent exuansion of the ore-unloading facilities, we estimate that annual
gold production at Muruntau wil i increase to about 30 tons in 1978 and 40 tons in 1979
and 1980. If the Soviets install the additional necessary ore-unloading facilities,
Muruntau production could increase to 75 tons per year.
Impact on Sales Estimates
The revision of estimated gold production at Muruntau has caused us to reduce
our estimate of Soviet gold reserves as of yearend 1977, from 1,865 tons ($12 billion at
$200 an ounce) to about 1,530 tons ($10 billion). We now estimate that the Soviets
have drawn down their gold, reserves by about 200 tons to meet hard currency
requirements since they resumed large gold sales in 1972. In 1976-77 Moscow
marketed roughly 660 tons of gold, earning almost $3 billion. Sales in first quarter
1978 were particularly heavy, and after withdrawing from the market for a short
period, the USSR is believed to be selling again in quantity.
The reduction in our estimates of reserves is of little immediate importance for
the Soviet hard currency position. With $9.8 billion in gold reserves and annual gold
production valued at about $1.7 billion, availability of gold for export is not likely to
substantially constrain imports in the near term. In the next few years, however,
falling Soviet oil production is expected to cut into Moscow's hard currency earnings;
this will probably intensify pressure to expand gold sales to the West. At some point,
Moscow will have to tie its sales more closely to current production in order to
maintain reserves at au acceptable level. (Secret Noforn WNINTEL)
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Vietnam is having mixed results coping with China's cancellation of its roughly
100 aid projects last month. The USSR is helping out with additional technical
personnel and materials, but non-Communist donors are chary of replacing Chinese
support for fear of offending Peking. While many of the canceled projects were not
essential to the long-term development of Vietnam, some were vital to development
programs in the transport, mining, and steel manufacturing sectors. In any event,
Vietnam's major problem lies not so much in attracting aid as in using efficiently what
has already been lined up.
Dealing With China's Aid Cutoff
Hanoi's sudden request to join the Soviet-dominated Council for Mutual Econom-
ic Assistance (CEMA) early in July was the leadership's initial response to heavy-
handed Chinese economic pressure. Shortly after Vietnam's membership was
accepted-and China cut off all its approximately $300 million in annual assistance-
Vietnamese Vice Premier Le Than Nghi visited the USSR, Romania, Hungary, and
East Germany while other Vietnamese delegations went to Bulgaria and Poland to
solicit aid.
The results of this diplomatic foray are not known, but CEMA members are
expected to at least partly fill the breach left by the Chinese. Although CEMA
membership is unlikely to boost multilateral aid receipts from the organization, it will
facilitate bilateral flows from East European countries.
Soviet personnel have already replaced the 300 Chinese engineers and technicians
building the high-priority Thang Long bridge across the Red River near Hanoi. The
USSR presumably will also provide the concrete, steel, and other materials for the
bridge that were formerly supplied by the PRC. The two-level, 5,500 meter rail, road,
and pedestrian bridge is needed to supplement inadequate bridge and ferry service
linking Hanoi with points north.
Western Reluctance to Fill the Gap
Even though Hanoi wants to avoid becoming overly dependent on the Soviets, it
has been less successful in getting Western nations to fill the gap caused by the Chinese
withdrawal. The French steel firm Creusot-Loire, for example, has declined to
reconsider building steel-making facilities at the Thai Nguyen Iron and Steel Combine
near Hanoi. The complex was begun by China in the early 1960s and reconstructed
with Chinese assistance during and after the war; it includes a rolling mill provided by
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East Germany. The French firm had been negotiating for several years on a $200
million addition to the complex when the project was reportedly shelved earlier this
year because Vietnam was unable to provide sufficient local logistical support.
Paris refused to reconsider Hanoi's latest aid bid on the grounds that PRC
sensibilities would be offended. Exasperation over the previous drawn-out negotiations
as well as Vietnam's inability so far to efficiently use French aid were probably also
contributing factors. The French refusal may lead Hanoi to reconsider an earlier offer
of steel facilities from the USSR.
Tokyo is reluctant to take over Chinese aid projects for fear of jeopardizing
Japanese-Chinese relations. Japan is already Vietnam's most important non-Commu-
nist aid donor and trading partner. Kawasaki Steel Corporation recently rejected a
Vietnamese request that it take over an iron ore mining project abandoned by China.
The Japanese Government has also declined to pick up other Chinese projects. Hanoi
is nonetheless intent on pursuing the Japanese connection and last month awarded a
Japanese firm a $50 million textile plant contract ahead of other bidders, specifically
to draw closer to Tokyo.
West Germany has been approached by the Vietnamese about the possibility of
completing Chinese projects but has not yet made a decision.
Difficulties in Absorbing Postwar Aid
Inadequate foreign capital per se is not at the root of Vietnam's dismal postwar
economic performance. Since 1975, Vietnam has lined up aid offers of $5.6 billion
extending through 1980. This le-vel of aid should support annual GNP growth on the
order of 5 to .10 percent, compared with the stagnation Vietnam has experienced to
date. GNP last year was only 13 percent above 1974.
For a variety of reasons Vietnam has been unable to translate aid pledges into
completed projects. Postwar demands on Vietnamese policymakers have slowed
decisions on organizing aid programs. Hanoi is reluctant to allow many non-
Communist advisers into the country even though government leaders admit that the
major shortcoming to development of the economy is insufficient managerial and
technical talent.
Finally, Vietnam's nfrastructure is not up to the task of efficiently absorbing aid.
The main port of Haiphong is strained well beyond its capacity while southern ports
have deteriorated over the past several years. Internal transportation linking ports with
project sites (concentrated in the north) is inadequate, and Hanoi has been reluctant to
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Vietnam: Postwar Aid and Credit Pledges, 1976-80 '
Total pledges ................................ 5,613
Communist .................................. 3,831
USSR ..... .................................. 2,500
China ........................................ 600 2
East European Countries ........ 719
Cuba .......................................... 12
1,155
370
207
155
75
30
Sweden .....................
.................
France
......................................
Japan ........................................
Norway ....................................
Denmark .................................
Iraq ..........................................
Algeria ......................................
Other ........................................
Multilateral ................................. 377
UN ._ ......................................... 192
World Bank ............................. 90
IMF ..................................... 54
Other ..................................... 41
35
20
243
'Pledges may diverge widely from actual aid receipts. Drawings on Swedish and French aid, for example,
are slow and will likely go behind 1980; most Japanese aid is used as quickly as it is pledged.
Estimated Chinese aid receipts up to cutoff in mid-1978.
allow foreign access to the south. Pilferage and damage to materials and equipment
are substantial throughout the country, and government agencies are currently
incapable of providing the local component of many projects.
Postwar Aid Donors
The bulk of postwar aid is being supplied by Vietnam's Communist allies and is
mostly tied to specific projects. Perhaps a quarter of Soviet aid, for example, is
committed to a 1.7-million kilowatt hydroelectric project in northern Vietnam.
Moreover, aid from East European countries, as well as the USSR, frequently requires
repayment in products produced by aid projects, thereby limiting Vietnam's pay-off
in foreign exchange earnings. Some Soviet aid takes the form of hard currency
purchases of wheat from Australia and other countries and of petroleum from the
Middle East.
Non-Communist nations are supplying about 20 percent of Vietnam's aid. The
leading donors are Japan, France, and the Scandinavian countries. We see no
indications that this share will rise substantially in the next few years. As with
Communist aid, most assistance is allocated to specific projects, such as plants
producing cement, paper, and bicycles, and facilities for the fishing industry. In
addition, aid is used to purchase transport equipment, machinery, petroleum products,
and grain.
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About $375 million in multilateral aid has been pledged so far. Multilateral aid is
provided mainly by United Nations agencies, the World Bank and International
Monetary Fund, and the Asian Development Bank. The bulk of aid from these
organizations is for irrigation and rural development projects and for food imports.
Commercial lending to Vietnam has slowed considerably in recent months. Early
in the postwar period, Vietnam obtained about $250 million in medium-term loans
from European, Japanese, and Hong Kong bank syndicates. The loans were used for
ship purchases and for food and petroleum imports. Now, bankers see substantial risks
in extending credit further, noting Vietnam's stagnant economy and preoccupation
with both the Cambodia border war and the rift with China.
Continuation of Aid Search
Vietnam will continue to cress for additional aid for its ambitious development
programs from both Communist and Western sources. There is little prospect that the
quarrel with China will be settled soon and Chinese aid resumed. Complicating
Hanoi's interest in CE MA aid, however, is concern about being wedged more tightly
into the Soviet bloc with consequent limitations on foreign policy maneuverability.
From Hanoi's perspective, recent approaches to the United States on establishing
diplomatic relations are a first step in offsetting both rising Soviet influence and the
break with China. For the moment Hanoi has dropped its demand for reconstruction
aid from the United States as a condition for normalizing relations; potential US aid
nonetheless remains a tantalizing prospect for the Vietnamese leadership. (Secret
Noforn-Nocontract)
THE GOLDEN TRIANGLE: NEW DEVELOPMENTS IN NARCOTICS TRAFFICKING*
The Golden Triangle, a broad area embracing parts of Burma, Thailand, and
I,aos, remains the center of world opium production for illicit purposes. We expect
production in 1978 to range between 420 and 470 tons-well above 1977's figure of
375 tons but slightly less than in 1975 and 1976.
Destination
Although two-thirds of the area's output is consumed within the three producing
? This article presents the ke~v conclusions on a forthcoming report of the Office of Economic Research.
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nations, in an average year approximately 150 tons of opium equivalent enters
international markets. This probably represents the largest single source of opium and
opium derivatives entering the international illicit trade. About one-half of Golden
Triangle exports are consumed in other southeast Asian countries, with Malaysia,
Hong Kong, Singapore, and Indonesia being the largest markets. Typically, another 60
tons of opium equivalent enter the West European market, while five to 10 tons go to
Australia.
In 1977, about one-third of the six tons of opium equivalent consumed in the
United States was of Golden Triangle origin. This marks a significant increase over
previous years and apparently results from a reduction in the flow of heroin derived
from Mexican opium. (Mexican heroin, which supplied about 90 percent of the US
market in the mid-1970s, has declined sharply in importance because of Mexico's
increasingly effective program of destroying poppy plantations as well as increased US
interdiction of heroin shipments at the border.) Golden Triangle heroin destined for
the United States is smuggled aboard international flights from Thailand and
Singapore and by sea shipments through Malaysia or other Pacific points.
Distribution System
Most Golden Triangle opium distribution has been traditionally in the hands of
ethnic Chinese, usually of Yunnanese origin. The most important of these groups are
the Chinese-led Shan United Army and the Chinese Irregular Forces. The latter group
was originally composed of remnants of Nationalist armies driven from western China
when the Communists consolidated their control. The SUA, on the other hand, has
been mainly a narcotics trafficking group which employs large numbers of ethnic
Shans as soldiers and laborers. The transport role of these groups has been declining in
recent years, however, because of government interdiction efforts. Independent
traffickers and tribal groups, which because of their smaller size are more difficult
targets for government action, now handle about two-thirds of opium shipments
within the Triangle. Some of these independent traffickers work under contract for or
pay taxes to the Chinese groups. Burmese Communists are also increasing their role in
narcotics activity by offering protection to opium caravans through their areas of
control.
Processing and international shipping remain in the hands of ethnic Chinese. In
particular, narcotics destined for the international market are often financed by
consortiums made up of Chinese businessmen who also may have other legitimate
interests. The actual physical distribution is handled by ethnic Chinese, usually of
South China ancestry, who deal with compatriots in Chinese communities throughout
the world.
17 August 1978 SECRET
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Attempts to Curb Traffic
The Burmese Government is engaging in vigorous police and military actions
against growers, processors, and smugglers. Although these efforts have resulted in
some structural changes in the narcotics business-including a decline in the use of
large caravans-they appear to be having little lasting effect on total opium output.
Opium cultivation continues to be the main source of income for many tribal groups.
As government forces are unable to effectively control all areas of Burma on a
continuous basis, tribal groups have little incentive to give up opium production
despite the occasional destruction of their crops and stocks. As for Thailand, the
government has moved more cautiously against growers, focusing its anti-narcotics
effort instead on urban enforcement. The government of Laos is apparently making
no effort to discourage the narcotics business in its jurisdiction.
In the near term we expect heroin that is derived from Golden Triangle opium to
come into the US market in increasing amounts as (a) Mexican heroin is prevented
from entering the United States in customary quantities, and (b) Golden Triangle
heroin is displaced in Western Europe by heroin of South Asian origin. We see little
likelihood that the total supply of Golden Triangle opium will be significantly
reduced. Indeed, governrrrent interdiction efforts may have strengthened the business
by forcing traffickers to shorten lines of communication, take advantage of relatively
safe supplies from Communist-cor.trolled areas, process opium near the site of poppy
cultivation, and use small caravans of independent transporters. Marginal traffickers
have been forced out, and those remaining are better organized and financed than
ever. Moreover, Laos-where regulation is weak and which was once only a minor
factor in Golden Triangle production-may be emerging as a major supplier of
narcotics. (Secret Noforn)
ANGOLA: ECONOMY FLOUNDERING UNDER COMMUNIST MANAGEMENT
The Neto government's recent campaign to improve relations with the West
largely reflects its mounting frustration with Cuban and Soviet handling of the
Angolan economy. Beside .s botching their management role, the Communists report-
edly have revived colonial practices that had been particularly galling to black
nationalists when Angola was under Portuguese control. With the economy still reeling
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under the impact of the Portuguese exodus, the protracted fighting with UNITA, and
the disruptions of Neto's drive for socialization, Cuban and Soviet advisers will not be
able to restore preindependence levels of activity in the next several years. Only oil
exports from the US-operated offshore wells at Cabinda are keeping the economy
afloat, and these earnings almost certainly will fall off in 1979.
Cubans and Soviets at the Helm
After independence in late 1975, the MPLA government turned to the Commu-
nists who were directing and supporting its military efforts for guidance in running
and reorganizing Angola along socialist lines. Although far from filling the void left by
the departure of the Portuguese in 1975, Cuban managers and technicians flooded the
country. More recently, the Soviets have increased their civilian presence, to some
degree at the expense of the Cubans who increasingly are being accused of managerial
incompetence and corruption.
As of mid-1978 about 10,000 Communist civilian technicians appear to be in
Angola. All of the country's economic ministries are heavily influenced by the
Communists. The Cubans reportedly dominate the Transportation Ministry and have
a strong say in the Construction and Housing Ministry besides providing the bulk of
teachers, port managers, and agricultural, water, electric power, and medical techni-
cians. The Soviets have concentrated on commerce and finance; they apparently
control the central bank, the Finance Ministry, and the Fisheries Ministry, and
increasingly are ousting Cubans from the top echelons of the Foreign Trade Ministry.
Communist Economic Exploitation
In the spirit of their Portuguese predecessors, the Cubans and Soviets both appear
to be earning hard currency by bartering either technical advice or military
equipment for Angolan exports valued at concessionary prices, then reselling the goods
advantageously on the world market. Analysis of Soviet trade data
ndicate concessionary sales of coffee and
diamonds, which traditionally have accounted for a third of Angolan exports.
? Soviet purchases of 8,000 tons-11 percent of the 1976 coffee crop-at
$1.09 a pound in rubles, compared with world prices of $1.28.
? Soviet purchases of 4,000 tons-5 percent of the 1977 coffee crop-at
$1.58 a pound in rubles, compared with world prices of $2.24.
25X1 C
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Angola: Economic Activity
7
Area of FNLA operations
Area of UNITA operations
? Area of operations for Cabindan
separatist groups
0 200
Kilometva
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Analysis of partner trade data and fragmentary reporting suggest that Communist
coffee purchases at concessionary prices may have been greater than revealed by the
Soviet trade accounts-as much as half the crop in 1976. Hence, the Communists may
be selling Angolan coffee directly on world markets.
Some evidence exists that:
? About one-half Angolan diamond production, which at 1978 world market
prices would have an estimated annual value of $30 million, is being
transferred to the USSR and Cuba.
? Cuba is marketing the 1978 coffee crop, valued at $214 million at world
market prices.
Both Cubans and Soviets in Angola have preempted scarce consumer goods for
their own use. Urban Angolans are resentful about waiting in long lines for consumer
items while "special stores" are well stocked for foreign personnel. Cuban troops
receive priority in food distribution, particularly for scarce commodities such as beef.
The Cubans also have been accused of profiting from smuggling and black market
trading of consumer imports.
The Economic Decline
Cuban and Soviet advice and management have been able to do little to reverse
the slide in the Angolan economy sparked by the civil war, the departure of 300,000 to
400,000 Portuguese, and persistent guerrilla activity in the southeastern part of the
country. Since 1975, GNP has fallen at least 15 percent in real terms, and output of
important foreign exchange earners such as coffee, diamonds, and iron ore has
plummeted. Aside from their ignorance of local agricultural conditions, the Commu-
nists are too few in number to offset the loss of entrepreneurial skills, middlemen, and
markets represented by the Portuguese. Moreover, the demand for professional and
technical talent has increased in the public sector because of the Neto government's
socialization program. Managers and technicians are needed to run the nationalized
plantations and factories and to distribute and market crops and other commodities at
home and abroad.
Commercial agriculture, which had benefited from seasoned Portuguese manage-
ment, has been particularly hard hit. Production of coffee, Angola's leading cash crop,
is estimated at only one-third of preindependence levels in 1978. The combined
efforts of the economically inexperienced Neto government and of Cuban and Soviet
technicians have been able to keep only one-quarter of the coffee plantations in
17 August 1978 SECRET
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Angola: Production of Key Commodities
Coffee
Thousand tons
Diamonds
Thousand carats
2125
1960
1000
Iron Ore
Thousand tons
6050
Petroleum (offshore)
Thousand b/d
0 0 Negl.
76 77 78
Est
78
Est
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SECRET
production. Compounding technical and management deficiencies is the damage done
to coffee trees when the Zaire-based FNLA was contesting the Neto government for
control of northern Angola in 1975-76. Migrant labor for the coffee plantations, which
are located in the north, now is cut off in the southern territory largely controlled by
UNITA.
Food production and distribution also are curtailed. Even subsistence farmers,
who normally produce small surpluses for local trading, have cut output to avoid theft
by government troops. Cuban and government forces have depleted herds of livestock
and game through indiscriminate slaughter. Truck and rail transport of food and other
crops to cities has been interrupted by guerrilla sabotage, parts shortages, and the
inexperience of operators and mechanics.
The mining sector also has suffered greatly in recent years. Iron ore output from
the all-important Jamba mine (near Cassinga) ceased in 1975 when (a) the Portuguese
fled; (b) the Angolan military confiscated the mine's trucks and bulldozers; and (c) the
mine's turbojet was highjacked to South Africa by a mechanic. Diamond output-80
percent of which is gem quality-has dropped sharply. The open-pit diamond mines
are located mostly in the northeastern Lunda district controlled by Cuban troops.
The rest of the economy remains in poor shape:
? Light industry, which had been growing at 15 to 20 percent a year prior to
independence, now appears to be operating at between one-quarter and one-
half of capacity.
? Urban construction has come to a standstill, intensifying Angola's critical
housing shortage.
? Although oil production resumed in April 1976, the current glut in the
world petroleum market has kept the offshore oil platforms at Cabinda
producing at only about 100,000 b/d, or 75 percent of preindependence
levels.
Current Account Surplus Down
The dislocations in economic activity have greatly reduced Angolan trade volume
and have contributed to a steady drop in the current account surplus. A $730 million
decrease in exports in the two years 1975-76 far outdistanced a reduction in imports,
cutting the trade surplus by more than 60 percent. Export losses would have been
much greater except for coffee exports from stocks built up in previous years and the
return to normal operation of the Cabinda oilfields.
17 August 1978 SECRET
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Current account balance .................................
Trade balance ......... ............................... _....
Exports, f.o.b . ......... ................... _....._.........
Of which:
200 590 409 122 30
257 682 539 262 180
745 1,281 918 554 900
Petroleum ....... ..... ............. ............._... 240 500 481 273 539
Coffee ............. ............ ....... .................. 241 286 215 232 301
Diamonds ....... ----- ................................ 105 96 53 17 18
Imports, f.o.b. ......... . ............. ..... ..... _........ .. 488 599 379 292 720
Net services and transfers ................................ - 57 - 92 -130 -140 -150
Data largely are estim_tes, based on the statistics of trade partners and fragmentary reporting on services
and transfers. Exports ire valued at world market prices, except for Soviet coffee purchases; imports
probably exclude Communist military equipment.
Although exports rebounded in 1977, imports increased 1.5 times, in large part
reflecting the replacement of nearly half of the 23,000 vehicles (mostly from Eastern
Europe) destroyed or taken out of the country by the Portuguese during the civil war.
Imports of grain also have jumped, their share of domestic consumption rising from a
range of 10 to 15 percent to roughly 25 percent of requirements. Other food imports
also are up sharply.
Foreign remittances by Cuban technicians, who are paid by the Angolan
Government, represent a growing foreign exchange drain. At average wage and salary
rates in Cuba-$200 to $250 a month-the wages paid to Cuban technicians would
total about $20 million annually; of this, probably more than half would be sent back
to Cuba. Salaries for Cubans in Angola probably exceed pay in Cuba.
Loss of income from the Benguela Railroad, which had earned $40 to $50 million
a year from transshipments of Zambian and Zairian trade, has also reduced the
current account surplus. The railroad reportedly is operating at only 15 percent of
capacity. Moreover, labor problems at the ports of Luanda and Lobito have caused
berthing delays of 60 to 90 days, costing Angola as much as several million dollars a
month in demurrage.
Disappointment with Cuban and Soviet technical and managerial assistance is an
important factor in they Neto government decision to seek closer ties with the West.
Since early July, Angola has (a) hosted a visit by EC Commissioner for Development
Claude Cheyson; (b) expressed interest in joining the Lome convention; (c) extended
SECRET 17 August 1978
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political and economic feelers toward the United States, West Germany, France,
Japan, Spain, Holland, and Belgium; and (d) agreed to the return of some Angolan
refugees from Portugal.
Whatever the outcome of Neto's Western demarche, economic recovery will be
slow. Even large-scale Western help and peace with IJNITA would not quickly return
output to preindependence levels. Coffee production and exports, for example, will be
reduced for several years because of the wartime damage and inadequate attention to
coffee trees. Coffee stocks have dropped by more than half since independence. Oil
production is slated to decline over the near term due to weak international demand
for the waxy Cabinda crude.
Given the poor outlook for key Angolan exports and the likelihood that imports
will pick up as the government attempts to regain development momentum, Angola
almost certainly is headed for a payments problem. Indeed, several signs of an
emerging foreign exchange shortage already exist. Guaranteed credit and immediate
cash payments to exporters are not as readily available as last year, and Angola
probably will need several hundred million dollars in credits and grants from western
suppliers in the next year or so. (Secret Noforn-Nocontract-Orcon)
Notes
South Korean Boom Darkened by Inflation
Inflation is casting a cloud over an otherwise buoyant South Korean economy,
generating substantial public concern-most notably in the military-and threatening
to become an important political issue in upcoming National Assembly elections. Led
by prices for food and housing, consumer prices are now rising at more than 15
percent per annum compared with 10 percent in 1977, according to the official index,
which appreciably understates the increase.
The underlying factors include:
? A severe spring drought has cut agricultural supplies and boosted food
prices.
? Rising real incomes have boosted consumer demand, especially for housing
and consumer durables; sales of washing machines and refrigerators are
more than triple last year's levels.
17 August 1978 SECRET
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? A construction boom-permits are up 75 percent over last summer-has
created shortages of building materials and skilled labor.
? Business and household income is being bolstered by the inflow of earnings
from overseas construction projects.
? Import costs are on the rise because of the appreciation of the Japanese
yen; South Korea, which has kept its won pegged to the US dollar, relies on
Japan for almost 50 percer.t of its nonoil imports.
? The government has been forced. to authorize large increases in price
ceilings in recent months., including charges for utilities and transportation.
Even though most South Kcreans are benefiting from higher real wages, concern
about inflation has spread, with military officers complaining of morale problems
because military pay is falling; behind the cost of living. The opposition New
Democratic Party (ND1') has called for the economic ministers to step down and is
likely to make inflation a key issue in National Assembly elections slated to be held
later this year or in early 1979.
Since mid-year, the Pak government has begun to lean against the inflation by
limiting credit, trimming government expenditures, and subsidizing a small increase in
imports of food and coal. So long as the boom continues with the concomitant
shortages of skilled labor and housing, however, prices and wages will continue to
spiral. As yet, the inflation is not jeopardizing the over-all health of the economy and
its prospects for hitting; the $12.5 billion export target for 1978. (Confidential)
Eastern Europe Steps Up Euroborrowing
About $1.7 billion in new Euroloans were negotiated by East European countries
in the first seven months of 1978, double the amount for the same period in 1977; at
least $1 billion more is being sought. East Germany has arranged $550 million in
syndicated loans and Hungary $400 million. Poland has borrowed about $300 million
and is seeking at least $500 milliicn more. Since most of the Euromarket loans are tied
only loosely, if at all, to the purchase of Western goods, they provide funds needed to
finance trade deficits or to roll over existing debt. (Confidential)
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 Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
Publications of Interest*
The Oil Market Through 1985
(ER 78-10206, August 1978, Secret Noforn-Nocontract-Orcon)
This study analyzes the prospects for the international oil market during the next
seven years. It surveys the likely range of OPEC oil supplies between now and 1985
and contrasts it with several alternative projections of world demand for OPEC oil. It
also explores the key factors that will determine various supply and demand outcomes.
China: Foreign Trade Policy in the 1970s
(ER 78-10455, August 1978, Secret Noforn-Nocontract)
This interdisciplinary publication explores the complex interplay of economic
and political factors in the development of China's foreign trade policy since the
Cultural Revolution (1966-69); it also outlines the trade policies currently being
pursued by China's new post-Mao leadership.
* Copies of these publications may be obtained by calling
17 August 1978 SECRET
25X1A
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 Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
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.- a
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c-reign
Assessment
Center
Economic Indicators
Weekly Review
17 August 1978
ER EI 78-033
17 August 1978
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 Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
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 those users. U.S.
Government officials may obtain additional copies of this document
directly or through liaisor, 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 an Gift Division
L~hrary of Congress
Washington, D.C. 20540
Non-U.S. Governmen': users not interested in the DOCEX
Project subscription service may purchase reproductions of specific
publications on an individual basis from:
Photoduplicaion Service
I.:.brary of Congress
Washington, D.C. 20540
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 Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
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.
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 BIG SIX F6W91b 14rW Nl4419Si C1~41~M8POSITE INDICATORS
Unemployment Rate
.gic). or ReleaseA924L05/07 : CIA- . 0T00702A0
Appro
lincluding Japan, West Germany, France, the United Kingdom, Italy, and Canada.
A-2
INDEX: 1970=100, seasonally adjusted
Ssmitogarithmic Scale
40
6oo&9-7 AP1978 OCT
 Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
Percent, seasonally adjusted, annual rate
Note: Three-month average compared with previous three months.
Trade Balance
4.0
4.3
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
AVERAGE ANNUAL ' Months
Percent Change GROWTH RATE SINCE LATEST MONTH I Year Earlier tarlie.-
LATEST from Previous 1 Year 3 Months Unemployment Rate
MONTH Month 1970 Earlier Earlier2 Big Five MAY 78 4.4 4.2 4.3
Industrial United States - - -
Production
Big Six APR 78 0.6 3.0 3.0 4.2
United States
Consumer Prices
Big Six JUN 78 0.6 9.2 6.2 7.2
United States t' I
K.7
Billion US $, f.o.b., seasonally adjusted
LATEST MILLION CUMULATIVE (MILLION US $)
MONTH US $ 1978 1977 mange
Trade Balance
Big Six MAY 78 3,499 22,513 11,298 -1,215
United States
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2Average for latest 3 months compared with average for previous 3 months, seasonally adjusted at annual rate.
A-3
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INDUSTRIAL PRODUCTION INDEX: 1970=100, seasonally adjusted
United States
1973 Average 120
West Germany
7
France
,JAN APR JUL OCT JH10 pP&V e 'LF oFF Rei ?astn 062/05913 7JAtIAP ,[YP80 1 U07ULA0008N0 1U0(Y .7-7 APR JUL OCT
1973 1974 1975 1976 1977 1978
A-4
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United Kingdom
Italy
Canada
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1973 1974 1975
United States
Japan
West Germany
France
Percent AVERAGE ANNUAL
Change GROWTH RATE SINCE
from
LATEST Previous 1 Year 3 Months
MONTH Month 1970 Earlier Earlierl
111!4 72 n
hiii 7.. -c u *-9
LlAY 7a; _31- .1
United Kingdom
Italy_
Canada
Percent AVERAGE ANNUAL
Change GROWTH RAIL SINCE
from
LATEST Previous 1. Yea- I Months
MONTH Month 1970 Earlie, Earherl
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JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1976 1977 1978
lAverage for latest 3 months compared with average for previous 3 months.
A-5
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UNEMPLOYMENT RATE
Japan
West Germany
r1%
2.3
4.6-
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United Kingdom
6
~"~~~ata --2.5-
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. Data for earlier periods thus are not comparable.
Italian data are not seasonally adjusted.
Canada
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
THOUSANDS OF PERSONS UNEMPLOYED
1 Year 3 Months
Earlier Earlier
United States JUL 79 5, !93 5, 7 1 5 983 ' UnItad Kingdom
Japan _ t v0 iialy
West Germany :...-- r i ??_0 Canada
France is z
NOTE: Data are seasonally adjusted. Unemployment rates for France are estimated. The rates shown for Japan and Canada are
roughly comparable to US rates. For 1975-78, the rates for France and the United Kingdom should be increased by 5 percent and
15 percent respectively, and those for West Germany decreased by 20 percent to be roughly comparable with US rates. Beginning in
1977, Italian rates should be decreased by 50 percent to be roughly comparable to US rates.
1 Year 3 Months
Earlier d,.arlier
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CONSUMER PRICE INFLATION Percent, seasonally adjusted,
annual rate"
united States
15
Ct 29 Average Annual Rate of Inflation 196:L-t972
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1973 1974 1975 1976 1977 1978
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NN A-8
Japan
West Germany
15
10
5
3.1
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United Kingdom
35
30
25
20
15
10
Italy
35
30
25
20
15
10
5
15
10
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
United States
Japan
West Germany
France
Percent AVERAGE ANNUAL Percent AVERAGE ANNUAL
Change GROWTH RATE SINCE Change GROWTH RATE SINCE
from from
LATEST Previous 1970 1 Year 3 Months LATEST Previous 1970 1 Year 3 Months
MONTH Month Earlier Earlier2 MONTH Month Earlier Earlier2
United Kingdom
Italy
Canada
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A-9
 Approved or a ease 2IIQ
-
GNP'
RETAIL SALES
Constant Market Prices
Constant Prices
Average
Average
Armual Growth Rata Since
Annual Growth Rate Since
Percent Change =
-----._.
Percent Change
---
-----
-----.
Latest
lean Previous 1 Year
Previous
Latest
from Previous
1 Year
3 Months
Quarter
Quarter 1$'7() Earlier
Quarter
Month
Month
1970
Earlier
Earlier'
United States 78 II
1.8 3.2 4.0
7.4
United States
May 78
-0.9
3.1
1.9
5.5
Japan 78 I
2.4 5.5 51
10.0
Japan
Jan 78
2.9
9.2
1.0
-2.8
West Germany 78 I
0.1 2.4 1,1
0.4
West Germany
Apr 78
-0.8
2.5
7.0
-7.3
France 78 1
1.8 4.1 1.4
7.4
France
Jan 78
9.9
0
1.0
10.5
United Kingdom 77 IV
-0.5 1.6 -1.1
-1.9
United Kingdom
Jun 78
0.6
1.2
6.5
7.0
Italy 78 I
2.0 1.9 -6.2
8.2
Italy
Mar 78
3.6
3.2
5.5
21.1
Canada 78 1
0.7 4.:' 2.11.
2.7
Canada
May 78
1.0
4.1
3.5
2.2
Seasonally adjusted.
SeasiscY adjusted.
Average far latest 3
months compared with average for previ
ous 3 mon
ths.
FIXED INVESTMENT '
WAGES IN MANUFACTURING'
Nonresidential; constant
prices
Average
Annual
Growth Rot
e Since
Average
Percent Change
Annual Growth Rate
Since
Latest
from Previous
1 Year
3 Months
Percent Change - -------- ---
-- ---
Period
Period
1970
Earlier
Earlier '
Latest
from Previous 1 Yea
Previous
Quarter
Quarter I' 0 Earlier
Quarter
United States
Jun 78
0.5
7.6
7.6
7.2
United States 78 II
3.6 3.0 7.4
15.1
Japan
Mar 78
-0.2
16.2
7.7
8.3
Japan 78 I
0.9 1.1 -0.4'
3.6
West Germany
78 1
0.9
8.9
4.3
3.9
West Germany 78 I
-0.5 C.7 11.6
-2.1
France
77 IV
3.1
14.1
12.0
12.9
I
France 77 IV
0.8 4.0 41
,
3.3
United Kingdom
May 78
0.5
16.4
20.6
54.9
United Kingdom 78 I
1.3 1.6 9.71
5.2
Italy
May 78
3.5
20.4
15.5
13.6
Italy 78 I
5.3 1.7 - 11.4
22.7
Canada
May 78
0.9
10.9
7.1
6.2
Canada 78 I
-3.7 4.8 - 12.71
-14.1
Hourly earnings (seasonally adjusted)
for the United States, Japan, a
nd Canada;
hourly wage
SeosaraNy adjusted.
rates for others. West German and French data refer to the beg
inning of the quarter.
' Average for latest 3
months compared with that for previous
3 months.
MONEY MARKET RATE$t
Percent Rote of Interest
1 Year
3 Months
1 Month
Representative otes
Latest Date
Earlier
Earlier
Earlier
United States
CommercitI paper
Aug 9 7.78
5.60
7.06
7.84
Japan
Call money
Aug 11 4.25
5.75
4.00
4.50
West Germany
Interbank leans (3 months)
Aug 9 3.68
4.03
3.60
3.67
France
Call money
Aug 11 7.62
8.50
8.00
7.50
United Kingdom
Sterling interbank loans (3
months)
Aug 9 9.58
7.20
9.21
10.00
Canada
Finance pc..ar
Aug 9 8.68
7.38
7.97
8.17
Eurodollars
Three-mort"h, deposits
Aug 9 8.28
6.18
7.84
8.46
Aourov
ed For Re' aSe200
CIA-RnP8OTflf)
7f)?Afl
flf)Ftflf)f)lf)
f)f)5-7
A-10
 EXPORT PRIC&pproved For Release 2002/05/07
us $
Average
Annual Growth Rate Since
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Percent Change
Latest from Previous
Month Month
May 78 0.4
May 78 4.6
May 78 -1.8
Apr 78 3.4
Jun 78 1.2
Apr 78 -0.6
Apr 78 -0.2
IMPORT PRICES
National Currency
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Percent Change
Latest from Previous
Month Month
May 78
May 78
May 78
Apr 78
Jun 78
Apr 78
Apr 78
1 Year 3 Months
1970 Earlier Earlier
9.4 5.0 8.3
11.4 27.3 67.2
11.4 10.6 -6.7
12.1 17.9 36.2
11.4 16.7 -3.8
10.9 9.6 6.7
8.3 -1.2 -13.6
Average
Annual Growth Rate Since
1970
12.8
6.9
3.3
9.3
17.6
18.9
8.9
Earlier
5.4
-17.4
-4.4
0.2
3.0
4.7
10.6
Earlier
6.8
-21.8
0.9
-1.6
16.3
-8.3
-2.1
United States I
Japan
West Germany
France
United Kingdom
Italy
Canada
Latest -- "
Period Million US $ 1978
78 I
Jun 78
May 78
78 I
77 IV
77 III
78 I
Converted to US dollars at the current market rates of exchange.
' Seasonally adjusted.
EXCHANGE RATES
Spot Rate
As of 11 Aug 78
Japan (yen)
West Germany
(Deutsche mark)
France (franc)
United Kingdom
(pound sterling)
Italy (lira)
Canada (dollar)
-6,954
8,829
2,665
N.A.
N.A.
- 1,273
1977 Change
-4,158 -2,796
3,076 5,753
1,946 720
-2 2
N.A. N.A.
N.A. N.A.
- 1,484 212
0.0054
0.5084
0.2326
1.9640
0.0012
0.8802
-.0.3
0.4
1.5
-2.2
1.1
-0.7
1.5
-6,954
2,345
323
0
682
2,390
- 1,273
40.68
43.58
5.54
-20.19
-32.20
- 1 1.78
42.29 21.65 0.94
16.66 7.51 3.17
13.16
12.93
8.29
8.66
2.02
2.02
5.73
-5.68
4.44
-2.27
1.01
0.13
C ?88T '02A000800010005-7
National Currency
Average
Annual Growth Rate Since
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Percent Change
Latest from Previous
Month Month
May 78
May 78
May 78
Apr 78
Jun 78
Apr 78
Apr 78
0.4
6.6
1.2
0.9
0.1
-0.6
1.2
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
End of
Jun 78
Jul 78
Jun 78
Apr 78
May 78
May 78
Jun 78
Billion US $
18.9
29.3
40.7
10.6
17.3
12.2
4.7
1970
9.4
5.0
3.8
9.4
15.2
15.4
9.5
Earlier
5.0
3.7
-1.2
8.9
9.2
5.7
7.3
Earlier
8.3
31.4
-0.6
21.0
13.1
- 1.6
-0.2
Jun 1970 Earlier Earlier
I
14.5 19.2 19.2
4.1 17.6 2T.5
8.8 34.3 42.2
4.4 10.0 0 1
2.8 10.0 1 21.4
4.7 7.9 11.4
9.1 5.1 40
BASIC BALANCE '
Current Account and Long-Term Capital Transactions
Cumulative (Million US f)
United States
Japan
West Germany
France
Latest .
Period Million US $ 1978 1977 Charge
No longer published'
Jun 78 1,301 5,581 2,145 3,436
May 78 -722 2,532 - 543 3.075
78 I -1 -1 -2', 1
United Kingdom 77 IV 1,389 N.A. N.A. N.A.
Italy 77 III 2,520 N.A. N.A. N.A.
Canada 78 I -668 -668 -584 - 84
' Converted to US dollars at the current market rates of exchange.
' As recommended by the Advisory Committee on the Presentation of Balance of Payments
Statistics, the Department of Commerce no longer publishes a basic balance
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
19 Mar 73
-4.36
44.25
31.91
-7.43
-28.16
-42.92
-13.28
1 Year 3 Months
Earlier Earlier
-9.53 -5.85
37.92 19.36
4.37 0.90
0.08 1.43
2.95 2.87
-6.52 -2.28
- 9.20 - 4.42
4 Aug 78
-1.15
0.33
1.19
-0.26
0.30
- 1,16
-0.26
Approved For Release 2002/05/07 :
A? 14 the mf ca1M1, to
CI~tl c t i ~~~///~~~ the wior or Lurrenclim le5.
 Approved For Release 2002/05/07 : CIA-RDP80TOO702AO00800010005-7
Developed Countries: Direction of Trade
zports to (f.a.b.) Imports from (c.i.f.)
Big Other Com- Big Other Com-
World Seven OECD OPEC munist Other World Seven OECD OPEC munist Other
UNITED STATES
1975 .......................... 107.65
46.5'4
16.25 10.77
3.37
29.82
103.42
49.81
8.83
18.70
0.98
25.08
1976 .......................... 115.01
51.30
17.68 12.57
3.64
29.44
129.57
60.39
9.75
27.17
1.16
31.09
1977 .......................... 120.17
53.92
18.53 14.02
2.72
30.98
156.70
70.48
11.08
35.45
1.22
38.47
1978
1st Qtr ................
JAPAN
1975 .......................... 55.73
16.56
6.07 8.42
5.16
15.87
57.85
16.93
6.08
19.40
3.36
12.05
1976 .......................... 67.32
22.61
8.59 9.27
4.93
17.84
64.89
17.58
7.78
. 21.88
2.91
14.72
1977 .......................... 81.11
28.02
9.73 12.03
5.32
26.01
71.33
18.87
7.93
24.33
3.41
16.79
1978
1st Qtr ................
WEST GERMANY
1975 .......................... 91.70
28.33
36.44 6.78
8.81
11.05
76.28
27.09
27.78
8.24
4.87
8.21
1976 .......................... 103.63
33.44
41.86 8.25
8.72
11.04
89.68
31.28
32.64
9.73
5.93
10.01
1977 .......................... 119.28
39.01
48.00 10.78
8.59
12.90
102.63
36.38
37.37
10.12
6.14
12.62
1978
Jan & Feb_ ..........
FRANCE
1975 .......................... 52.87
20.00
15.50 4.90
3.13
8.61
53.99
23.04
14.33
9.43
1.94
5.21
1976 .......................... 57.05
22.49
16.15 5.08
3.23
8.75
64.38
27.81
16.93
11.36
2.24
6.01
1977 .......................... 65.00
1978
25.90
18.19 5.97
3.00
11.94
70.50
30.28
18.24
11.82
2.46
7.70
1st Qtr ................
UNITED KINGDOM
1975 .......................... 44.03
12.55
16.59 4.55
1.56
8.64
53.35
18.47
18.52
6.91
1.68
7.67
1976 .......................... 46.12
14.03
17.53 5.13
1.39
7.92
55.56
19.66
18.81
7.29
2.08
7.65
1977 .......................... 57.44
16.99
22.56 6.78
1.63
9.48
63.29
24.02
21.34
6.31
2.40
9.22
1978
1st Qtr ...............
ITALY
1975 .........................
34.82
15.61
7.86 3.72
2.46
4.67
38.36
17.32
6.75
7.85
2.09
4.34
1976 ..........................
36.96
17.41
8.69 4.23
2.18
3.96
43.42
19.35
8.04
8.12
2.65
5.24
1977 ..........................
45.04
20.92
10.20 5.85
2.45
5.62
47.56
20.80
8.67
9.03
2.80
6.26
4th Qtr ................
12.84
6.02
2.78 1.67
0.69
1.68
13.15
5.90
2.49
2.25
0.83
1.68
CANADA
1975 ..........................
33.84
26.311
1.73 0.71
1.20
2.00
38.59
29.78
1.70
3.43
0.32
2.02
1976 ..........................
40.18
32.0 i
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
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 2002/05/07 : CIA-RDP80TOO702AO00800010005-7
A-12
 Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
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 Omer
CANADA
02
43 0
32 2
8 . . . .
1
70 3
7
1975
.......................... 33.84
26.30
1.73
0.71
1.20
2.00
38.59
29.
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 2002/05/07 : CIA-RDP80T00702A000800010005-7
A-13
 12.0
10.0
2.0
JAN 'APR JUL OCT JAN APR JUL' OCT'- JANAPR JUL OCT JAN' APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
FOREIGN TRADE BILLION US $, f.o.b., seasonally adjusted
United States
14.6
Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
A-14
 Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
United Kingdom
6.0
5.0
4.0
Semllagarfhmic Scale
3.4
LATEST
MONTH
MILLION
US $ 1978
1977
CHANGE
LATEST
MONTH
MILLION
US $ 1978
1977
CHANGE
JUN 78
13,723
82.731
71,782
15,3%
United Kingdom
JUN 78
5,570
33,777
29,467
Balance
-1,597
-16,368
-11,524
4,844
Balance
-195
-1.349
-2,884
Japan
JUN 78
4,846
32,346
30,319
6.7%
Italy
JUN 78
3,517
22,832
22,136
Balance
2,953
14,790
8,540
6,250
Balance
951
1,973
-591
West Germany
Canada
MAY 78
3,401
17,447
16,713
4.4%
Balance
219
1,536
722
814
France
JUN 78
6.217
37,182
37.@2B
13.3
Balance
100
147
-1,670
1,817
Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
A-15
 Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
FOREIGN TRADE PRICES IN US $1
United States
Japan
West Germany
JAN APR JUL OCT JAN APR JU' OCT JAM APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
19JX0proved For 16ase 2002/05I 7cIA-RDP80Ti MOZA00080001 4%5
lExport and import plots are based on five-month weighted moving averages.
A-16
 Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
United Kingdom
Italy
197`Approved F&rcWe ase 2002/0716 CIA-RDP8(% 02A000800011@(T(%-7
A-17
 ApprovSELECTED BN /06cINUIP oa~7o, ~E 0010005-7
MONEY SUP
PLY'
Average
INDUSTRIAL PRODUCTION '
Annual
Growth Rat
e Since
Average
Percent Change
Annual Growth Rate Snca
Latest
from Previous
1 Year
3 Months
Percent change --
--
----
Month
Month
1970
Earlier
Earlier
Latest
from Previous
1 Year
3 Months
Period
Period 1970
Earlier
E srlier'
Brazil
Mar 78
2.7
36.4
43.3
34.7
India
Mar 78
1.1 4.9
0.8
17 8
India
Feb 78
-0.6
13.7
16.0
20.4
South Korea
May 78
3.8 22.9
27.5
29.6
Iran
Mar 78
9.9
29.3
22.5
51.7
Mexico
Mar 78
- 5.1 5.1 1
3.4
--2.0
South Korea
May 78
1.3
31.2
30.7
23.7
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
17.4
2.0
Nigeria
Oct 77
0.6
36.3
46.9
32.6
Taiwan
Mar 78
5.3
25.2
31.0
24.3
h Seasonally adjusted
.
Thailand
Nov 77
3.3
13.1
12.3
4.7
'Average for latest
3 months compared with average for previous 3 months.
' Seasonally adjusted.
r Average for latest 3 months compared with average for previous 3 months.
CONSUMER
PRICES
Average
WHOLESALE
PRICES
Annual Growth
Rcte Since
Average
Percent Change - -
--
----
Annual Growth
Rate Since
Latest
from Previous
1 Year
Month
Month
1970
Earlier
Percent Change
Latest
from Previous
1 Year
Brazil
Jun 78
4.1
28.3
38.0
Month
Month
1970
Earlier
India
Mar 78
0.3
7.5
2.9
Brazil
May 78
3.4
28.4
34.5
Iran
May 78
-0.4
12.4
12.0
India
May 78
0.6
8.0
-2.8
South Korea
Jun 78
2.8
14.6
14.7
Iran
May 78
0.4
11.0
10.9
Mexico
May 78
1.0
15.0
17.2
South Korea
Jun 78
1.3
15.9
11.7
Nigeria
Dec 77
3.2
16.6
31.0
Mexico
May 78
2.5
16.5
16.3
Taiwan
Apr 78
1.8
10.1
7.6
Taiwan
Mar 78
1.1
8.2
1.2
Thailand
Apr 78
1.0
8.6
8.8
Thailand
Jan 78
-0.2
9.5
6.4
EXPORT PRICES
OFFICIAL RESERVES
Us $
Average
Million US $
Annual Growth Rnte Since
Latest Month
Percent Change
---
1 Year
3 Months
Latest
from Previous
1 Year
End of,
Million US $ Jun 1970
Earlier
Earlier
Month
Month
1970
farrier
Brazil
Feb 78
6,733
1,013
5,878
5,994
Brazil
Feb 78
0.4
14.0
1.5
India
Apr 78
6,064
1,006
4,134
5,411
India
Mar 77
-20.9
9.6
17.9
Iran
Jun 78
12,068
208
11,025
12,483
Iran
Jun 78
0
30.8
0
South Korea
May 78
4,101
602
3,519
4,376
South Korea
78 1
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
Jun 78
2,387
148
4,663
3,906
Taiwan
Mar 78
-0.7
11.2
3.8
Taiwan
Mar 78
1,433
531
1,349
1,447
Thailand
Dec 76
2.0
13.3
13.1
Thailand
May 78
2,129
978
2,005
2,087
Approved For Release 2002/05/07A_UA-RDP80T00702A000800010005-7
 Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
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 I
,
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
- 02
845
916
-7.7%
Feb
78
Balance
67
1
66
Iran
Apr 78
Exports
-34.0
-8.2
7,615
8,012
-4.9%
Mar 78
Imports
105.8
14.2
3,694
3,235
14.2%
Mar
78
Balance
1,991
2,795
-804
South
Korea
May
78
Exports
14.2
29.3
4,651
3,630
28.1%
May
78
Imports
64.3
25.1
4,994
3,905
27.9%
May
78
Balance
-343
-275
-68
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
-55.4
-29.9
1,143
1,597
-28.4%
Dec
76
Imports
86.7
8.4
N.A.
N.A.
N.A.
Dec
76
Balance
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
78
Balance
-29
-23
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AGRICULTURAL PRICES MONTHLY AVERAGE CASH PRICE
WHEAT
S PER BUSHEL
Kansas City No 2 Hard Winter
'250
9 AUG
3.06
3 AUG
$,07
JUL 78
3,13
200
AUG 77
2.30
RICE
37.5 $ PER HUNDRED WEIGHT
No. 2 Medium Grain, 4% Brobens,
f.o.b. mills, Houston, Texas
31 JUL ,
19 50
30.0
24 JUL
19 50
JUL 78
19:50
AUG 77
14.94
22.5
f8,5o
;400
15.0
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A-20
$ PER METRIC TON
9 AUG 7.06
3 AUG 6.51
JUL 78 6.45
AUG 77 6.93
$ PER BUSHEL
Chicago. No. 2 Yellow
3 AUG 122.00
JUL 78 135.80
AUG 77 199.40
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SOYBEANS
15 $ PER BUSHEL
SOYBEAN MEAL
S PER TON
500 400
320`
240
6.21
200
1-9 AUG II
SOYBEAN OIL/PALM OIL
Crude, Bulk, c.i.f. US Ports
9 AUG 0.2750
3 AUG 0.2800
JUL 78 0.3120
AUG 77 0.5335
1-9 AUG II
BEEF
C PER POUND
AUSTRALIA
Boneless Beef,
f.o.b., New York
SOYBEAN OIL
Crude, Tank Cars, f.o.b. Decatur 1,0
9 AUG 0.2469
3 AUG 0.2467
JUL 78 0.2577
AUG 77 0.2113
UNITED STATES
Wholesale Steer Beef,
Midwest Markets
9 AUG 156.50
3 AUG 182.50
JUL 78 171.18
AUG 77 140.58
S PER METRIC TON 400
AUG 1-9
IICP F\ -
IVOGH'
1975 1976 1977 1978r
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.
4 AUG
91.00
5 AUG
81.44
28 JUL
90.75
29 JUL
85.69
JUL 78
88.63
JUL 78
85.10
AUG 77
63.01
AUG 77
62.49
1-4AUGII
1974 1975 1976 1977 1978
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 Approved For Release 2002/05/07 : CIA-RDP80T00702A000800010005-7
INDUSTRIAL MATERIALS PRICES MONTHLY AVERAGE CASH PRICE
$ PER ME
"
RIC TON
C PER POUND
45
-
---
$ PER METRIC TON
-
3,000
?
.
I.ME
US
:1,000
40 }
9 AU
28.5
_. o.0
a
3 AUG
28.0
31 0
2
5
JUL 78
26.4
31.0
4800
00
.
35 ,
AUG 77
24.9
21 .0
9 AUG
3 AUG
JUL 78
AUG 77
Major Producer (MP)
$ PER METRIC TON
622.1 414,000
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A-22
LEAD
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CPYRGHT
ALUMINUM
Major US Producer
t per pound
55.00
53.00
53.00
47.09
US STEEL
Composite
$ per long ton
419.31
387.54
357.08
327.00
IRON ORE
Non-Bessemer Old Range
$ per long ton
21.43
21.43
21.43
20.05
CHROME ORE
Russian, Metallurgical Grade
$ per metric ton
NA
NA
150.00
50.00
CHROME ORE
S. Africa, Chemical Grade
$ per long ton
56.00
56.00
58.50
42,00
FERROCHROME
US Producer, 66-70 Percent
E per pound
42.00
41.00
42.39
44.55
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
16,992.00
19,048.00
21,111.00
5,325.00
MERCURY
New York
$ per 76 pound flask
160.00
162.32
116.30
1 10.00
SILVER
LME Cash
it per troy ounce
559.34
496.44
447.09
425.81
GOLD
London Afternoon Fixing Price
$ per troy ounce
202.47
178.16
144.95
!09.65
RUBBER
60 0 PER POUND
1-9 AUG
LUMBER INDEX6
140
1,000
120
1-4 AUG II
1974 1975 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 U S.
3A' of 1 Dec 75, US tin price quoted is "Tin NY lb 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.
1 AUG II
1978
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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