ECONOMIC INTELLIGENCE WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00702A000900070002-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 55
• Document Creation Date: December 15, 2016
• Document Release Date: July 8, 2004
• Sequence Number: 2
• Publication Date: November 16, 1978
• Content Type: REPORT

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Economic Intelligence
Weekly Review
070002-3
!!{ 78-O46
-rnher M78
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Western Europe: Small Countries on Fringe of EMS Debate ......................
The small countries have not had much influence in decisions regarding
the structure and mechanics of the proposed European Monetary Sys-
tem, and the majority have little choice about whether or not to join.
USSR: Flawed Economic Performance ......................................................
Industrial growth is still sliding; growth in GNP this year probably will fall
below the 3 1/2 percent posted in 1977.
USSR: Continuing Slowdown in Orders for Western Machinery ...............
Orders have not recovered from the low level of 1977, a major exception
being equipment for the oil and gas sector..
Vietnam: Growing Economic Ties With Soviet Orbit ................................. 15
Faced with a formidable array of economic and military problems, Hanoi
has softened its key policy of nationalistic Independence in favor of the
additional security offered by more formal ties to CEMA allies.
Non-OPEC LDC Terms of Trade: Substantial Gains in 1977 ....................... 18
The terms of trade (the ratio of export prices to Import prices) rose 13
percent last year, the largest annual Increase In the 1970s.
Notes . ........ ...................................................................................... 24
EC Steel Industry Remains Depressed
UNCTADRubber Negotiations Face Hurdles
Indonesia Gets International Loan on Good Terms
ER ELWR. 78-046
16 November 1978
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SECRET
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WESTERN EUROPE: SMALL COUNTRIES ON FRINGE
OF EMS * DEBATE
The small West European countries have had little voice in decisions regarding
the structure and mechanics of the proposed European Monetary System (EMS), and
the majority have little practical choice about whether or not to join. Those in the
European Community (EC) have generally lined up with their bigger neighbors on the
various EMS issues: Ireland with the United Kingdom; Belgium-Luxembourg with
France; and the Netherlands and Denmark with West Germany. The Benelux nations
and Denmark along with Norway already are members of the European currency
snake and will continue to link their currencies to the deutsche mark regardless of
whether EMS comes into being. The Irish surely will join EMS if the United Kingdom
does and may elect to go in even if the United Kingdom does not.
Sweden, which dropped out of the snake in August 1977, already has been asked
by the Community to join EMS. The Swedes along with the Swiss and Austrians, who
have long tried to keep their economic policies in tune with those of West Germany,
are taking a wait-and-see attitude, Even if EMS proves workable, the Swiss may have
a long wait, as France does not want the buoyant Swiss franc in the system.
The potential new members of the European Community-Greece, Spain, and
Portugal- are even further removed from the debate over EMS. Only Greece, which
is not expected to join the EC until 1981, has publicly endorsed EMS, declaring it
would be willing to align the drachma with other Community currencies.
Present Snake Members Already In
Since the present snake will not be disbanded, all the EC members of the
snake-West Germany, Denmark, Belgium, Luxembourg, and the Netherlands-
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Small EMS Candidates: Share of Trade With EC
Percent
80
70r
60
Netherlands Belgium- Ireland Denmark Norway Sweden Austria Switzerland
Luxembourg
would certainly become EMS members. Norway, the one non-EC snake participant,
presumably would remain in the snake and almost certainly would be offered
associate status in EMS. While all the snake members support EMS, the small countries
were piqued by West German and French failure to consult them prior to proposing
the EMS initiative at the Bremen EC summit last July.
The Dutch and Danes have closely aligned themselves with the West German
position on the mechanics of the system. Both firmly support the parity grid
arrangement for determining intervention and oppose using the basket indicator to
trigger anything more than consultations. Both presumably fear that reliance on the
currency basket arrangement might accelerate West German inflation. While this
would improve their competitive positions vis-a-vis West Germany, it would raise the
cost of imports from their most important supplier and accelerate inflation at home.
The Dutch have lined up behind the West Germans on the issue of new credit
facilities for intervention and balance-of-payments support. Dutch finance minister
Frans Andriessen has called for stringent limits on access to credit by countries with
weak currencies to prevent maintenance of unrealistic exchange rates and thus a delay
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in economic policy adjustments by weak currency countries. Andriessen believes EMS
can be successful only if EMS members gear their economic policies more closely to
West German policy. The Danes have been quiet on the credit issue, probably because
they have been to the snake's credit window a number of times in attempts to support
the krone.
Belgium, which has close political and economic ties to both France and West
Germany, has tried to mediate Franco-German differences on technical issues. As
architects of the so-called Belgian compromise, the Belgians managed to blend French
desires for using the currency basket approach to intervention with West German
insistence on the parity grid. Like the French, they believe that the basket indicator
should trigger "presumptive" action by the country with a divergent currency before
its currency reaches the intervention limits of the parity grid. Under this formula a
country would not be required to intervene, but would be expected to explain why it
did not intervene and indicate other measures it might take. Luxembourg has
shadowed the Belgian position.
As a non-EC member, Norway has been merely an interested onlooker to the
EMS negotiations. Prime Minister Odvar Nordli will meet with West German
Chancellor Schmidt in late November to discuss the Norwegian role in EMS. Despite
its high rate of inflation, Norway has managed to stay in the snake and presumably
will follow the West German lead.
Ireland Wants In, But...
The Irish Government strongly favors EMS and will join without hesitation if the
United Kingdom participates. In the event Britain does not join immediately, as now
seems likely, the Irish will be in a quandary. They must weigh the advantages and
disadvantages of breaking the tie between the Irish and British pounds. As spelled out
by Finance Minister George Colley, the economic advantages of joining EMS without
Britain include a reduction in the rate of inflation, increased investment in Ireland by
continental EC firms, greater independence from the United Kingdom in monetary
policy, and greater financial aid from the EC.
Colley appears overoptimistic. If the Irish pound were pulled up by participation
in EMS as he apparently supposes, foreign investment in Ireland-particularly in
export industries-would be less attractive. Moreover, Irish monetary policy would be
shaped by pressure to maintain EMS parities. Government officials realize that
allowing the Irish pound to appreciate relative to the pound sterling would adversely
affect about one-half of Ireland's trade, making Irish goods less competitive in the
United Kingdom and increasing competition from British imports, with consequent
adverse effects on domestic output, employment, and the balance of payments. In
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Small EMS Candidates: Index of Wholesale Manufacture Prices
Against West German Prices
March 1973=100
Snake Countries
140
80
Non-Snake Countries
180
Mar II III IV I IIT III IV I II III IV I II III IV I II III IV I It III
1973 1974 1975 1976 1977 1978
1. Luxembourg is not included in these data.
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addition, Dublin is concerned about the implications for relations with Northern
Ireland and Irish unity if the currency link were broken.
Prime Minister Jack Lynch, whose Fianna Fail party was returned to power in a
landslide victory in 1977, has frequently said his government would be willing to
break the tie with sterling. He doubtlessly hopes the step can be avoided. The
government has been accused by opposition parties of glossing over the potential
damage from breaking the currency link in its nationalistic fervor to be "free at last of
Britain." Although Lynch and his cabinet apparently are ready to accept the financial
discipline entailed by membership in EMS, they may delay a decision on whether to
join until the United Kingdom makes its final decision.
Sweden appears to be the first non-EC country approached about joining EMS.
Not surprisingly, the Swedish response has been noncommittal; Sweden pulled out of
the snake last year as part of an effort to restore sagging exports. Stockholm has since
been able to maintain exchange rate stability by pegging the krona to a 15-currency
basket representing Sweden's most important trading partners.
Speaking for Austria, Finance Minister Hannes Androsch has welcomed the
proposed EMS as a means of restoring stability to intra-European exchange rates and
has offered to cooperate in the effort. He views EMS as a confirmation of Austria's
"hard schilling" policy of maintaining a close link with the deutsche mark and can
point to a domestic inflation rate of 3.5 percent. The cost has been an erosion of export
competitiveness as Austria has been unable to match the West German performance
on inflation, wage restraint, and productivity. Austrian officials see three courses of
action open to them: (a) allow the schilling to float; (b) link the schilling unofficially
with EMS; or (c) join EMS as an associate member, provided that membership would
not infringe on Austria's status as a neutral country. Vienna seems in no hurry to make
a choice.
Swiss government and central bank officials are skeptical that EMS will work and
are in no rush to decide whether to seek membership. They claim that Minister of
Economics Fritz Honegger's favorable appraisal in early October of possible Swiss
cooperation with EMS was politically motivated and did not accurately reflect
government or central bank thinking. A working group under the direction of the
Swiss central bank is studying the consequences of Swiss association with EMS; it is not
expected to complete its work before yearend.
Swiss exporters may be more inclined to see benefits in associating with EMS,
since appreciation of the Swiss franc in relation to the deutsche mark has hampered
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Small EMS Candidates: Index of Exchange Rates
Against the Deutsche Mark
March 1973=100
60
Non-Snake Countries
140
40 Mar II 111 IV I II III IV I II III IV I II 111 IV 1 II III IV 1 II III
1973 1974 1975 1976 1977 1978
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sales to their largest market and has given an edge to their toughest competitor in third
countries. Even if Swiss officials eventually decide in favor of EMS, the odds are
against Switzerland being allowed to join. Paris rebuffed Bern's attempt to join the
snake in 1975 on the grounds that a strong Swiss franc would pull up other member
currencies; the French oppose Swiss participation in EMS for the same reason.
Ten months through 1978, the Soviet economy is headed for another year of
slowing growth. Despite the outlook for a record grain crop this year, growth in GNP
probably will fall below the 31/2 percent posted in 1977.
? Industrial growth is still sliding and the likely 3.5-percent increase would
be the smallest in 30 years.
? Agriculture will register only a small gain this year-a bumper grain
harvest being offset by declines in other major crops.
? Construction still is subject to protracted delays.
? Only one-half of the 530 projects scheduled to come on stream during the
first half of 1978 actually were commissioned, and only 60 percent of the
projects carried over from 1977 were completed in the first six months.
? Primary energy production is running behind last year's pace and is not
likely to rise more than 4 percent in 1978.
? Meat shortages still persist, although this year's good grain harvest-
coupled with a continued high level of grain imports-should bolster meat
production next year. Finding enough meat will remain the chief worry of
most households through the winter of 1978/79.
Industry Still Slipping
Growth in industrial output this year will be less than 4 percent and could fall as
low as 3.5 percent. Except for gains in steel and electric power output-following last
year's exceptionally poor performance-all other branches of industry are running
behind the pace posted for the first three quarters of 1977; for some products,
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production has declined in absolute terms, notably for coal, timber, generators, freight
cars, butter, and selected processed foods.
Output of nonferrous metals and construction materials (particularly cement)
gained very little over the first nine months of last year. In the chemical industry,
which has been plagued by idle capacity, delays in equipment deliveries, and a
shortage of skilled labor, growth has fallen below 5 percent for the first time on record.
Growth in civilian machinery production also has slipped this year.
Jan-Sep
1977 1978
Civilian industrial production ........... ....... ............. ._....... ............ ........... _........... 4.5 3:5
Primary energy ....._._..._ ......................._._.................._............._............._....... 5 4
Oil ..... . . . . ... .. . . . . . . . I?? .................. ........... ........ ..........._....... 5 4.5
...............................
Natural gas .._ ................. ............. ..................... ............ ........................ --__ .. 7.5 7.5
Coal .......................................................................................................... ..... 1.5 0
Electric power _................. ...................................._..........._._........................... 3.5 4.5
.
Ferrous metals ................... ....... _........._..................... ............... _.............. _.... 0.5 3
Nonferrous metals ._ ............................ .............. ......................._...._.._._......... 2 0.5
Construction materials ...____ ................ .............................. ....... .......... ....... .._.. 3 1.5
Cement ....................................... .............................................. ...................... 2.5 0,5
Chemicals ......................... ......... .._............ ............. .__............. ....... 6 4.5
Civilian machinery .........._ ..................._.........._...._......._......_............_......__. 7 6.5
Consumer nondurables ..... _ .................. _..... ............. ........ _.......... ............ _... 4.5 2
The Soviet farm situation is mixed. A record grain harvest announced this week
by Premier Kosygin-"more than 230 million tons"-should provide a boost to
livestock feed and ease any immediate need for the Soviets to purchase unusually large
quantities of Western grain. On the negative side, an unusually wet season damaged
the potato and sugar beet crops and lowered grain quality in some areas. Unless the
grain crop is considerably in excess of 230 million tons, we expect the Soviets to
purchase on the order of 15 million tons of grain during the current marketing year.
The estimate of import needs is based on plans for expanding the livestock sector,
which currently consumes more than one-half the annual grain crop. At midyear,
targets for livestock products seemed attainable; however, the nine-month results
indicate a slowing in this sector. Hoped for gains in the crucial livestock sector are
being impeded by problems in operating large livestock complexes. As a result, growth
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in industrial meat production has declined; the 1978 meat goal will remain unfulfilled
unless an unprecedented jump in output occurs in the final quarter.
Leadership Perceptions
As it surveys the economy, the Soviet leadership has little to be pleased with and
much to be worried about. The poor performance over the past three years already
has forced the Politburo to scrap major segments of the current 5-year plan (1976-80)
and to settle for short-run solutions to long-term problems, particularly with respect to
energy. Moscow clings to the hope that the economy is simply muddling through a
difficult transition period in which productivity gains, conservation measures, and
new technology will gradually offset declining increments to labor and capital. The
attitude that no problem is too great for the Soviet "system" to overcome seems to
prevail. Recently Soviet Minister of Foreign Trade Patolichev echoed this theme:
You know, during the war steel output was only five million tons per year.
How was it possible to defeat the Germans? This is where our system works.
This is where our system is flexible.... I know our Five Year Plans can do
miracles.... You know, Leonid Brezhnev says "tighten the belts by one
notch." Everyone will do it, and the effect will be tremendous.
Temporizing on Policy Choices
No clear strategy has emerged on dealing with the formidable problems that are
building in size: declining oil production in the 1980s; a slowdown in capital formation
and labor force growth; regional imbalances in labor, plant and equipment, and
natural resources; and declining returns to investment.
Moscow has been responding to short-term needs for oil with measures that will
hinder a transition to a balanced long-term energy strategy. Since December 1977, the
leadership has adopted a crisis management approach. It has rushed more men and
equipment into Tyumen Oblast to step up drilling and recovery operations at the giant
Samotlor field and to open up a number of smaller fields in Tyumen Oblast-at the
expense of sharper production declines in some of the older producing regions. The
prospects for this commitment to Tyumen oil are highly dubious. Samotlor, which
presently produces about one-fourth of all Soviet oil, is being driven beyond its
previously planned capacity, while exploitation of the smaller fields require dispropor-
tionately large quantities of investment. Even now, these fields are not being brought
on stream as rapidly as planned.
The increasingly heavy commitment of resources to oil production in West
Siberia is unlikely to prevent a serious decline in Soviet ability to export oil in the
1980s. Moreover, given the limits on investment resources, the push in West Siberia
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could retard progress toward increasing the production of coal or gas. Delays in solving
high-voltage transmission problems, in developing either slurry or capsule pipelines,
and in producing power generating equipment adapted to Kansk-Achinsk coal will
preclude any large-scale substitution of coal for at least a decade. Eventually the
Soviets are likely to emphasize gas, based on a quantum increase in Tyumen or
Astrakhan production. Provided that gas reserves are close to official claims, this
approach would be the only way of realizing a continuing increase in total energy
production in the 1980s. But the accompanying demands for equipment would place
an acute strain on the steel industry and on industrial branches producing compressors
and other equipment for the gas industry and gas consumers. Foreign credits to hasten
the import of large-diameter pipe and compressors might prove to be critical at this
juncture. Even now, by stressing development of Tyumen oil, Brezhnev has height-
ened the need for a broad range of onshore and offshore technology, much of which
will have to be imported if the best and quickest possible results are to be obtained.
The slow-down in capital formation could not be occurring at a worse time
because greater investment is needed to counter the declining increments to labor, to
renovate obsolete plant and equipment, and to stave off the impending energy crunch.
Moreover, the required investment programs are becoming more costly and their
payoff further away, as more resources are devoted to Siberia where costs are high,
labor is short, and infrastructure is often nonexistent.
Demand for investment goods also must compete with the needs of agriculture
(which currently command about one-fifth of the country's investment resources) and
the defense sector. Moscow has indicated that some redistribution of investment
resources is in the offing for 1979: the energy and machine-building branches of the
economy are to receive a larger share of investment together with transportation and
metallurgy. Agriculture's share will remain intact. This reallocation implies a declin-
ing share for consumer-oriented industries and perhaps housing.
We expect growth in per capita consumption in 1978 to be considerably less than
last year, largely because of the-effect on food output of last year's mediocre harvest.
The output of major crops in 1977 fell 5.5 percent below the previous year. Planning
Chief Baybakov warned the consumer of this possibility in his speech on 1978
prospects last December and appealed at that time to all sectors to regard the 1978
consumer goals as "minimum targets."
Although per capita meat output this year will exceed the previous highs
achieved in 1974-75, meat shortages are still common. The long-run gap between
supply and demand for meat appears to be widening, evidenced by an increase in the
spread between fixed prices in state retail stores and free prices in collective farm
markets. Over the long run, the leadership appears confident that the meat situation
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will improve. In mid-summer, Brezhnev announced a relatively high meat goal for
1985, and per capita meat consumption norms were raised by about 15 percent.
Moscow continues to offer impressive incentives to the private agricultural sector,
probably anticipating a big pay-off in meat production.
Slowing economic growth and looming resource shortages already are affecting
foreign economic relations. Mounting hard currency debt and reduced expectations
regarding (a) the gains from trade with the West and (b) Soviet ability to boost exports
have led to a more pragmatic approach to hard currency trade. The USSR has
trimmed its trade deficits and reduced new borrowings in order to better ensure
balance of payments stability in the 1980s.* Worried about its ability to export enough
to cover anticipated hard currency imports and to repay existing debt, Moscow has
been insisting on compensation type arrangements for major industrialization projects
undertaken with the West. These demands tend to reduce the flow of Western
technology and equipment and will continue to impede technology transfer unless the
USSR becomes more accommodating regarding complementary Western requests for
management participation, quality control, production sharing, and on-site inspection.
Economic Ties With Eastern Europe
Domestic economic problems have spilled over to influence Soviet economic
relations with Eastern Europe. Over the last few years the USSR has had to face up to
the increasing opportunity costs of exporting raw materials, particularly energy, to
Eastern Europe. In addition to charging higher prices to its East European customers,
the USSR has begun to stiffen its terms for Soviet guarantees of future raw material
deliveries. In particular, Moscow is asking Eastern Europe to provide the equipment
and construction labor required to develop raw material deposits, But Soviet ability to
redress the imbalance in its resource transfer to Eastern Europe will ultimately depend
upon political realities. For example, the USSR has eased the impact of higher oil
prices by providing large credits to East European oil importers and by allowing some
East European participants in the CEMA-wide Orenburg pipeline project to reduce
labor participation below agreed-upon levels.
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Despite the improvement in the USSR's hard currency payments position, Soviet
orders for Western machinery and equipment still have not recovered from the low
level of 1977. Indeed, the value of Soviet contracts, based on data for the first nine
months of 1978, is running nearly 25 percent behind the 1977 pace. The picture is
mixed, however. A sharp slump in equipment orders for the chemical and petro-
chemical industry more than accounts for the 1978 decline. Contracts for certain
industrial sectors-notably oil and gas-are on the upswing again.
USSR: Hard Currency Orders for Machinery and Equipment,' January-September
Million US $
1976
1977
1978
Total ......................................................................................................
4,333 '
2,572
2,013
Chemical and petrochemical ....... ...._...._ .................... ................ .........
1,070
1,199
562
Oil and natural gas' ........._ ............ ..........:._...... ..... .......... ._...... ..._.._
1,440
233
779
Metalworking and metallurgy ..... ................. ............................ ._._........
898
237
103
Mining and construction ................. .................... ............... .......... ....... ..
113
136
40
Timber and wood products ........ .................................................
133
65
75
Vehicle manufacturing ........ ............. ......._....... ................... ........ ......... ..
325
48
94
Ships and marine ................. .............. .................... ............................. ....
48
67
83
Aircraft ...... ....................................... .......... .... ...... ...... ................... .._......
14
45
0
Vehicles; industrial user unknown _ .._ ....... ......... ........ .......... ....... .....
20
56
54
Electronic, including computers..._ ................................... .......
16
113
100
...
Food processing ........................ .. ............................................. ........
37
137
17
Consumer goods ............................................ _ ...................................... _
98
75
31
Other ...._ ...................................................................._..................._.......
121
161
75
' Orders are categorized according to end users whenever possible. Two exceptions are tire manufacturing equipment;
which is under "chemical and petrochemical," and computers and related equipment, which are under "electronics."
z Includes roughly $800 million worth of machinery that was ordered on behalf of Eastern Europe for the Orenburg
pipeline project.
' Including pipeline equipment but excluding pipe.
' Including trucks, tractors, bulldozers, and materials-handling equipment.
Soviet orders for machinery and equipment through September were down for
most major hard currency trading partners: (a) down by more than four-fifths for the
United Kingdom; (b) down by nearly two-thirds for Japan; (c) down by one-half for
Italy; (d) essentially unchanged for France; and (e) up by one-half for West Germany.
Soviet contracts for US equipment for the first nine months, on the other hand, were
more than double the 1977 level for the same period, with oil and gas equipment
responsible for almost all of the increase. Soviet orders placed in the United States
include a $158 million contract for a drill-bit plant to be erected at Kuybyshev.
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Soviet Equipment and Machinery Orders, January-September
Million US $
1977
1978
The continuing slump in orders for Western machinery and equipment seems to
reflect Soviet financial conservatism, Western distaste for compensation agreements,
and problems in digesting the machinery already purchased. A number of major
industrial projects scheduled for the current five-year plan (1976-80)-which presum-
ably would have been backed by long-term credits-reportedly were ordered
postponed to the 1981-85 five-year plan by Chairman of the USSR State Bank,
Vladimir S. Alkhimov. To slow the growth of Soviet debt, Moscow also scaled down
the size of some major projects involving Western equipment and technology. A
notable example is the recently signed order for $200 million to $250 million in gas lift
equipment to be used at the Samotlor and Fedorovo oilfields in West Siberia. When
the Soviets began shopping for the project in 1975, Moscow reportedly was looking for
about $500 million worth of Western equipment. Similarly, a Soviet contract for a
bearing plant currently in the final stages of negotiation was initially set in 1977 at $93
million, reduced to $37 million in June 1978, and then finally marked down to only
$11 million.
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Heightened Soviet insistence on compensation arrangements as a condition for
going forward with major projects involving large purchases of Western equipment
and technology has led to a slowdown in new orders. Western firms are becoming
more reluctant to accept many Soviet products. Unlike in 1974, when fuel and raw
material shortages made long-term supplies of Soviet products attractive to Western
firms, they now regard compensation agreements as a disagreeable condition for
winning Soviet contracts. For example, Moscow so far has been unable to find a
Western firm to supply an estimated $750 million worth of equipment for an ethylene
plant to be built at Tomsk because of Soviet demands for a 100-percent buy-back
arrangement in the output of the plant. US firms reportedly are unwilling to accept
any type of compensation arrangement while West German firms want to buy back
oil instead of petrochemicals. The West European chemical industry already is
worried about the difficulties of absorbing large flows of Soviet chemical fertilizers
and petrochemicals stemming from earlier compensation agreements.
Inability to absorb the substantial amount of previously ordered Western
machinery and equipment also has contributed to the cutback in orders. Serious
bottlenecks have developed in constructing the facilities needed to house Western
equipment and-according to Soviet Foreign Trade Minister Nikolay S. Patoli-
chev--foreign trade organizations have thus been enjoined to slow down the signing of
new contracts. In addition, the USSR reportedly is finding it difficult to supply
manpower for new plants as a result of labor shortages and the lack of technically
qualified workers.
Implications for the United States
The slowdown in orders should have a mixed impact on prospective US
equipment sales. US-produced oil and gas equipment is preferred by Moscow, and
Soviet orders in this area are on the rise. The lack of US-government-backed credits,
however, will continue to limit sales of this equipment to key items; further current
US export restrictions will continue to be a further hindrance. Export restrictions, for
example, were a major factor in Moscow's decision to order the gas lift equipment for
the Samotlor and Fedorovo oilfields from a French-led consortium, which guaranteed
an "all-European" package, rather than to accept the offer of a Japanese consortium,
which included several US-based subcontractors. Soviet orders for nonenergy equip-
ment are expected to remain depressed. In particular, US commercial reluctance to
accede to Soviet demands for compensatory arrangements, along with the lack of low-
interest long-term credits, probably will sharply limit major US-USSR deals over the
near term.
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Over the past six months, the USSR has substantially tightened its economic links
with Vietnam. Hanoi's joining the Soviet-dominated Council for Mutual Economic
Assistance (CEMA, or COMECON) last June has been followed by the 3 November
"treaty of friendship and cooperation" between the two countries, as well as several
new economic agreements. Faced with deteriorating relations with China, a border
war with Cambodia, a large import bill, and a lackluster postwar economy, the Hanoi
leadership has softened its key policy of nationalistic independence in favor of the
additional security offered by more formal ties to CEMA allies. Vietnam's immediate
gains will include aid to help replace Chinese assistance, which was cut back in May
and completely ended in July. Hanoi will continue to resist Soviet pressures for greater
influence over its policies.
CEMA Membership
Vietnam's entry into CEMA at the 29 June 1978 Bucharest meeting was not as
precipitous as it appeared. Hanoi had had longstanding bilateral aid and trade
relations with the major CEMA members-Bulgaria, Czechoslovakia, East Germany,
Hungary, Poland, Romania, and the USSR. Hanoi had sent observers to CEMA
meetings from 1958 to 1962, in 1967, and from 1973 to 1978. Beginning in 1976, the
Vietnamese upgraded the level of their observer delegation by sending Vice Premier
and State Planning Chairman Le Than Nghi to the CEMA meetings. In 1977, Hanoi
joined two CEMA financial organizations-the International Bank for Economic
Cooperation and the International Investment Bank. Moscow had previously been
encouraging Vietnam to join CEMA as a full member but Hanoi had demurred,
preferring not to jeopardize its image of independence and nonalignment, especially
vis-a-vis the People's Republic of China.
While China's decision last May to cut back economic aid to Vietnam was a
proximate cause for Hanoi's CEMA membership, the groundwork had been laid
earlier. Relations with China had been worsening continuously since 1975 over (a)
Vietnam's border dispute with Cambodia, (b) PRC-Vietnam disputes over territorial
rights both at mainland borders and around the Paracel and Spratly Islands, (c)
Hanoi's close relations with Moscow, and (d) Vietnam's treatment of its ethnic
Chinese. The downward spiral in Hanoi-Peking relations, combined with Vietnam's
failure to garner substantial economic aid from the United States and other Western
nations, no doubt caused Politburo leaders to reassess the political and economic
security available from closer CEMA ties.
We cannot yet expect economic benefits to Vietnam from CEMA membership
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beyond ongoing bilateral aid and trade programs. The Soviet and East European
CEMA members are reportedly committed by bilateral agreements to support
Vietnam with an estimated $640 million annually ($500 million from the USSR, $140
million from East European countries) in economic aid from 1976 through 1980-al-
most three-fifths of total aid and credits promised to Vietnam during the period, The
bulk of economic aid is bilateral credits, which Hanoi presumably hopes will
ultimately be written off, as happened to Communist credits extended to North
Vietnam during the war. CEMA loans-as distinct from bilateral aid-could not so
easily be written off. Any debt cancellation might raise problems for future borrowing
from the West by CEMA banks themselves.
Hanoi certainly wants the CEMA members-either bilaterally or as a group-to
take over many of the 100-odd aid projects abandoned by China and to offset the
withdrawal of approximately $300 million in annual Chinese aid to Vietnam. The
CEMA countries will be selective in their choice of former Chinese projects to support
to avoid straining their own resources. Furthermore, the East European members wish
to avoid unnecessarily riling Peking. The CEMA members could help Hanoi finish
various construction, transport, and mining projects *; at the same time, they would be
reluctant to take on the completion of manufacturing installations incorporating
Chinese equipment and engineering that might not be compatible with Soviet and
East European machinery and production processes.
Vietnam may gain in other ways from the use of aid from CEMA countries. Food
aid may be obtained on more favorable terms and possibly in greater amounts. The
CEMA Executive Committee, for example, is reportedly discussing emergency food
aid for Vietnam in the wake of the recent floods. Under CEMA, bilateral programs
may be better coordinated to reduce redundancy and to improve linkages between
projects. Vietnam will receive guidance from CEMA on formulating economic plans.
Vietnamese leaders probably hope that the trade with CEMA members may be
enhanced by improved shipping and clearing arrangements on a multilateral basis
rather than on a seven-country bilateral basis. Multilateral clearing in CEMA,
however, has customarily been more apparent than real. Finally, the implied
institutional backing of CEMA may improve Vietnam's creditworthiness in the eyes of
Western bankers, who are concerned that Hanoi may have difficulty servicing its
commercial bank credits.
Whether or not the political and economic gains to Hanoi of closer ties to the
Soviet orbit are real-or at least perceived by Hanoi as real-they will have been
obtained at the expense of Vietnam's image of independence and nonalignment.
Hanoi now will be forced to weigh carefully its highly nationalistic goals against the
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obligation to be more forthcoming in support of Soviet policies. Even though Vietnam
is not geographically vulnerable to Soviet control, Moscow may decide at some point
to use its increased economic leverage to urge Hanoi to allow, for example, Soviet
naval access to Vietnamese ports. The Vietnamese are unlikely to grant the Soviets
formal base rights, but a serious escalation of pressure by China could cause Hanoi to
permit a limited Soviet military presence. Vietnam's membership in CEMA and the
signing of the friendship treaty, moreover, play into China's hands by seemingly
proving the PRC claim that Moscow is behind every Vietnamese action in Southeast
Asia.
Vietnam's closer ties to the Soviets may give pause to many Western aid donors.
With Hanoi seemingly more securely in the Soviet camp, Western nations-which
earlier had hoped Vietnam would be more of an Asian "Yugoslavia" than a
"Cuba"-may give up trying to gain influence over Vietnam through aid programs.
The many Western nations that have been trying to improve relations with China for
several years will see no benefit in succoring Hanoi at the risk of perturbing Peking.
Japan, France, and Italy, precisely for this reason, have already refused Hanoi's
request that they take over some of the abandoned Chinese aid projects.
Vietnam has not been received enthusiastically in CEMA by all members. At least
Romania, Poland, and Czechoslovakia resent Hanoi's entry. Romania-and also
Yugoslavia, which has a special relationship with CEMA-prefer to keep CEMA from
becoming involved in Vietnam because Hanoi is so deeply entangled in Sino-Soviet
rivalries in Southeast Asia. Poland considers Vietnam to be too far away to claim the
attention-and the resources-of the poorer East European countries. Both Poland
and Romania fear an increasing politicization of CEMA at the behest of Moscow and
feel that aid to Soviet-designated developing countries merely strains the resources of
the East Europeans and runs counter to the CEMA objective of evening up the living
standards of the East European member states.
Many of the East European countries feel that Vietnam's membership was
rammed through by Moscow and that Vietnam itself has little to offer the East
Europeans. East Germany, Czechoslovakia, and Hungary see in Hanoi's membership a
Moscow ploy to spread an increasingly expensive Soviet burden-especially onto the
more developed CEMA economies. Bulgaria, on the other hand, views the possibility
of multilateral CEMA projects in Vietnam as preferable to current bilateral programs.
The Kremlin has palpably scored in arranging for Vietnamese membership in
CEMA and the recent friendship treaty. Moscow has probably increased its political
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and economic leverage over Vietnam by binding more closely a major aid client. At
the same time, the USSR strengthens a useful ally on China's southern flank, an ally
that at some point could be called on to support Soviet policies in Southeast Asia. Over
time, Moscow probably expects better access to the Indochina region for political,
military, and intelligence purposes.
Prospects
For now, we do not expect Vietnam's CEMA membership to result in substantial
loans under CEMA auspices or in a dramatic improvement in bilateral aid receipts.
CEMA officials have only recently agreed on areas for Vietnamese participation in
CEMA organizations. Vietnamese representatives will start out on CEMA working
groups and gradually participate in standing commissions. While the Vietnam-CEMA
relationship evolves, Hanoi will continue to rely on existing bilateral arrangements
with CEMA members for economic aid. The economic agreements signed at the same
time as the Soviet-Vietnamese friendship treaty will result in a moderate increase in
the already large Soviet aid program. The East Europeans will remain reluctant to
increase their support in parallel fashion.
Because of its CEMA membership and the friendship treaty, Vietnam's interna-
tional image of nonalignment is no longer as sturdy as Hanoi would have the non-
Communist world believe. Peking is going out of its way to remind especially the other
Southeast Asian nations of the growing Moscow-Hanoi link and the danger it poses.
For their part, Vietnam's leaders do not relish the closeness of the association with
Moscow forced on them by the rift with China and will do what they can to restrain
Soviet influence. Hanoi remains uneasy about its dependence on the USSR and is still
in the process of sorting out its international position, as witness its continuing
overtures to the United States for diplomatic relations, and its efforts to persuade non-
Communist Asia that the friendship treaty has not seriously romised its
nonaligned foreign policy.
NON-OPEC LDC TERMS OF TRADE: SUBSTANTIAL GAINS IN 1977
In 1977, the terms of trade of the non-OPEC LDCs-the ratio of their export
prices to their import prices-rose by 13 percent, the largest jump in this decade. Due
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Non-OPEC LDCs: Terms of Trade
Percent Change
10
e 8
mainly to fluctuations in the export prices of primary commodities, non-OPEC LDC
terms of trade had fallen 8 percent in 1975 and had posted a 2-percent gain in 1976.
Despite the large jump in oil import prices following the OPEC price hikes of
1973/74, the 1977 non-OPEC LDC terms of trade were 4 percent higher than in 1970
and were more favorable than in any year since then.
In 1978 the non-OPEC LDCs are expected to lose some of their recent gains in
terms of trade. Coffee, cocoa, and tea prices have already started to recede from their
recent highs. Sugar prices are expected to remain low for some time, and no strong
upturn is expected in prices for minerals. At the same time, prices of imported
manufactures and oil should continue to climb.
Factors Behind the Changes
In this analysis, trends in the non-OPEC LDC terms of trade are determined by
relative changes in indexes of export and import prices; the indexes are weighted
averages of 167 prices on the export side and 168 prices on the import side, with the
weights based on the composition of trade in 1970. Primary commodities and basic
16 November 1978 SECRET
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manufactures dominate non-OPEC LDC exports; oil and manufactures dominate
imports. While the bulk of manufactured exports come from a few countries like
Hong Kong, Taiwan, and South Korea, primary commodity exports are widely
dispersed. Although prices for oil and manufactured goods have shown practically
nothing but increases in recent years, primary commodity prices have moved up and
down over a wide range-booming in 1972-74, plummeting after mid-1975, recover-
ing in 1976-77, and slipping in late 1977. The consequence has been fluctuating terms
of trade for the LDC group and widely disparate results for individual countries.
Terms of Trade: Regional Developments
Sub-Saharan Africa, South Asia, and Latin America made the strongest terms-of-
trade gains between 1975 and 1977. In sub-Saharan Africa the terms of trade jumped
31 percent to stand 5 percent above the 1970 level. During the same period the terms
of trade for South Asia increased by 22 percent but were still 5 percent below those of
1970. Latin America showed a 19-percent gain in 1976-77, to reach a position 11
percent higher than in 1970. The East Asia-Pacific region and the Middle East-North
Africa region had much smaller improvements of 5 percent each; the former region
pulled even with its 1970 terms of trade, the latter rose to 6 percent above the 1970
level.
Terms of Trade: Country Positions
While the non-OPEC LDCs as a group experienced a 16-percent trade-weighted
improvement from 1975 to 1977, 51 of the 78 countries included in the analysis
showed improved or unchanged terms of trade, 15 had declines of 10 percent or less,
and 12 suffered losses greater than 10 percent. These changes ranged from a 123-
percent gain for Uganda to a 57-percent loss for Reunion.
Those countries recording improved or unchanged terms of trade between 1975
and 1977 included several major coffee exporting countries in Latin America and
Africa, which gained from a tripling of coffee prices during the period. These gainers
included Uganda,, Ethiopia, Colombia, Cameroon, Brazil, Guatemala, and Kenya.
Many of these countries had experienced worsened terms of trade in 1975 compared
with 1970 because a jump in oil import prices coincided with a drop in coffee export
prices. Among exporters of manufactures South Korea and Hong Kong showed
improvements in 1976-77 after reversals in 1971-75.
Mexico has shown unusual stability in its terms of trade. Its 1977 position was 1
percent above that of 1975. Since 1970, the largest annual change has been a 6-percent
improvement in 1974 during the commodity boom. Mexico has been cushioned
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Selected Non-OPEC LDCs: Changes in Terms of Trade
1977 1975
Over Over
1975 1970
1977
Over
1970
Non-OPEC LDC average' ...................................... 16 -10 4
Gains or no change
Uganda .............................................................. 122.6 -27.0 62.5
Ethiopia ....... ............................................ 108.9 -25.0 56.7
Colombia ............................................................ 92.0 -7.4 77.8
Ivory Coast ............................................ 91.0 -20.2 52.4
Cameroon .......................................................... 75.0 -181 43.3
Brazil ...........::......... ......... ......... ........................ 61.7 -24.3 22.4
Guatemala .............. ............................................. 59.7 -14.3 36.9
Kenya ........... ._ ....................... ............. 48.8 -10.2 33.6
Malaysia ..:.............. ........................... ................. 15.6 -8.2 6.1
India ................................................................. 15.3 -24.0 -12.4
Egypt ................................................................. 13.5 -6.0 6.7
Malawi ................................................................ 8.1 -9.8 -2.5
Zaire .................................................................. 7.6 -44.4 -40.2
South Korea ...................................................... 7.6 -25.4 -19.7
Singapore ............. .:...................... ....................... 7.2 15.6 23.9
Hong Kong ....................................................... 4.3 -13.4 -9.7
Mexico ................................................................ 1.0 -1.0 0
Losses of 10 percent or less
Bahrain .............................................................. -1.7 -7.9 -9.5
Thailand ......... .......................................... -1.6 -1.4 -3.0
Netherlands Antilles .. ..... ......... ........... -3.4 36.7 32.1
Bahamas ............................................................ -3.7 32.9 28.0
Trinidad and Tobago ..................................... -4.3 40.9 34.9
Chile ...................._............................................. -4.7 -46.3 -48.8
Argentina ............................................ -8.2 -6.5 -14.2
Zambia ............................................................. -8.3 -54.4 -58.2
Losses greater than 10 percent
Jamaica .............................................................. -12.1 -3.8 -15.4
Philippines .. ......... ............ ................. -14.6 3.1 -12.0
Morocco ................... ............................. -15.6 4.8 -11.5
Dominican Republic .. ...... .. ................ -27.8 50.2 8.4
Guyana ............................ ............ .......... -30.9 14.8 -20.7
Mauritius .............................................. -54.1 83.5 -15.8
Reunion .............................................................. -56.7 97.9 -14.4
' Based on trade-weighted overall export and import price indexes for 78 non-OPEC LDCs.
against large terms-of-trade swings by its diversified exports, which range from coffee
to electronics.
Among the 15 countries with terms-of-trade losses of less than 10 percent from
1975 to 1977 were Argentina, Zambia, Chile, The Bahamas, Bahrain, and
Thailand. Two Caribbean oil processors, Trinidad and Tobago and the Netherlands
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Major Non-OPEC LDC Traders: Export Prices, Import
Prices, and the Terms of Trade
Index: 1970=100
Non-OPEC LDC average'
Export ...... ...._..... _...._......
101
107
139
197
199
205 , 250
Import _....... ............. .........
106
114
143
202
222
222 240
Terms of trade ..... _.........
95
94
97
98
90
92 104
Argentina
Export ...... _... _ ........:........
105.5
113.4
162.9
202.5
197.4
189.7 199.0
Import ................................
105.6
114.4
142.0
188.7
211.1
209.7 232.0
Terms of trade ............ _....
99.9
99.1
114.7
107.3
93.5
90.5 85.8
Brazil
Export ........ .............
99.8
106.0
135.7
175.0
179.6
208.1 306.2
Import _..._ .. ..................
105.2
113.8
142.4
212.5
237.2
232.9 250.2
Terms of trade .._._...._.....
94.9
93.1
95.3
82.4
75.7
89.4 122.4
Chile
Export
83.5
83.0
114.3
153.2
114.0
119.3 121.4
Import ......... ...................
105.5
114.9
140.7
188.6
212.4
213.4 237.1
Terms of trade ........... .......
79.1
72.2
81.2
81.2
53.7
55.9 51.2
Colombia
Export .......... ................_...
99.3
106.5
134.0
188.6
195.5
259.2 414.5
Import ............. ......
107.6
115.9
144.1
187.0
211.2
206.8 233.1
Terms of trade ..................
92.3
91.9
93.0
100.9
92.6
125.3 177.8
Egypt
Export ....... ........... ..............
107.6
118.2
144.0
221.1
213.3
218.8 257.9
Import ............ ............. ......
107.8
115.7
146.9
207.2
227.0
220.6 241.6
Terms of trade ..__....... ...
99.8
102.2
98.0
106.7
94.0
99.2 106.7
Hong Kong
Export ...
104.8
113.3
126.4
153.8
161.3
168.8 188.9
Import .................... _..........
104.3
113.5
140.6
173.5
186.2
191.3 209.1
Terms of trade .......... .......
100.5
99.8
89.9
88.6
86.6
88.2 90.3
India
Export ............. _ .........
104.2
111.6
135.4
167.1
179.0
174.6 208.9
Import ..................
103.4
110.7
145.7
219.4
235.4
229.4 238.4
Terms of trade _ ................
100.8
100.8
92.9
76.2
76.0
76.1 87.6
Jamaica
Export ...... ...
96.5
102.2
125.0
181.8
203.7
187.7 194.1
Import .._ ............................
104.7
114.6
142.3
189.0
211.8
212.9 229.5
Terms of trade ... ........
92.2
89.2
87.8
96.2
96.2
88.2 84.6
Malaysia
Export ....._...._..................
100.8
104.1
145.7
222.5
206.5
221.5 263.9
Import .................. ......... .....
105.4
113.1
138.9
201.6
225.0
228.2 248.8
Terms of trade ..................
95.6
92.0
104.9
110.4
91.8
97.1 106.1
Mexico
Export _ ..............................
104.9
116.0
139.8
186.9
207.1
200.2 228.7
Import ........... ............. ........
106.9
116.5
144.4
182.8
209.1
208.4 228.8
Terms of trade ..................
98.1
99.6
96.8
102.2
99.0
96.1 100.0
Morocco
Export
102.8
107.4
132.0
196.9
227.3
204.3 206.3
Import ................. ..............
106.7
116.1
141.7
194.5
216.9
210.3 233.1
Terms of trade ..................
96.3
92.5
93.2
101.2
104.8
97.1 88.5
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Major Non-OPEC LDC Traders: Export Prices, Import
Prices, and the Terms of Trade (Continued)
Export .......... ..................
Import ., ...... .:................
Terms of trade
Singapore
Export ' .................
Import ........ ..................
Terms of trade ...............
South Korea
Export .... ........ . ..................
Import .......: ....................
Terms of trade .................
Thailand
Export..................................
Import ........ ..................
Terms of trade ................
Trinidad and Tobago
Export .......
Import ....... ..................
Terms of trade . .........
Zaire
Export ...... ..................
Import .... ........ .
Terms of trade ..................
Zambia
Export... ...................
Import .......
Terms of trade .................
101.8
107.3
148.6
224.2
233.0
200.9
218.0
105.1
113.0
137.4
204.9
225.9
226.8
247.8
96.9
95.0
108.2
109.4
103.1
88.6
88.0
105.4
110.7
151.9
251.6
251.8
264.8
302.5
104.9
112.6
138.2
197.7
217.8
221.5
244.2
100.5
98.3
109.9
127.3
115.6
119.5
123.9
103.8
112.0
131.9
159.6
166.7
170.1
187.1
101.6
109.8
144.8
206.7
223.4
222.4
233.1
102.2
102.0
91.1
77.2
74.6
76.5
80.3
100.8
105.7
149.9
220.2
213.6
204.0
231.8
107.0
116.6
140.5
193.9
216.7
216.6
239.0
94.2
90.7
106.7
113.6
98.6
94.2
97.0
116.2
120.9
170.9
412.0
442.1
445.2
491.6
100.0
106.1
131.0
297.2
313.8
338.7
364.5
116.2
113.9
130.5
138.6
140.9
131.4
134.9
83.1
81.8
115.6
162.3
115.4
122.1
138.2
106.7
115.9
141.2
182.7
207.4
209.3
231.1
77.9
70.6
81.9
88.8
55.6
58.3
59.8
78.5
77.1
110.5
150.7
96.7
102.3
101.7
108.9
117.0
142.3
185.0
212.1
215.1
243.1
72.1
65.9
77.7
81.5
45.6
47.6
41.8
'Trade-weighted average for 78 countries.
Antilles, suffered small deteriorations in 1977 relative to 1975 but remained well
ahead of their 1970 terms of trade.
The 12 countries with 1976-77 terms-of-trade losses of more than 10 percent
included several sugar exporters; these nations lost the strong positions held in 1975
when sugar prices peaked. Those suffering pronounced declines included Reunion,
Mauritius, Guyana, and the Dominican Republic.
Methodological Note
Our indexes are proxies for the export and import prices faced by individual
LDCs. Indexes calculated by the LDCs themselves are available only for a small
number of countries and usually after a long timelag.
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We assume that annual movements in export and import unit value indexes in
LDCs are a mirror image of unit value indexes movements in developed countries.
From computerized SITC 5-digit and 4-digit foreign trade data, trade-weighted US
dollar export and import unit value indexes are calculated at the SITC 3-digit level for
the United States, the United Kingdom, Japan, and West Germany combined. The
export indexes are proxies for LDC import indexes; the import indexes are proxies for
LDC export indexes.
Indexes for individual LDCs are computed by applying their 1970 SITC 3-digit
export/import trade weights to the proxy price indexes and aggregating the results up
to the SITC 1-digit level and to SITC 1-digit combinations. Indexes for country groups
are similarly trade weighted.
EC Steel Industry Remains Depressed
During the first nine months of 1978, EC steel production barely reached 100
million tons, only 4.4 percent above the depressed level of the same 19 7 7 period.
Operating rates remain low with only two-thirds of capacity in production. Despite
production cutbacks, inventories have continued to increase, giving producers greater
incentive to adhere to output quotas established lass year under the aegis of EC
industries commissioner Etienne Davignon. Quotas for fourth quarter 1978 add to 31
million tons, slightly lower than actual third quarter production.
Despite low operating rates and the continued losses of many individual EC steel
companies, the industry's general profit position has improved moderately in recent
months. Minimum price guidelines under the Davignon plan have brought some order
to the European steel market. Export prices have stiffened and the import limitation
agreements negotiated between the EC and many of its trading partners have eased
competition from foreign steel.
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The dullish outlook for EC economic performance next year does not suggest
much change in the steel picture. While some European producers hope to increase
exports to the Middle East and China in 1979, they will face stiff competition from
Japan in both markets. Given these prospects, the Davignon plan probably will be
extended through next year-the commissioner already is preparing to renegotiate the
import restraint agreements. Meanwhild, EC steelmen are laying plans for new
mergers and the shutdown of their older, high-cost plants. These rationalization
plans-deemed imperative by industry leaders-already are encountering resistance
from labor, particularly since many of the obsolete plants are located in areas already
economically depressed. F_ I
UNCTAD Rubber Negotiations Face Hurdles
Negotiations between natural rubber producing and consuming nations, which
started Monday in Geneva under UNCTAD auspices, face a number of stumbling
blocks. Disagreements on key issues could result either in compromises or deferral for
further study and subsequent negotiations.
These negotiations are especially noteworthy because natural rubber is the first of
18 commodities under UNCTAD's Integrated Program for Commodities to reach the
stage of formal negotiation on a new agreement. If the negotiations fail, many see little
chance of success on other commodities. Moreover, the industrialized countries may
be under pressure to demonstrate their good faith on North-South issues in the
negotiations on rubber because of the rupture of Common Fund negotiations in
November 1977. (Common Fund negotiations resumed on Tuesday and will run
simultaneously with the rubber talks until 27 November.)
There are three potential areas of disagreement. Producers, particularly the
poorer and less efficient ones such as Indonesia, want to minimize their financial
outlays by having a small buffer stock-300,000 to 400,000 tons-as opposed to one of
about 700,000 tons that US officials contend is necessary to prevent serious price
fluctuations. The United States is even more strongly opposed to producer insistence
on export controls similar to those now in effect in the International Tin Agreement
(ITA). Export controls invoked under the ITA frequently have remained in effect long
after prices have stabilized and ultimately have resulted in higher prices. Consuming
countries, the United States in particular, also seek to have high and progressive export
taxes by producers amended because they lead to inflated prices.
25X1
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 25X1 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
 tion lelease 2004/07/28 : C1A-RDP80T00702A000900070002-3
v
"MA
Assessment
Center
Economic Indicators
Weekly Review
ER EI 78-046
16 November 1978
Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
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 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-RDP80T00702A000900070002-3
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
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-RDP80T00702A000900070002-3
 BIG SIX F0AW-1b1VFd 9 $C b9ff L6f69k%RS
Industrial Production
140
130
Unemployment Rate
INDEX: 1970=100, seasonally adjusted
Semilogarithmic Scale
miter 'Iv~tesf7
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 AppTW For Releasg@Q/07/28 : CIPI- 80TO0702AQ W0070002-3 1978
lincluding Japan, West Germany, France, the United Kingdom, Italy, and Canada. A-2
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
Consumer Price Inflation
Note: Three-month average compared with previous three months.
Trade Balance
4.0
-3.0 Note: Five-month weighted moving average.
Percent, seasonally adjusted, annual rate
Billion US $, f.o.b., seasitVally adjusted
Percent Change
AVERAGE ANNUAL
GROWTH RATE SINCE
LATEST MONTH Year Earlier
3 Months
Earlier
LATEST
from Previous
1 Year
3 Months
Unemployment Rate
Industrial
Production
MONTH
Month
1970
Earlier
Earlier2
Big Five
United States
AUG 78 4.6
AUG 78 5.9
4.4
7.0
4.4
6.1
Big Six
LATEST
MILLION CUMULATIVE (MILLION US $)
MONTH
US $ 1978
1977
Change
Consumer Prices
Big Six
AUG 78
0.7
9.2
6.6
8.4
Trade Balance
United States
AUG 78
0.5
6.7
7.9
10.1
Big Six AUG 713
5,559 36,972
20,145
16,827
2Average for latest 3 montFSs tbRS 9ed ewiffi F08ge" or preevase32094hs, /07/2 y adCl~ aRDP80T00702A000900070002-3
A-3
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
INDUSTRIAL PRODUCTION INDEX: 1970=100, seasonally adjusted
United States
-120 - -
1973 Average 120
West Germany
130
120
JAN APR JUL OCT 1 APR J OCT J N APR L AN R T AN APR JUL OCT JAN APR JUL OCT
Approve& For Release 20'64/oJ2>~ C -R ~S$df 00~ 62A0269~i~070002-3 1978
1973 1974 1975 1
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
United Kingdom
Italy
11 JULOCT JAN APR JUL OCTI
Percent
Change
from
AVERAGE ANNUAL
GROWTH RATE SINCE
Percent
Change
from
AVERAGE ANNUAL
GROWTH RATE SINCE
United States
LATEST
MONTH
SEP 78
Previous
Month
0.5
1 Year 3 Months
1970 Earlier Earlierl
3.9 6.5 7.7
United Kingdom
LATEST
MONTH
AUG 78
Previous
Month
0.9
1 Year 3 Months
1970 Earlier Earlierl
0.6 1.2 5.0
Japan
AUG 78
0.8
4.0? 5.5 1.3
Italy
AUG 78
-5.4
1.6 1.7 -11.3
West Germany
AUG 78
-1.7
2.1 1.7 12.1
Canada
AUG 78
-0.8
4.1 3.8 3.6
France
AUG 78
0.0
3.0 1.6 -7.1
ANcProved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
lAverage for latest 3 months mpared with average for previous 3 months.
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
UNEMPLOYMENT RATE PERCENT
United States
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
Approved For Release 2004/07/26 CIA-RDP80T00702A000900070002-3
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
United Kingdom
2.5-
Italy (quarterly)
--
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 ere not comparable.
Italian data are not seasonally adjusted.
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
1 Year
Earlier
3 Months
Earlier
1 Year
Earlier
3 Months
Earlier
United States
i )CT 78
5,870
6,688
6,193
United Kingdom
OC t 78
1,360
1,432
1,371
Japan
AUG 78
1,270
1,130
1,270
Italy
i'8 III
1,6b8
1,692
1,455
West Germany
SEP 78
986
1,035
986
Canada
SEP 78
946
887
944
France
SEP 78
1,235
1,132
1,186
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.
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
CONSUMER PRICE INFLATION Percent, seasonally adjusted,
annual rate
United States
15
10
Japan
West Germany
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
1Three-month average compared y pprovetc`'tor'elease 2004/07/28 : CIA-RDP80T00702A000900070002-3
~MM A-8
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
United Kingdom
Italy
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
Percent
Change
from
AVERAGE ANNUAL
GROWTH RATE SINCE
Percent
Change
AVERAGE ANNUAL
GROWTH RATE SINCE
LATEST
Previous
1970
1 Year
3 Months
LATEST
from
Previous
1970
1 Year
3 Months
MONTH
Month
Earlier
Earlier2
MONTH
Month
Earlier
Earlier2
United States
SEP 78
0.8
6.8
8.3
9.1
United Kingdom
SEP 78
0.9
13.2
7.8
12.2
Japan
AUG 78
1.0
9.8
4.2
7.2
Italy
SEP 78
1.0
13.1
12.2
13.5
West Germany
SEP 78
0
5.1
2.2
2.5
Canada
SEP 78
0.1
7.6
8.6
8.7
France
SEP 78
0.5
9.1
9.2
11.6
2Average for latest 3 months compared with average for previous 3 months, seasonally adjusted at annual rate.
Approved For Release 2004/07/28: CIA-RDP80T00702A000900070002-3
A-9
 GNP' Approved For Release 2004/07/28: CjJMQA&J00702A000900070002-3
Average
Annual Growth Rate Since
Percent Change ---------_.--
Latest from previous 1 Year Previous
Quarter Quarter 1970 Earlier Quarter
United States
Japan
West Germany
78 II
France
78 I
United Kingdom
77 IV
Italy
78 I
Canada
78 11
' Seasonally adjusted.
Average
Annual Growth Rate Since
Latest
Percent Change
from previous
1 Year
Previous
Quarter
Quarter
1970
Earlier
Quarter
United States
78 II
3.6
3.0
7.4
15.1
Japan
78 II
1.8
1.5
5.11
7.6
West Germany
78 II
-0.5
1.2
7.8
-2.0
France
77 IV
0.8
4.0
4.71
3.3
United Kingdom
78 I
2.8
1.8
11.3
11.6
Italy
78 I
2.3
1.1
-19.61
9.4
Canada
78 II
10.6
6.5
6.11
49.9
I Seasonally adjusted.
United States
Japan
West Germany
France
United Kingdom
Canada
Eurodollars
Cornmercia
Call money
Interbank loans (3 months)
Call money
Sterling interbank loans (3 months)
Finance paper
Three-month deposits
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Average
Annual Growth Rate Since
Percent Change -.
Latest from Previous 1 Year 3 Months
Month Month 1970 Earlier Earlier'
Jul 78
Jun 78
Aug 78
Jan 78
Sep 78
Jun 78
Aug 78
' 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
Period Period 1970 Earlier Earlier'
United States Jul 78
Japan Jun 78
West Germany 78 II
France 77 IV
United Kingdom Jun 78
Italy Jul 78
Canada Aug 78
7.6 7.6
15.8 5.6
8.8 4.2
14.1 12.0
16.3 20.5
19.9 14.5
Hourly earnings (seasonally adjusted) for the United States, Japan, and Canada; hourly wage
rates for others. West German and French data refer to the beginning of the quarter.
' Average for latest 3 months compared with that for previous 3 months.
Nov 3
1 Year 3 Months I Month
Earlier Earlier Earlier
Approved r Release 07U2AOOO9U(070002
A-10
 EXPORT PRIC proved For Release 2004/07/28:
% f O $02A000900070002-3
US $
National Currency
Average
Average
Annual Growth Rate Since
Percent Change
Annual Growth Rate Since
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
Aug 78
1.3
9.7 11.0
19.5
United States Aug 78
1.3
9.7 11.0
19.5
Japan
Jul 78
1.0
11.7 26.8
37.9
Japan Jul 78
-5.8
3.8 - 4.3
- 8.8
West Germany
Aug 78
1.7
11.7 14.3
23.3
West Germany Aug 78
- 1.2
3.7 -1.5
-0.3
France
Jun 78
2.2
11.5 13.6
7.8
France Jun 78
0.6
8.8 5.3
-2,1
United Kingdom
Sep 78
1.7
12.3 21.8
41.9
United Kingdom Sep 78
0.8
15.1 8.3
9.6
Italy
Jun 78
0.5
10.8 8.1
2.7
Italy Jun 78
-0.8
15.3 4.9
4.6
Canada
Aug 78
4.1
8.7 1.4
19.2
Canada Aug 78
5.6
9.8 7.6
28.7
IMPORT PRICES
OFFICIAL RESERVES
National Currency
Average
Annual Growth Rote Since
Billion US $
Change
-
atest Month
Latest
Latest from Previous
1 Year
3 Months
1 Year
3 Months
Month
Month
1970 Earlier
Earlier
End of
Billion US $
Jun 1970 Earlier
Earlier
United States
Aug 78
0.6
12.7 7.9
3.3
United States Sep 78
18.8
14.5 19.0
18.9
Japan
Jul 78
-6.6
5.8 -20.9
-22.7
Japan Aug 78
29.2
4.1 17.8
27.7
West Germany
Aug 78
0.4
3.4 -3.4
7.6
West Germany Sep 78
44.7
8.8 34.5
40.7
France
Jun 78
-0.6
9.1 0.2
-9.1
France Apr 78
10.6
4.4 10.0
10.2
United Kingdom
Sep 78
0.9
17.1 4.3
3.8
United Kingdom Sep 78
17.6
2.8 17.3
17.3
Italy
Jun 78
-0.7
18.7 1.8
2.4
Italy Sep 78
14.1
4.7 10.5
13.2
Canada
Aug 78
1.7
9.8 10.0
16.1
Canada Oct 78
5.1
9.1 4.2
4.6
CURRENT ACCOUNT B
ALANCE
'
BASIC BALANCE
Current and Long-Term Capital Tr
ansactions
Cumulative (Million
US $)
Latest
Cumulative (Million
US $)
Period Million US $
1978 1977
Change
Latest
-
-
United States 2
78 I
-6,954 -
6,954 -4,158
-2,796
Period Million US $
1978 1977
Change
United States
No longer published 2
Japan
Sep 78
1,900 1
3,982 6,442
7,540
Japan Sep 78
600
6,746 4,390
2,356
West Germany -
Aug 78
10
2,725 788
1,937
West Germany Aug 78
-75
1,730 -3,308
5,038
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
Canada
I 78 II
- 1,201 1 -
2,381 1-2,658
277
Italy 77 III
2,427
N.A. N.A.
N.A.
Canada 78 II
883
327 -557
884
Converted to US dollars at the curr
ent market rates of exchange.
' Converted to US dollars at the current
market rates of exchange.
Seasonally adjusted.
' As recommended by the Advisory Committee on the P
resentation of Balance
of Payments
Statistics, the Department of Commerot no
longer publi
shes a basic balance.
EXCHANGE RATES
TRADE-WEIGHTED EXCHANGE
RATES'
Spot Rate
As of 3 Nov 78
As of 3 Nov 78
Percent Change from
_
Percent Change from
US $
1 Year 3 Months
1 Year
3 Months
Per Unit
19 Mar 73
Earlier Earlier
27 Oct 78
19 Mar 73
Earlier
Earlier 27
Oct 78
Japan (yen)
0.0054
40.77
34.60 0.49
-3.45
United States -4.05
-9.14
0.02
2.86
West Germany
0.5283
48.61
19.49 3.91
-7.03
Japan 43.76
30.37
0.27 -1.94
(Deutsche mark)
West Germany 33.93
5.26
1.87 -2.25
France (franc)
0.2326
4.80
12.56 -0.02
-5.70
France -10.41
-2.23
-2.65 -0.36
United Kingdom
1.9820
-19.83
11.54 0.92
-3.93
United Kingdom -29.09
-0.25
-0.85
0.34
(pound sterling)
Italy -43.72
- 7.95
-2.21
0.57
Italy (lira)
0.0012
-31.95
5.36 -0.17
-4.62
Canada - 16.38
-8.75
-3.07
1.52
Canada (dollar)
0.8558
- 14.70
-5.36 -2.77
0.50
' Weighting is based on each listed countr
y's trade wit
h 16 other industrialized countries to
Approved For Release 2004/07/28:
ClA'A0PR!0M2?A0 000"x0'2?'3 the major currencies.
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
UNITED STATES
1975 .........................
1976 ..........................
........
1977 .... .............
1978
1st Qtr ................
2d Qtr ................
Jul _............. ....... .
Aug ........................
JAPAN
1975 ....................
1976 ........................ .
1977 ........................ .
1978
1st Qtr ................
2d Qtr ...............
Jul ........ .................
Aug .................
WEST GERMANY
1975 ..........................
1976 ..........................
1977 ........
1978
1st Qtr ................
2d Qtr ................
Jul _ .....................
Aug ........................
FRANCE
1975 ..........................
1976 ..........................
1977 ...................
1978
1st Qtr ................
2d Qtr ................
Jul___ ..................
....
Aug ...... ............
UNITED KINGDOM
1975 ..........................
1976 ...................... ..................
1977 ..........................
1978
1st Qtr
Jul ..........................
Aug ........................
ITALY
1975 ..........................
1976 ..........................
1977 ..........................
1978
1st Qtr ................
2d Qtr ................
Jul ............. _...........
CANADA
1975 ..........................
1976 ..........................
1977 ..........................
1978
1st Qtr
Billion US $
Exports to (f.o.b.)
Big Other Com-
World Seven OECD OPEC munist Other
107.59 46.93 16.25 10.77 3.37 30.27
115.01 51.30 17.67 12.57 3.64 29.82
120.17 53.92 18.54 14.02 2.72 30.97
30.96 13.65 4.60 3.76 1.00 7.95
37.05 16.14 5.25 4.43 1.44 9.79
10.94 4.51 1.51 1.38 0.40 3.14
11.61 4.95 1.65 1.32 0.37 3.33
55.73 16.56 6.07 8.42 5.17 19.52
67.32 22.61 8.59 9.27 4.94 21.91
81.12 28.03 9.72 12.03 5.33 26.01
22.11 7.79 2.43 3.35 1:32 7.22
24.07 8.60 2.44 3.55 1.74 7.74
8.58 2.99 1.02 1.33 0.51 2.73
8.18 2.94 0.86 1.19 0.58 2.60
90.11 28.33 36.44 6.78 7.21 11.33
101.93 33.44 41.86 8.25 7.02 11.36
118.01 39,00 48.01 10.78 7.30 12.92
32.45 11.17 13.05 2.76 1.97 3.49
34.69 11.94 13.71 3.01 2.26 3.77
10.42 3.64 3.93 1.01 0.65 1.18
10.99 3.38 4.57 1.01 0.71 1.32
53.03 20.01 15.50 4.90 3.13 9.50
57.05 22.49 16.15 5.08 3.23 10.10
64.86 25.90 18.18 5.96 2.99 11:82
18.49 7.66 5.07 1.57 0.66 3.53
20.36 8.31 5.60 1.70 0.84 3.91
6.66 2.78 1.72 0.59 0.27 1.29
4.86 1.92 1.25 0.46 0.24 1.00
44.46 12.54 16.59 4.55 1.56 9.21
46.56 14.03 17.53 5.13 1.39 8.48
58.04 17.29 22.20 6.77 1.63 10.14
16.86 5.09 6.27 2.03 0.55 2.92
17.60 5.38 6.59 2.20 0.51 2.92
5.80 1.84 2.10 0.71 0.16 1.00
5.77 1.73 2.18 0.69 0.15 1.02
34.84 15.61 7.86 3.72 2.46 5.19
37.25 17.58 8.73 4.27 2.18 4.48
45.04 20.91 10.20 5.84 2.46 5.64
10.80 5.22 2.40 1.37 0.48 1.33
13.65 6.51 2.92 1.81 0.66 1.75
4.46 2.17 0.93 0.57 0.22 0.57
34.07 26.30 1.72 0.71 1.20 4.14
40.52 32.01 2.03 0.81 1.25 4.40
43.08 34.83 2.20 1.17 1.08 3.80
10.87 8.88 0.45 0.23 0.22 1.10
12.66 10.32 0.56 0.23 0.36 1.19
3.53 2.81 0.13 0.08 0.15 0.36
Source: International Monetary Fund, Direction of Trade.
A- 12
Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
Imports from (c.i.f.)
Big Other Com-
World Seven OECD OPEC monist Other
UNITED STATES
1975 .......................... 103.42 49.81 8.83 18.70 0.98 25.09
1976 .......................... 129.57 60.39 9.75 27.17 1.16 31.10
1977 .......................... 156.71 70.48 11.09 35.45 1.23 38.47
1978
1st Qtr ................ 43.14 20.39 3.51 8.15 0.47 10.62
2d Qtr ................ 45.99 22.53 3.68 7.90 0.48 11.40
Jul .......................... 15.67 7.56 1.29 2.62 0.14 4.04
Aug ........................ 14.96 6.92 1.11 2.91 0.19 3.83
JAPAN
1975 .......................... 57.85 16.93 6.08 19.40 3.36 12.07
1976 .......................... 64.89 17.58 7.78 21.88 2.91 14.73
1977 .......................... 71.32 18.88 7.92 24.33 3.41 16.79
1978
1st Qtr ................ 18.32 5.04 2.06 6.46 0.86 3.89
2d Qtr ................ 19.39 5.51 2.30 5.95 1.01 4.63
Jul .......................... 6.47 1.95 0.80 1.82 0.30 1.60
Aug ........................ 6.92 2.17 0.81 1.92 0.32 1.70
WEST GERMANY
1975 .......................... 74.92 27.09 27.78 8.24 3.51 8.30
1976 .......................... 88.14 31.28 32.64 9.73 4.38 10.11
1977 .......................... 101.42 36.39 37.37 10.12 4.92 12.61
1978
1st Qtr ................ 28.24 10.11 10.88 2.32 1.39 3.55
2d Qtr ................ 29.75 11.10 11.43 2.24 1.40 3.58
Jul .......................... 9.57 3.60 3.48 0.77 0.54 1.18
Aug ........................ 9.43 3.41 3.51 0.82 0.50 1.19
FRANCE
1975 .......................... 53.99 23.04 14.33 9.43 1.94 5.24
1976 .......................... 64.38 27.81 16.93 11.36 2.24 6.04
1977 .......................... 70.49 30.28 18.24 11.81 2.46 7.69
1978
1st Qtr ................ 19.76 8.58 5.40 3.05 0.64 2.09
2d Qtr ................ 20.42 9.16 5.62 2.77 0.68 2.19
Jul .......................... 6.31 2.88 1.65 0.94 0.23 0.61
Aug ........................ 5.56 2.49 1.29 0.95 0.21 0.63
UNITED KINGDOM
1975 .......................... 53.93 18.47 18.52 6.91 1.68 8.36
1976 .......................... 56.20 19.65 18.81 7.29 2.08 8.36
1977 .......................... 64.06 24.03 21.38 6.32 2.42 9.91
1978
1st Qtr ................ 18.87 7.44 6.68 1.80 0.55 2.40
2d Qtr ................ 19.31 7.66 7.27 1.30 0.59 2.48
Jul .......................... 6.42 2.58 2.17 0.58 0.21 0.88
Aug- ..................... 6.30 2.48 2.08 0.60 0.23 0.91
ITALY
1975 .......................... 38.39 17.32 6.75 7.85 2.09 4.39
1976 .......................... 43.43 19.35 8.05 8.12 2.65 5.26
1977 .......................... 47.57 20.80 8.66 9.03 2.80 6.28
1978
1st Qtr ................ 11.26 5.03 2.10 2.18 0.51 1.44
2d Qtr ................ 13.38 6.14 2.58 2.15 0.73 1.76
Jul .......................... 4.90 2.18 0.93 0.82 0.37 0.61
CANADA
1975 .......................... 38.67 29.78 1.70 3.43 0.32 3.43
1976 .......................... 43.04 33.55 1.82 3.48 0.38 3.81
1977 .......................... 44.91 35.75 1.79 3.06 0.34 3.98
1978
1st Qtr ................ 10.80 8.60 0.44 0.77 0.08 0.91
2d Qtr ................ 13.52 11.08 0.50 0.71 0.09 1.13
Jul .......................... 3.88 3.05 0.17 0.26 0.04 0.35
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
FOREIGN TRADE BILLION US $, f.o.b., seasonally adjusted
United States
14.0
12.0
10.0
West Germany
2.0
JAN APR JUL OCT JAN APR JUL OCT JANL APR JUL OCT JAN APR JUL OCT JAN' APRJUL OCT 'JAN "APR JUL OCT
1973 1974 1975 1976 1977 1978
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
United Kingdom
6.4
0.0
LATEST
MONTH
MILLION
US $ 1978
1977
CHANGE
LATEST
MONTH
MILLION
US $ 1978
1977
CHANGE
United States
SEP 78
13,429
104,054
91,352
13.9%
United Kingdom
SEP 78
6,043
50,004
41,298
21.1%
15.120
126,721
109,30$
15.9%
6,423
51,895
44,234
17.3%
Balance
-1,691
-22,667
-17,953
-4,714
Balance
-380
-1,891
-2,936
1,044
Japan
SEP 78
8,618
71,117
58,515
21.5%
Italy
SEP 78
4,509
37,843
32,756
15.5%
6,216
50,210
48,130
8.8%
4,005
35,250
32,347
9.0%
Balance
2,402
20,907
12,385
8,522
Balance
504
2,593
409
2,184
West Germany
AUG 78
11,974
90,233
76,223
18.4%
Canada
AUG 78
3,640
29,739
27,962
6.4%
9,258
74,131
62,846
18.0%
3,478
28,071
26.672
5.2
Balance
2,715
16,102
13,378
2,725
Balance
162
1,668
1,289
379
France
7,075
57,929
47,645
21.6%
-6,776
57,511
49,999
x5.0%
299
417
-2,354
2,771
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
FOREIGN TRADE PRICES IN US $1
120
,i9
West Germany
19;K proved For ! se 2004/07/2@?OIA-RDP80Tg@M7A0009000761%
lExport and import plots are based on five-month weighted moving averages.
A-16
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCI JAN APR JUL ULI
197A4pproved FolWll ase 2004/0+/9~PCIA-RDP80+0M32A0009000i6- 3
577670 11-78
A-17
 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
SELECTED DEVELOPING COUNTRIES
Average
Annual Growth Rote Since
India
South Korea
Mexico
Nigeria
Taiwan
Percent Change _----- _____.-. ...__. - _
Latest from Previous 1 Year 3 Months
Period Period 1970 Earlier Earlier'
Jun 78 - 1.8
Jul 78 -2.0
Jun 78 0
78 1 6.8
Aug 78 3.0
4.1
1.2
-0.4
2.2
1.0
3.1
1.9
0.9
5.1 5.4
22.0 20.2
6.2 8.5
11.4 0.5
16.3 1 31.0
' 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 I
Brazil Mar 78
India Apr 78
Iran Jul 78
South Korea Aug 78
Mexico Jul 78
Nigeria Mar 78
Taiwan May 78
Thailand Apr 78
34.7
13.0
20.7
26.2
36.4
3.3
40.8
32.3
' Seasonally adiu,ted-
' Average fa- loves, 3 months compared with average for previous 3 months.
Brazil
India
Iran
South Korea
Mexico
Nigeria
Taiwan
Thailand
Average
Annual Growth Rate Since
Percent Change
Latest from Previous 1 Year
Month Month 1970 Earlier
Jun 78
Jun 78
Aug 78
Sep 78
Aug 78
Dec 77
Aug 78
Jun 78
EXPORT PRICES
us $
Latest
Month
Brazil Feb 78
India Sep 77
South Korea 78 II
Taiwan Jun 78
Thailand Dec 77
18.2
23.2
27.7
30.0
42.1
1 Year
0.4 14.0 1.5
-2.7 10.0 18.4
2.4 8.8 8.9
1.9 11.3 3.3
0.1 10.2 -7.8
28.3 38.0
7.5 2.2
11.8 7.8
14.6 15.6
15.1 17.0
16.6 31.3
9.8 - 0.6
8.7 8.4
Average
Annual Growth Rate Since
Average
Annual Growth Rate Since
Percent Change -------_---
Latest from Previous 1 Year
Month Month 1970 Earlier
Brazil May 78
India May 78
Iran Aug 78
South Korea Sep 78
Mexico Aug 78
Taiwan Aug 78
Thailand Mar 78
2.7 36.4
2.5 14.0
1.8 28.5
5.8 31.3
1.9 21.0
5.6 35.3
0.6 25.1
-3.2 I 13.3
3.4
0.6
-1.3
2.0
-0.2
0.4
-0.1
43.3
16.2
28.9
30.9
37.3
18.9
32.8
12.5
28.4 34.5
8.0 -2.8
10.0 7.8
15.8 12.3
16.3 13.8
8.1 1.6
9.4 5.8
1 Year 3 Months
End of Million US $ Jun 1970 Earlier Earlier
Brazil ; Feb 78
India Jun 78
Iran Sep 78
South Korea Aug 78
Mexico Mar 78
Nigeria Aug 78
Taiwan Jun 78
Thailand Sep 78
6,733
6,140
11,659
4,354
1,766
1,872
1,462
2,269
1,013
1,006
208
602
695
148
531
978
5,878
4;559
11,463
3,765
1,422
4,611
1,411
1,925
5,994
5,823
12,068
4,101
1,723
2,609
1,433
2,161
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
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
Aug 78 Exports
2.9
10.4
15,868
15,635
1.5%
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
Jul 78 Exports
78.8
29.8
2,867
2,453
16.9%
Jul 78 Imports
225.3
41.9
3,596
2,751
30.7%
Jun 78 Balance
-728
-298
-430
Nigeria
78 II Exports
86.7
-26.0
1,808
2,526
-28.4%
78 I Imports
579.5
115.0
1,808
841
115.0%
78 I Balance
-974
368
-1,342
Taiwan
Aug 78 Exports
84.2
38.7
8,044
5,884
36.7%
Aug 78 Imports
68.9
32.5
6,439
5,119
25.8%
Aug 78 Balance
1,605
765
840
Thailand
Jul 78 Exports
7.1
10.4
2,246
2,099
7.0%
Jul 78 Imports
51.5
13.8
2,697
2,330
15.7%
Jul 78 Balance
-450
-231
-219
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
AGRICULTURAL PRICES MONTHLY AVERAGE CASH PRICE
37:5 $ PER HUNDRED WEIGHT
No. 2 Medium Grain, 4% Brokens.
f.o.b. mills, Houston, Texas
23 OCT
15.50
2 NOV
8.46
16 OCT
15.50
25 OCT
9.16
SEP 78
15.50
OCT 78
9.02
NOV 77
21.31
NOV 77
6.66
1-23 OCT II
2 NOV 0.6627
25 OCT 0.6719
OCT 78 0.6523
NOV 77 0.4904
300
1,500
1-2 NOV II 1-2 NOV II
1978 0 0 1974 1975 1976 1977 1978 0
$ PER METRIC TON SUGAR
75 C PER POUND
800
1,000
200
1-2 NOV II
8.62
1-2NNO
COFFEE/TEA
400 C PER POUND
COFFEE
2,000 OtherMilds Arabicas, ex-dock New York
350 2 NOV 152.17
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
SOYBEANS
15 $ PER BUSHEL
Crude, Bulk, c.i.f. US Ports
2 NOV 0.3050
25 OCT 0.3050
OCT 78 0.3045
NOV 77 0.2045
SOYBEAN MEAL
$ PER TON
500 400
1-2 NOV
1974 1975 1976 1977 1978
0.5 $ PER POUND $ PER METRIC TON
SOYBEAN OIL
Crude, Tank Cars, f.o.b. Decatur
FOOD INDEX
500
1,000
800 400
AUSTRALIA
Boneless Beef,
f.o.b., New York
19 OCT 108.00
13 OCT 106.00
SEP 78 101.57
NOV 77 67.23
2 NOV 186.00
25 OCT 177.50
OCT 78 176.26
NOV 77 163.40
1-2 NOV II 100
1978
1-24 OCT I I
UNITED STATES
Wholesale Steer Beef,
Midwest Markets
28 OCT 77.19
21 OCT 81.83
SEP 78 81.64
NOV 77 65.47
1-2 NOV II
108.38 2,500
1-19 OCT
1-19 OCT II 1,000
1976 1977 1978
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-RDP80T00702A000900070002-3
INDUSTRIAL MATERIALS PRICES MONTHLY AVERAGE CASH PRICE
COPPER WIRE BAR
1.40 C PER POUND
$ PER METRIC TON 45 C PER POUND
LME US 3,000
2 NOV 68.6
25 OCT 69.3
OCT 78 68.4
NOV 77 53.6
73.6
71.6
71.4
60.6
2,500 35
1-2 NOV II 1.000
LME
2 NOV 39.7
25 OCT 39.2
OCT 78 38.0
NOV 77 28.6
$ PER METRIC TON
1,000
1-2 NOV II
200
1975 1976 1977 1978
PER METRIC TON
787.6 If 16,000
STEEL SCRAP
t50 $ PER LONG TON
1-2 NOV II 0 250
1974 1975 1976 1977 1978 1974
5 PER METRIC TON150
us
1-31 OCT II
1974 1975 1976 1977 1978
PLATINUM
350 $ PER TROY OUNCE
us
39.0
39.0
343.6
320
MP
2 NOV 280.0
25 OCT 280.0
OCT 78 262.9
NOV 77 167.2
USD
.S : 1 .0
34$.5
327.8
169.4
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
ALUMINUM
Major US Producer
it per pound
55.25
53.00
53.00
48.00
US STEEL
Composite
$ per long ton
419.31
395.81
359.36
327.00
IRON ORE
Non-Bessemer Old Range
$ per long ton
22.55
21.43
21.43
20.51
CHROME ORE
Russian, Metallurgical Grade
$ per metric ton
NA
NA
150.00
150.00
CHROME ORE
S. Africa, Chemical Grade
$ per long ton
56.00
56.00
58.50
42.00
FERROCHROME
US Producer, 66-70 Percent
It per pound
42.00
42.00
41.00
43.00
NICKEL
Composite US Producer
$ per pound
2.02
2.06
2.07
2.41
MANGANESE ORE
48 Percent Mn
$ per long ton
67.20
67.20
72.24
72.00
TUNGSTEN ORE
Contained Metal
$ per metric ton
18,411.00
17,169.00
22,113.00
18,082.00
MERCURY
New York
$ per 76 pound flask
151.00
50.55
138.43
134.50
SILVER
LME Cash
it per troy ounce
598.31
514.64
482.70
436.90
GOLD
London Afternoon Fixing Price
$ per troy ounce
230.33
176.31
162.10
130.44
LUMBER INDEX6
1-24 OCT II
1976 1977 1978
OCT II
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.
6This 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.
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 Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3
Approved For Release 2004/07/28 : CIA-RDP80T00702A000900070002-3