ECONOMIC INTELLIGENCE WEEKLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00702A000700080004-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 53
• Document Creation Date: December 16, 2016
• Document Release Date: March 29, 2005
• Sequence Number: 4
• Publication Date: August 10, 1978
• Content Type: REPORT

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ECONOMIC INTELLIGENCE WEEKLY REVIEW
10 August 1978
West Germany: Tax Cuts To Lift Economy
A simulation using our West German econometric model suggests that
Chancellor Helmut Schmidt's stimulation package?a $5.6 billion dosage
in 1979, to be upped by $1.6 billion in 1980?could raise next year's GNP
growth rate by nearly 1.5 percentage points, to as much as 4.5 percent.
!I Spain and the EC: Extending Europe Past the Pyrenees
Having moved nimbly in the post-France era to fulfill the political
conditions of Community membership, Spain must now negotiate the
complicated economic issues, notably agricultural exports and labor
mobility.
I Pakistan: Encouraging But Uncertain Economic Rebound
The military government has benefited from a bumper cotton crop and a
big jump in remittances from overseas Pakistanis.
China: Integration of Civilian and Defense Industries
Chairman Hua apparently wants defense industries to share more of
China's top-drawer resources with the producers of basic industrial
equipment.
Notes
French Trade and Payments Outlook Improves Markedly
Egypt Disappointed at Level of Arab Aid
Canadian Measures Aim at Reviving Confidence
Nigeria Facing Foreign Exchange Stringency
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WEST GERMANY: TAX CUTS TO LIFT ECONOMY
Pursuant to Chancellor Helmut Schmidt's commitment at the Bonn Summit, the
West German Cabinet on 28 July approved a $5.6 billion stimulation package for 1979
(the equivalent of slightly less than 1 percent of GNP) and an additional stimulus of
$1.6 billion for 1980. Hammered out during a three-day marathon Cabinet session, the
package represents an uneasy compromise within the governing coalition ?between
(a) Social Democratic Party (SPD) demands for tax cuts and increased family
allowances benefiting primarily low and lower-middle income groups and (b) Free
Democratic Party (FDP) preferences for tax relief and investment incentives for
business. Gross tax reductions and expenditure increases exceed the amounts stated
above, but the government intends to offset some of the budget impact through
a 1 percentage point increase in the value-added tax (VAT) effective 1 July 1979. A
simulation using our West German econometric model suggests that Schmidt's
program could raise next year's GNP growth rate by nearly 1.5 percentage points, to as
much as 4.5 percent.
Details of the Program
The heart of the 1979 package is a $5.5 billion cut in personal income taxes?part
of a basic reform of the income tax structure supported in principle by all political
parties. The major reform element is substitution of gradually progressive rates for a
system that has combined a flat 22-percent rate on the first $8,000 of taxable income
for single persons ($16,000 for married couples) with steeply progressive rates, starting
at 30.8 percent, on higher earnings. In addition, the reform raises the basic tax
exemption from $1,650 to $1,845 for single persons and from $3,300 to $3,690 for
married couples. Depending on their respective tax brackets, annual tax savings for
individuals and married couples would range from $45 and $90 to $450 and $900.
Other measures in the 1979 package include:
? $1 billion for family allowances, primarily increased maternity benefits
and higher child support payments for families with three or more children.
? $450 million for investment incentives and research in advanced technol-
ogy industries.
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For 1980 the government proposes:
? A further $1.6 billion reduction in income taxes through an increase in
deductions for self-employed persons.
? A $1.4 billion reduction in business taxes through abolition of a much
criticized tax on wage bills and an increase in exemption from the levy on
enterprise capital.
? $850 million in additional outlays to increase support payments for a
second child and finance a reduction in the voluntary retirement age of
disabled persons.
The 1 percentage point increase in the VAT on 1 July 1979 is expected to offset
revenue losses by $1.25 billion in 1979 and an additional $2.25 billion in 1980.
Expected Impact
For both economic and political reasons, Schmidt opted for a tax cut package
even though it normally carries a smaller short-run stimulative impact than an
equivalent public spending program; the respective multipliers for West Germany are
1.4 and 1.8. A reform of the tax structure was long overdue and is widely supported, if
for divergent reasons, by all political parties and interest groups. Schmidt obviously
hopes tax cuts will generate political gains for his government in upcoming state and
parliamentary elections. The benefits from public works spending, though normally
larger than gains from equal tax cuts, are less obvious to most voters. Moreover, the
government probably could not implement a like-sized public works program under
present circumstances. Spending on public works initially affects the construction
sector, the one sector of the German economy that is currently bumping against
capacity.
To measure the likely impact of the proposed stimulation package, we ran a
simulation on our quarterly econometric model of the West German economy. The
program has its strongest and most immediate effect on private consumption and
residential housing, because nearly all of the measures effective 1 January 1979 are
specifically designed to increase disposable household incomes. The impact on
consumption nevertheless is not as large as would be expected in the United States
because of (a) significant leakages abroad as shown in the sizable response of imports
of goods and services; and (b) a much higher marginal savings rate.
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West Germany: Projected Impact of Stimulation Program
Deviation from Base Line
Billion 1970 DM
1979
1980
1st
Qtr
2nd
Qtr
3rd 4th 1st 2nd
Qtr Qtr Qtr Qtr
Billion 1970 Deutsche Marks
3rd
Qtr
9th
Qtr
GNP
1.1
2.5
3.7
3.9 3.9
3.6
3.0
2.3
Private consumption
0.8
1.7
2.4
2.4 2.5
2.3
2.1
1.8
Government consumption
0
0
0
-0.1 -0.2
-0.3
-0.3
-0.4
Business fixed investment
0.3
0.8
1.4
1.5 1.7
1.7
1.5
1.2
Residential housing
0.1
0.3
0.6
0.8 0.9
1.1
1.1
1.2
Stockbuilding
0.1
0.3
0.6
0.8 0.8
0.7
0.5
0.3
Export volume
0
0.1
0.2
0.3 0.3
0.3
0.3
0.2
Import volume
0.2
0.7
1.2
1.5 1.7
1.8
1.7
1.5
Percent
GNP deflator
0
0
0.1
0.2 0.4
0.6
0.7
0.9
Billion US $
Current account balance
-0.2
-0.4
-0.8
-1.0 -1.1
-1.2
-1.1
-1.0
Increased consumer spending triggers a rise in business investment by mid-1979;
the higher investment level is maintained through mid-1980, helped by the reduction
in business taxes scheduled for the beginning of that year. The program's effect wears
off during 1980 under the influence of the VAT increase and an acceleration of
inflation reflecting capacity contraints and shortages of skilled labor.
Our model simulation indicates that this stimulation package raises real GNP
growth in 1979 to as high as 4.5 percent, compared with little more than 3 percent in
the absence of government action. The speedup in growth reduces unemployment to
4.3 percent of wage and salary workers (from 4.5 percent in 1978), or roughly 3.5
percent of the labor force (3.7 percent in 1978). The inflation rate is only slightly
higher in 1979 than it otherwise would be but accelerates by an additional 0.5
percentage point in 1980. Although the feedback from increased imports induces a rise
in exports, the current account surplus in the simulation is $2.4 billion less in 1979 and
$4.4 billion less in 1980 than in the base case. No allowance has been made, however,
for further shifts in deutsche mark parities.
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Package Likely To Be Changed
Although approved by the Cabinet, Schmidt's stimulation package will encounter
tough sledding both in the Bundestag (the lower house, where the governing coalition
holds a thin majority) and in the Bundesrat (the upper house, which is controlled by
the Christian Democratic Union/Christian Social Union opposition). The opposition
parties, while supporting tax reform, seek a better break for middle and upper income
groups and especially more tax relief for business, a view shared by many in the FDP,
the junior coalition party. FDP agreement to the package in the Cabinet presumably
was motivated in part by a desire to avoid intracoalition squabbles, especially prior to
the crucial October state elections in Hesse. FDP leaders can expect the CDU/CSU to
insist on changes in the stimulation package more in line with their own preferences as
the price for Bundesrat consent. Such changes, in turn, would arouse the bitter
opposition of SPD left-wingers, whose support for even the present proposals is shaky.
While the ultimate shape of the stimulation package is uncertain, experience with last
year's program suggests that some combination of tax cuts arid spending increases will
be enacted and that parliamentary logrolling will more likely increase than reduce its
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SPAIN AND THE EC: EXTENDING EUROPE PAST THE PYRENEES
Spain, having moved nimbly in the post-Franco era to fulfill the political
conditions for membership in the European Community, now must address the task of
opening its highly protected economy to European competition. Long-run gains from
increased trade, free movement of resources, and more intense competition will
outweigh the losses suffered by less efficient Spanish producers. Madrid's application
for EC membership enjoys widespread popular support within Spain. On the
Community side, admission of Spain is considered a political necessity. Nevertheless,
the economic issues complicating EC enlargement?especially questions concerning
agriculture and labor mobility?will lead to protracted negotiations, and integration of
the Spanish economy into the Community will require a lengthy transition period.
State of Play
Spain applied for EC membership on 28 July 1977?two years after Greece and
four months after Portugal. Madrid recently turned in lengthy questionnaires required
by the Community and expects a ruling or opinion on membership from the EC
Commisssion by the end of the year. After a favorable ruling is obtained, formal
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negotiations will take about two years. Ratification will require another one to two
years, making membership possible by 1982 or 1983. EC leaders favor a further five-
to 10-year transition or adjustment period for integrating the Spanish economy into
the Community. Madrid is agreeable to a long economic transition provided Spain is
accorded full political rights from the start.
Under a 1970 trade agreement, Spanish exports of most agricultural products and
many industrial items already enjoy preferential access to the European Community.
Negotiations for a renewal of this agreement began in February and are proving
difficult. Madrid wants greater concessions, including preferences at least as favorable
as those granted Mediterranean Arab countries and Israel for citrus fruit and other
food exports. The Community seeks a substantial reduction of Spanish industrial
tariffs. These negotiations are important as a harbinger of the likely course of accession
negotiations.
Spain has had close economic ties with the EC since the Community was
established. Currently, the Nine provide more than one-third of Spanish imports?pri-
marily machinery, basic manufactures, and chemicals. EC countries take nearly one-
half of Spanish exports, notably citrus fruits and vegetables, steel and other basic
manufactures, and transport equipment. Spain's main trade partners in the Communi-
ty are France, West Germany, and the United Kingdom. Spain-EC trade turnover was
almost $11 billion last year, a large amount for Spain but only 1 to 2 percent of the EC
total. Spain chronically runs a deficit in trade with the Community?$1.4 billion in
1977.
Hurdles To Be Cleared
Spain, along with Greece and Portugal, faces serious obstacles to EC acceptance,
but the Community has committed itself to take in all three countries provided they
maintain representative forms of government. While Spain's greater size appears to
make obstacles to its membership more difficult than those confronting the other
applicants, the three cases are closely linked. The Community can hardly deny a
concession to Spain that it has granted one of the smaller countries.
Agriculture presents the most difficult hurdle for Spanish accession. The problem
is that 75 percent of Spain's agricultural production is Mediterranean?wine, fruits
and vegetables, olive oil, and tobacco. These same crops are the major agricultural
products of the poor regions of southern France and Italy and are already in surplus in
the Community. In addition, Spanish prices are as much as 60 percent below present
EC levels.
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EUROPEAN COMMUNITY AND SPAIN:
Production of Selected Agricultural Products
1975
Thousand Tons
Oranges
Tangerines
Lemons
and Limes
Tomatoes
Wine
1,554
380
628
295
840
1,946
KEY:
European Community
Spain
4,886
3,150
Olive Oil
602
470
14,910
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Spain argues that membership will boost its imports from the Community of
cereals, butter, and sugar, but this is little consolation for the farmers of southern
France and still less for the Italians. Wine is particularly troublesome. France and
Italy already have engaged in one wine war. Spanish wine prices are even lower than
Italian, and Spain has more acreage devoted to vineyards than either Italy or France.
France is insisting on special aids for its Mediterranean farmers to protect them from
losses due to enlargement. Italy opposes many of these special aids for France because
they could jeopardize Italian food exports to France. Negotiators have not yet come to
grips with this thorny issue. The solution undoubtedly will entail a special system of
levies and subsidies to compensate for differences in farm prices; this system would be
phased out gradually as were the systems adopted after the Community was expanded
to include the United Kingdom, Denmark, and Ireland. Spanish farmers ultimately
would gain from membership through expanded exports and higher prices.
Free movement of labor, a central principle of the European Community, poses
another serious obstacle to EC expansion. West Germany, France, and the Benelux
countries fear an influx of Greeks, Portuguese, and Spaniards that would swamp labor
markets and social insurance systems. About 500,000 Spaniards already work in the
Community and are accompanied by as many dependents. One-half of Spain's
emigrant workers are in France. At present, Spaniards make up about 7 percent of
foreign workers in the EC countries; Greeks, Portuguese, and Spaniards together
account for about 20 percent. The accession problem is complicated by an outstanding
EC commitment to allow free entry of Turkish labor by 1986. West Germany in
particular probably will insist that restrictions be continued on workers from the
acceding countries for some time. Spain will resist because the return of workers from
the north since the 1974-75 recession and the slowdown in emigration have added an
estimated 5 percent to a Spanish labor force already suffering from high
unemployment.
The Industrial Dilemma
Spanish industrialists are apprehensive about their ability to compete in the
European Community even though Spain, unlike Portugal and Greece, is something of
an industrial power. For years, Spanish industry has been protected by high tariffs,
quotas on many imports, cheap credit, and government subsidies and tax rebates. This
protection has nurtured structural distortions such as an excessive number of small-
scale firms, inadequate research and development programs, and an inefficient
distribution system. The increased competition and larger market should promote
expansion and efficiency. Firms that fail to become more efficient of course will be
hurt or eliminated by EC competition. Household appliance manufacturers and the
paper products industry look particularly vulnerable.
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The elimination of industrial trade barriers will be a boon for some Spanish firms
that already are competitive with EC producers. Industries with good prospects for
expansion include manufacturers of machine tools, typewriters, batteries, and auto-
mobiles. The Ford Motor Company subsidiary recently became Spain's largest single
exporter.
On the other hand, a number of competitive industries?iron and steel, textiles,
footwear, and shipbuilding?are unlikely to see sales to the EC Nine mushroom
because markets for their products are glutted. In steel, demand is slumping
worldwide, leaving both Spain and the Nine with excess capacity. The Community has
imposed severe restrictions on steel imports. Spain has reluctantly agreed to accept a
quota of 900,000 tons per year, 9 percent below its 1976 sales to the Community.
Restraints have been imposed on intra-Community steel trade, and EC producers are
supposed to reduce capacity over the next few years.
One of Spain's major competitive advantages vis-a-vis EC producers is lower
wages?about 50 percent lower than French or West German pay. The opening to the
EC market to Spanish industrial products should attract firms hoping to take
advantage of the wage differential to produce in Spain for sale in the Nine. Inflation
and wage increases in Spain, however, have far exceeded the EC average over the past
three years and will continue to erode Spain's competitive advantage for at least the
next few years. The legalization of trade unions in 1977 is not having a dramatic effect
on Spanish wage rates. Wage increases, though still rapid, are limited by an austerity
pact agreed to by the unions last year.
Other Considerations
The 1977 extension of EC territorial waters to 200 miles in the Atlantic was a
severe blow to Spanish fishing. Spain retaliated in 1978 to protect this important
industry by extending its own territorial waters to 200 miles. Madrid is especially
concerned because the fishing fleets are based in areas already suffering from the
slump in shipbuilding. The Community has granted fishing licenses to Spain pending
negotiation of a fishing agreement, but these licenses are adequate to keep only about
20 percent of Spain's northern fishing fleet active. Some Spanish vessels have been
seized by France and Britain for fishing without licenses. No progress on a new
arrangement is expected until EC members can agree among themselves on a common
fishing policy.
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Gross National Product
1977
Billion US S.
West Germany
France
United Kingdom
Italy
Netherlands
Belgium
Denmark
Ireland
Luxembourg
European
Cornmunity
Spain
Greece
Portugal
United States
-
249
RomianA,ffia,aw.;&4..,
' I 160
105
2
382
514
J27
J16
118
1,543
1,890
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Once it becomes a member, Spain will receive more money than it pays into EC
coffers for many years?around $300 million the first year. While more funds can
only help, they will not amount to much in the $100 billion Spanish economy. EC
lenders like the Regional Fund, the European Social Fund, and the Agricultural
Guidance Fund are too small at present to have much impact on Spain.
The so-called gap between the rich EC Nine and the less affluent applicants is a
nonissue in the Spanish case. Per capita income exceeds Ireland's and falls only slightly
below Italy's. Moreover, Greece and Portugal, which are indeed quite poor, probably
will be EC members by the time Spain can join. Spain ranks eighth in the 24-member
OECD in GNP, ninth in steel production, and twelfth in energy production.
Bullish Outlook
Spain stands to reap substantial long-term economic gains through accession to
the European Community. Spanish leaders are optimistic about membership but
aware of the threat of near-term economic dislocations. Madrid will have to modify its
legislation on competition, state monopolies, labor, patents, trademarks, and insurance.
Bills already in parliament are designed to bring the Spanish tax system more in line
with the Community norm. Reform of banking and investment policy, formerly
characterized by highly monopolistic practices and pervasive government interven-
tion, is well along. Madrid will need to find ways to smooth the transfer of labor and
capital from firms and farms that cannot stand the blast of EC competition to
enterprises than can thrive in the expanded market. The tough issues centering on
labor and agriculture will riot block Spanish entry but will require protracted
negotiation and lengthy periods of adjustment. In the accession process, EC agricultur-
al policy, already baroque, will be broadened and made still more complex.
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PAKISTAN: ENCOURAGING BUT UNCERTAIN ECONOMIC REBOUND
In the 12 months since the ouster of Prime Minister Bhutto and the establishment
of martial law, the military government of General Mohammad Zia-ul-Haq has
benefited from a bumper cotton crop and a big jump in remittances from overseas
Pakistanis. Real GNP in the fiscal year ending 30 June 1978 was up an estimated 6
percent. Preoccupied with restoring domestic political stability, Islamabad has for the
most part avoided major economic initiatives. Specifically, the government has not
faced up to the basic problems of dealing with Pakistan's sizable foreign debt or of
weeding out overambitious capital-intensive development projects.
A Perspective on the Bhutto Years
Pakistan's economy performed poorly under the Bhutto regime (December 1971-
July 1977) when real growth averaged 3.6 percent annually, only slightly higher than
the 3.1-percent population growth rate. Apart from external shocks to the economy
over which the regime had no control, economic development was hampered by
improvident government policies. Bhutto's development strategy focused on invest-
ment in a small number of high-cost, slow maturing projects, which in toto greatly
exceeded available domestic resources. Thus, the government relied heavily on foreign
borrowing both to cover chronic trade deficits and to support development programs.
When the July 1977 coup occurred, external public debt had reached $6.6 billion.
saddling the government with a debt service ratio of 18 percent.
Political disturbances during the four months preceding the coup helped bring on
a sharp deterioration in the economy. Labor disturbances periodically shut down large
segments of industry; transportation links between the port of Karachi and the rest of
the country were intermittently disrupted, thus slowing the movement of both exports
and imports. Shortages of key commodities and production losses, together with
excessive pay raises given to civil servants, undercut efforts to reduce inflation from
the 20-percent-plus level in 1975 and 1976.
The Postcoup Environment
Caution in economic matters has been the byword of the Zia government, largely
reflecting the role economic issues played in Bhutto's overthrow. General Zia and his
military colleagues have retained the civilian economic bureaucracy inherited from
the Bhutto era and the top leaders of key economic organs?the Planning and Foreign
Economic Affairs Division of the Prime Minister's Secretariat, the Ministeries of
Finance and Planning, and the State Bank of Pakistan. All are well-trained and
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Pakistan: Encouraging but Uncertain Economic Rebound
Index: 1972/73=100
225
GNP
Agricultural
Production
Industrial Production
1972/73 73/74 74/75 75/76 76/77 77/78
576869 8-78
competent economic managers. Although little information is available on the
relationship between Zia and these economic chiefs, we believe that Zia is relying on
them for policy guidance.
So far the new government has confined its actions largely to repairing the
damage done under Bhutto. To stimulate agricultural production, it has denational-
ized agricultural industries?flour and rice milling and cotton ginning?and has raised
procurement prices for rice. Denationalization has also raised hopes that cotton and
rice exports, now in government hands, will be returned to private operation with a
consequent increase in exports. The signing of joint oil exploration agreements
between the government and several foreign oil companies also suggests a new
willingness to enlarge the sphere of operation for both foreign and domestic business
firms.
As for long-term planning, the government has prepared a new five-year plan
that focuses on development of infrastructure, improvement of agricultural productiv-
ity, and greater involvement of the private sector. Although details of the plan remain
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sketchy, Islamabad apparently intends to go ahead with several of the major projects
inherited from the Bhutto regime. Some Pakistani planners and the World Bank?
which plays a leading role in the consortium of Western aid donors to Pakistan?favor
postponement or cancellation of these large capital-intensive projects and a concentra-
tion of resources on agricultural development.
Among the prime examples of these economically questionable projects are the
nuclear reprocessing plant and a $1.5 billion steel mill. Similarly, the $650 million
Chashma nuclear power plant, still in the planning stages, will eventually produce
electricty at a higher cost per unit than would hydroelectric or gas-fueled power
plants.
Current Trends
At present the government is not under great pressure to move rapidly in
economic matters. It ended its first year in power with inflation and balance-of-
payments problems fairly well under control, although both are still matters of
concern. Aided by a rebound in overall agricultural production and the restoration of
normal supply and distribution channels for consumer goods, inflation in FY 1978 was
held to about 10 percent. On the minus side, a 10-percent decline in wheat production
is forcing the government to import about 1.5 million tons in FY 1979. The shortfall
largely reflects the government's failure to raise wheat procurement prices, which
encouraged farmers to shift acreage into other crops. Although industrial production
recovered moderately in FY 1978, it is still running only slightly above the level of FY
1974.
Balance-of-payments problems have been eased by the sharp rise in remittances
from about 1 million Pakistanis working overseas, mainly in the Persian Gulf states.
The inflow, an estimated $1 billion in FY 1978, helped slash the current account
deficit by one-third and allow ed a $230 million drop in financing requirements; with
the remaining requirements more than covered by official project and nonproject aid,
foreign exchange reserves increased by $240 million, to $660 million at the end of
June.
Immediate Prospects
Despite this encouraging comeback, economic recovery remains fragile. An
uncertain investment climate persists as private businessmen wait to see Zia's plans to
return the government to civilian rule. Over the past 12 months, he has on several
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Pakistan: Balance of Payments
Million US $
FY 1974'
FY 1975
FY 1976
FY 1977
FY 19782
Trade balance
?473
?1,139
?976
?1,185
?1,500
Exports, f.o.b.
1,020
975
1,163
1,105
1,300
Imports, f.o.b.
1,493
2,114
2,139
2,290
2,800
Current account
?548
?1,170
?946
?1,035
?660
Services (net)
?225
?260
?323
?446
?260
Worker remittances
150
229
353
596
1,100
Debt repayments
?216
?310
?345
? 220
?367
Financing requirements
764
1,480
1,291
1,255
1,027
Reserve change
103
?93
?166
?198
240
' Fiscal year ending 30 June of stated year.
2 Estimated.
occasions announced plans to hold national elections but has failed to come through.
The private sector is also waiting for more precise government statements on its future
role in the economy.
In this environment, economic performance in FY 1979 will depend primarily on
the agricultural sector and specifically on weather conditions. Another bumper cotton
crop would provide a stimulus to the textile industry and to cotton exports. Although
Islamabad is trying to arrange for necessary wheat imports on concessionary terms, a
$55 million hike in the wheat import bill is in prospect at the moment.
The massive external debt should remain manageable. A four-year debt resched-
uling agreement expired on 30 June 1978, and the government now faces a $235
million increase in debt servicing in the new fiscal year. Islamabad has argued that it
cannot meet this added burden and has requested the World Bank, which chairs the
group of major creditors, for a new rescheduling agreement. Led by the United States,
which holds about 35 percent of Pakistan's total debt, the major creditors have
deferred a decision until December 1978. They take the view that the need for
rescheduling cannot be assessed until the government reveals more details of its new
long-term development program and outlines the direction of the economy.
In any case, a balance-of-payments crisis and a default in external debt payments
do not appear in the offing. Some further rise in workers remittances?though
nowhere near last year's extraordinary 85-percent increase?plus the buildup of
foreign exchange reserves and the anticipated inflows of official project and nonproj-
ect assistance should allow the government sufficient manueverability in handling its
25X1 external accounts.
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CHINA: INTEGRATION OF CIVILIAN AND DEFENSE INDUSTRIES *
Chairman Hua Kuo-feng appears to have instituted a policy requiring Chinese
defense industries to contribute more to the civilian economy. Conceivably, this would
involve greater sharing of China's scarcest resources?scientists and technicians,
precision machinery and instruments, and imported high-quality materials?with the
producers of basic industrial equipment.
Hua, in his report to the Fifth National People's Congress last February, called
for greater integration of military and civilian enterprises. The speech itself, however,
did not provide any specifics on how this integration was to be accomplished. Hua did
indicate that such coordination of production would reduce the need for investment
capital, an urgent measure in view of the ambitious construction goals set forth in the
current 10-year (1976-85) plan.
Promoting the Policy
Two PRC press accounts published since Hua's speech provide some additional
insight into the new policy. The first report, published one month after the Congress,
described the efforts of an institute in the Second Ministry of Machine Building to
promote the civilian uses of nuclear energy. It is a straightforward account of how the
institute, for the last several years, has encouraged greater use of nuclear energy
technology in the civilian economy. No reference, however, is made in the account to
Hua's speech or the integration policy which he proposed.
The second article, published a month after the first, discusses the support given
in recent years to civilian R&D projects by a defense research institute engaged in the
development of electronic circuits for the Seventh Ministry of Machine Building?the
ministry responsible for missile development. The article refers directly to the
integration policy and is more informative than the first regarding the relationship
between defense and civilian enterprises.
As part of its cooperative efforts, the institute reportedly participates in the
selection of civilian R&D projects to be undertaken and consequently is able to
influence the focus and the progress of civilian R&D in areas vital to military research.
It is by this means, according to the article, that the institute uses civilian industry to
promote military industry. The article also states that civilian use of the products
* This article is a joint assessment by the Office of Economic Research, the Office of Regional and Political Analysis,
and the Office of Strategic Research.
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developed in those projects shortens the development period for military products.
The institute first puts prototype electronic products to use in civilian applications and
then improves them over time to meet the generally more stringent military
specifications.
The emphasis on benefits accruing to the defense institute because of its
cooperative relationship with the civilian sector is possibly designed to persuade
reluctant elements in the defense establishment to comply with the new policy.
Shakeup in the Defense Industries
Since last fall all but one of the seven heads of the defense-related machine
building ministries have been replaced. Four of the new appointees are civilian
replacements for men associated primarily with the People's Liberation Army. The
only career military officer retaining his position is Wang Cheng, head of the ministry
controlling electronics production. While the reshuffle fits with the erosion of military
influence in government affairs that has been occurring since the end of the Cultural
Revolution, other factors may also be at work. Some of the ministers who lost their
portfolios may have had ties with the disgraced -Gang of Four," or they may have
been critical of the subordination of some military ventures to the newly emphasized
goal of rapid economic modernization, of which the proposed integration is a part.
Leadership of Machine Building Ministries
Ministry
of Machine
Present
Prior to Fall of 1977
Minister
Background
Minister
Background
Building
First (civilian
machinery)
(Thou Tzu-chien
Civilian
Liu Shui-ching
Military
Second
(nuclear energy)
Liu Wei
Civilian
Liu Hsi-yao
Civilian
Third-
(aircraf t)
Lu Tung
Civilian
Li Chi-tai
Military
Fourth
(electronics)
Wang Cheng
Military,
Wang Cheng
Military
Fifth
(conventional
armaments)
Chang Chen
Civilian
Li Cheng-fang
Military
Sixth
(shipbuilding)
Chai Shu-fan
Civilian
Pien Chiang
Civilian
Seventh
(missiles)
Sung Jen-chiung
Civilian
Wang Yang
Military
10 August 1978
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Implications
The defense sector has long had a priority claim on scientists and technicians,
precision machinery and instruments, and imported high-quality materials. Hua
seems to be calling for greater sharing of these resources with producers of basic
industrial equipment than at any time in the past. A large-scale diversion of resources
probably would be resisted by sectors of China's military bureaucracy.
These developments do not necessarily imply a reduction in defense spending. It
seems likely, however, that attempts will be made to eliminate redundancies between
civilian and military efforts and, within the defense industry, to concentrate resources
on projects of most immediate importance. The shakeup seems intended to bring
military production into line with economic priorities and to permit more efficient use
of existing plants and equipment.
At this juncture, the most significant aspect of these developments may be that
Peking has found it necessary to take steps to strengthen its control over a military
bureaucracy accustomed to priority treatment in matters of resource allocation. This
effort, in turn, underscores the current tightness in the availability of resources for
new investment as well as the need to maximize output from existing industrial
facilities.
Notes
French Trade and Payments Outlook Improves Markedly
France's current account deficit should be brought under $1 billion in 1978 if, as
we expect, present favorable trends in merchandise trade continue. Previous forecasts
of a $1.8 billion current account deficit have to be revised in light of slower-than-
expected growth in aggregate demand and a first-half surge in exports. The trade
balance has improved steadily since January, registering a first-half surplus of $147
Million on an f.o.b./c.o.b. basis. Exports were up 13 percent in franc value in January-
June compared with a year earlier, led by food and manufactured consumer goods.
Continued slow economic growth?real GNP is rising at a rate of about 3 percent?
held the rise in imports (in terms of francs) to only 6.7 percent. The trade turnaround
will enhance the prestige of Prime Minister Raymond Barre, who has made
elimination of the trade deficit and strengthening of the franc major economic policy
goals.
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Egypt Disappointed at Level of Arab Aid
The Gulf Organization for the Development of Egypt (GODE) has agreed to
provide Egypt with $250 million in debt relief for 1978-79, as well as substantial debt
writeoffs in subsequent years. Cairo had been hoping for new commitments of $600
million to $1 billion in quickly disbursable grants or long-term loans. Unless larger
amounts of new Arab aid are forthcoming before yearend, Egypt could find itself
pushing against the short-term borrowing limits contained in its recently approved
Extended Fund Facility agreement with the IMF.
The GODE donors?Saudi Arabia, Kuwait, the United Arab Emirates, and
Qatar?complained that cash
flow problems, declining petroleum revenues, and the falling value of the dollar limit
their ability to provide economic assistance. While these problems are important, the
conservative Arab Gulf states may also want to retain their economic leverage in an
attempt to insure that Sadat is responsive to their interests in the peace negotiations
with Israel. Although GODE donors remain concerned about Egyptian financial
management, Cairo's recent agreement with the IMF to make further economic
reforms temporarily removes this longstanding Arab excuse for delaying new aid
commitments.
During 1976 and 1977, the GODE committed $1.75 billion in loans and provided
loan guarantees worth another $250 million. All but $100 million of this money has
been used to (a) pay off foreign debt arrears which reached $1 billion early in 1977
and (b) help Cairo cover the rest of its foreign financial gap in 1977 and the first half
of 1978.
All of the new aid promised on 27 July is being provided through debt relief?
$50 million on 1977 debt, $50 million in 1978, and $150 million on 1979 debt. At this
recent meeting, GODE also agreed in principle to write off the large debt repayments
falling due beyond 1979.
10 August 1978
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Canadian Measures Aim at Reviving Confidence
In a surprise 1 August speech, Prime Minister Trudeau announced a series of
economic initiatives to infuse new life into Canada's listless economy by building
business and consumer confidence. While billed as a major shift in economic priorities,
the program provides no net fiscal stimulus. A key objective is to shore up Trudeau's
image for parliamentary elections that must he called by next spring. The major
proposals included:
? A $2 billion cut in government spending together with a large (but
unspecified) reduction in taxes.
? Reaffirmation of Ottawa's intention to reduce government interference in
private business affairs.
? A promise to continue government efforts to hold the line on public sector
wage gains.
In addition, Trudeau reiterated his goal of holding federal employment stable this
year and reducing it in 1979. He also announced that the postal service would be
converted from a government department to a crown corporation, a concession to the
powerful postal workers' union and an effort to give Canadians some hope for
improved postal service. The tax cut reportedly will approximate the expenditure
cutbacks. Consequently, the program's impact on national income and employment
will depend on whatever boost it gives to public confidence.
Nigeria Facing Foreign Exchange Stringency
Nigerian foreign exchange reserves fell to $2.2 billion in July, a drop of $2.0
billion since the beginning of the year and the lowest level in four years. Reserves are
now equivalent to only about two months worth of imported goods and services. The
foreign business community in Nigeria, which is experiencing longer delays in
receiving payments from the Federal Military Government, believes that Lagos will
devalue the naira as the next step in relieving the foreign exchange crunch.
The rapid drawdown of reserves reflects the decline ol oil revenues?which
account for more than 90 percent of export earnings?coupled with the rise in imports
of capital goods and services essential to the economic development effort. In March
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1978, oil exports reached their lowest level in more than six years, at 1.5 million b/d.
Demand for Nigerian crude has fallen off as cheaper supplies from the North Sea and
Alaska have become available. Furthermore, rigid Nigerian oil pricing policies have
hampered efforts to keep up with traditional competitors, particularly Libya and
Algeria.
Already this year the goVernment has taken a number of initiatives in an attempt
to boost export earnings and ward off serious balance-of-payments problems. Among
these measures are:
? Oil price cuts in the first and second quarters and a recently announced
additional discount to third-party customers who sign long-term contracts for
specified crudes and to producing companies that raise liftings beyond last
quarter's average.
? Implementation in April of an austerity budget restricting consumer
imports, suspending wage increases and government subsidies, and limiting
federal spending to 1977 levels.
? Renegotiation of foreign contracts for major infrastructure projects to
stretch out the payments periods.
? Arrangement of a $1 billion Eurodollar loan, which has been completely
drawn down, and negotiation (near completion) of a second $1 billion
Eurodollar loan.
? Pursuit of barter arrangements with Japan, Poland, Romania, and several
US firms which would enable Nigeria to receive capital goods and food in
exchange for oil.
Nigeria appears to be headed for a $3 billion current account deficit in 1978,
even if imports respond quickly to the April restrictions. Although the oil companies
are beginning to respond to pricing incentives, oil exports for the year will average 1.8
million b/d at best, down from last year's 2.0 million b/d average. The austerity
measures should hold down the rapid increase in imported services but necessary
expenditures for ongoing projects will keep the deficit on services more than $3 billion.
The devaluation reportedly under consideration would do little to improve this
year's current account deficit. Indeed, its immediate effect would be to raise the
import costs of the development program. Although devaluation would in the long run
10 August 1978
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encourage local production and import substitution, Lagos in the months ahead almost
certainly will have to scale back its devlopment effort and/or seek additional
international financing.
24
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10 August 1978
or e ase
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Assessment
Center
Economic Indicators
Weekly Review
10 August 1978
ER El 78-032
10 August 1978
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' 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 Sevice
Library of Congress
Washington, D.C. 20540
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FOREWORD
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 FOREIGN COUNTRIES' COMPOSITE INDICATORS
Industrial Production
140
130
120
INDEX: 1970=100, seasonally adjusted
Semilogarithmic Scale
110
Unemployment Rate
)3
7
6
-
4
3
Note: Excluding data for Italy.
Big Five
Big Six
(Weighted average)
_lLiJUStatzlzi
126
4.4
Percent
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
lIncluding Japan, West Germany, France, the United Kingdom, Italy, and Canada
A-2
1976
1977
1978
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Consumer Price Inflation
Percent, seasonally adjusted, annual rate
Note: Three-month average compared with previous three months.
Trade Balance
4.0
3.0
2.0
A5.7
Billion US $, f.o.b., seasonally adjusted
Big Six
-1.0
-2.0
-3.0
Note: Five-month weighted moving average.
1JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN
1973 1974 1975
Industrial
Production
Big Six
United States
Consumer Prices
Big Six
United States
AVERAGE ANNUAL
Percent Change GROWTH RATE SINCE
LATEST from Previous 1 Year 3 Months
MONTH Month 1970 Earlier Earlier2
APR 78 0.7
APR 78 1.5
MAY 78 0.8
MAY 78 0.8
3.0
3.1 4.4
3.7 5.1 5.2
9.2 6.3 7.1
6.7 7.0 9.9
United States
\ 4.3
/1.9
APR JUL OCT JAN APR JUL OCT JA APR JUL OCT
\47
1976 1977 1978
Unemployment Rate
Big Five
United States
Trade Balance
Big Six
United States
2Average for latest 3 months compared with average for previous 3 months, seasonally adjusted at annual rate.
A-3
LATEST MONTH
MAY 78 4.4
MAY 78 6.1
3 Months
1... Year Earlier Earlier
4.2 4.3
7.1 5.1
LATEST MILLION CUMULATIVE (MILLION US $)
MONTH US $ 1978 1977 Change
MAY 78
MAY 78
3,495 22,505 11,298 11,207
-2,238 -14.771 -8.280 -6,491
"i16/38 7 /8
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INDUSTRIAL PRODUCTION INDEX: 1970=100, seasonally adjusted
United States
140
130
?12
1973 Average 120
110
Japan
140
130
120
110
Semilogarithmic Scale
West Germany
130
120
110
113
France
140
130
?120 Ni 121
110
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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...
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United Kingdom
100
Italy
140
130
120
110
100
Canada
130
120
110
Semilogarithmic Scale
106
115
128
JAN APR JUL OCT
1973
JAN
APR JUL
1974
Percent
Change
from
OCT JAN APR JUL OCT
1975
AVERAGE ANNUAL
GROWTH RATE SINCE
JAN APR JUL OCT
1976
JAN APR JUL
1977
Percent
Change
from
OCT JAN APR JUL OCT
1978
AVERAGE ANNUAL
GROWTH RATE SINCE
LATEST
Previous
1 Year
3 Months
LATEST
Previous
1 Year
3 Months
MONTH
Month
1970
Earlier
Earlierl-
MONTH
Month
1970
Earlier
Earlier].
United States
JUN 78
0.3
3.7
4.7
12.2
United Kingdom
APR 78
1.0
0.7
1.9
6.1
' Japan
JUN 78
-0.6
3.9
4.7
6.5
Italy
MAY 78
5.5
3.2
-1.4
-1.6
West Germany
MAY 78
-1.7
1.9
0.9
-6.6
, Canada
APR 78
-0.2
3.8
2.1
3.7
France
MAY 78
-3.1
3.1
3.3
13.4
I-Average for latest 3 months compared with average for previous 3 months.
A-5
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UNEMPLOYMENT RATE PERCENT
United States
9
8
7
6
Japan
2
West Germany
5
4
3
2
France
5
4
3
2
1965-74 Average 4.6 ?
'
1.2 ?
1.2 ?
1.9
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
A-6
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United Kingdom
4
Italy (quarterly)
Li 7
3.8
7.0
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
8.6
2.5
3.4 -
5.0 -
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
LATEST MONTH
1 Year
Earlier
3 Months
Earlier
LATEST MONTH
1 Year
Earlier
3 Months
Earlier
United States
JUN 78
5,754
6,904
6,148
United Kingdom
JUL 78
1,371
1,402
1,387
Japan
MAY 78
1,270
1,140
1,160
Italy
II 78
1,455
1,432
1,520
West Germany
JUN 78
984
1,044
1,014
Canada
JUN 78
944
848
938
France
MAY 78
1,113
1,066
1,042
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.
A-7
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CONSUMER PRICE INFLATION Percent, seasonally adjusted,
annual rate'
United States
15
10
2.9 Average Annual Rate of Inflation 1961-1972
Japan
45
40
35
30
25
20
15
10
5.8
5
West Germany
15
10
3.1
France
15
10
5.-
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
iThree-month average compared with previous three months.
A-8
1978
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United Kingdom
35
30
25
20
15
10
Italy
35
30
25
20
15
-10
4.7
,0012.4
Canada
15
10
5
4.2
2.9
98
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
J7
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
al AY 78
0.8
MAY 78
1,0
11.1N 78
0,1
MAY 78
1.0
9,7
9.13
5.2
9.0
7 n
9 9
' United Kingdom
IIIN 78
35
6.0
Italy
ILIN 78
2.4
2 2
'Canada
_:1161 79
91
10.2
0.8
131
74
5.2
19
13,1
12.2
12,4
1
08
7 7
9.2
9.8
2Average for latest 3 months compared with average for previous 3 months, seasonally adjusted at annual rate.
A-9
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GNP '
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RETAIL SALES '
Constant Market Prices
Percent Change
Latest from Previous
Quarter Quarter
Average
Annual Growth Rate Since
1 Year Previous
1970 Earger Quarter
United States
78 II
1.9
3.2
4.1
7.7
Japan
78 I
2.4
5.5
5.7
10.0
West Germany
78 I
0.1
2.4
1.1
0.4
France
78 I
1.8
4.1
1.4
7.4
United Kingdom
77 IV
-0.5
1.6
-1.1
-1.9
Italy
78 I
2.0
1.9
-6.2
8.2
Canada
78 I
0.7
4.7
2.8
2.7
Seasonally adjusted.
FIXED INVESTMENT '
Nonresidential; constant prices
Constant Prices
Percent Change
Latest from Previous
Month Month
Average
Annual Growth Rate Since
1 Year 3 Months
1970 Earlier Earlier
United States
May 78
-0.9
3.1
1.9
5.5
Japan
Jan 78
2.9
9.2
1.0
-2.8
West Germany
Apr 78
-0.8
2.5
7.0
- 7.3
France
Jan 78
9.9
0
1.0
10.5
United Kingdom
Jun 78
0.6
1.2
6.5
7.0
Italy
Mar 78
3.6
3.2
5.5
21.1
Canada
May 78
1.0
4.1
3.5
2.2
' Seasonally adjusted.
Average for latest 3 months compared with average for previous 3 months.
Percent Change
Latest from Previous
Quarter Quarter
Average
Annual Growth Rate Since
1 rear Previous
1970 Earlier Quarter
United States
78 I
1.0
2.2
4.7
4.1
Japan
78 I
0.9
1.1
-0.4
3.6
West Germany
78 I
-0.5
0.7
1.6
-2.1
France
77 IV
0.8
4.0
4.7
3.3
United Kingdom
77 IV
-1.5
1.3
4.1
-5.9
Italy
78 I
5.3
1.7
-11.4
22.7
Canada
78 I
- 3.7
4.8
-12.7
-14.1
' Seasonally adjusted.
WAGES IN MANUFACTURING '
Average
Annual Growth Rate Since
latest
Period
Percent Change
from Previous 1 Year 3 Months
Period 1970 Earlier Earlier 2
United States
Jun 78
0.5
7.6
7.6
7.2
Japan
Mar 78
-0.2
16.2
7.7
8.3
West Germany
78 I
0.9
8.9
4.3
3.9
France
77 IV
3.1
14.1
12.0
12.9
United Kingdom
Mar 78
16.2
16.8
21.7
31.4
Italy
May 78
3.5
20.4
15.5
13.6
Canada
Apr 78
-0.1
10.9
7.7
6.8
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.
MONEY MARKET RATES
United States
Japan
West Germany
France
United Kingdom
Canada
Eurodollars
Represerratiye rote
Commercial paper
Call money
Interbank loans (3 months)
Call money
Sterling interbank loans (3 months) i
Finance paper I
Three-month deposits
Latest Date
Percent Rate of Interest
I Year 3 Months 1 Month
Earlier Earlier Earlier
Aug 2 7.81
5.49
6.96
7.78
Aug 4 4.38
5.75
4.12
4.25
Aug 2 3.71
4.06
3.56
3.65
Aug 4
7.75
8.63
8.50
7.25
Aug 2
9.91
7.55 I
8.95
10.11
Aug 2
8.38
7.34
7.98
8.06
Aug 2
8.41
6.11
7.73 8.63
A- 10
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EXPORT PRiae roved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
EXPORT PRICES
US $
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Latest
Month
May 78
May 78
May 78
Apr 78
Jun 78
Dec 77
Apr 78
Percent Change
from Previous
Month
0.4
1.1
-1.8
3.4
1.2
0.9
-0.2
Average
Annual Growth Rate Since
1970
9.4
12.2
11.4
12.1
11.4
10.7
8.3
1 Year 3 Months
Earlier Earlier
5.0
23.6
10.6
17.9
16.7
8.6
-1.2
8.3
45.4
-6.7
36.2
-3.8
-1.3
-13.6
National Currency
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Latest
Month
May 78
May 78
May 78
Apr 78
Jun 78
Dec 77
Apr 78
Average
Annual Growth Rate Since
Percent Change
from Previous 1 Year 3 Months
Month 1970 Earlier Earlier
0.4
3.1
1.2
0.9
0.1
0.6
1.2
9.4
5.8
3.8
9.4
15.2
15.8
9.5
5.0
0.7
-1.2
8.9
9.2
9.6
7.3
8.3
14.3
-0.6
21.0
13.1
-4.7
-0.2
IMPORT PRICES
National Currency
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Average
Annual Growth Rate Since
Percent Change
Latest front Previous 1 Year 3 Months
Month Month 1970 Earlier Earlier
May 78 -0.3 12.8 5.4 6.8
May 78 5.3 7.1 -17.0 -12.3
May 78 1.5 3.3 -4.4 0.9
Apr 78 -2.2 9.3 0.2 -1.6
Jun 78 1.1 17.6 3.0 16.3
Dec 77 -0.7 19.5 9.7 -13.1
Apr 78 1.5 8.9 10.6 -2.1
OFFICIAL RESERVES
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Latest Month
Billion US $
1 Year 3 Months
End of Billion US $ Jun 1970 Earlier Earlier
Jun 78 18.9 14.5 19.2 19.2
Jun 78 27.3 4.1 17.4 29.2
May 78 40.0 8.8 34.8 41.9
Apr 78 10.6 4.4 10.0 0.1
May 78 17.3 2.8 10.0 21.4
May 78 12.2 4.7 7.9 11.4
Jun 78 4.7 9.1 5.1 4.0
CURRENT ACCOUNT BALANCE
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Latest
Period
78 I
Jun 78
May 78
78 I
77 IV
77 III
78 I
Cumulative (Million US $)
BASIC BALANCE '
Current Account and Long-Term Capital Transactions
Cumulative (Million US $)
Latest
Million US $ 1978 1977 Change Period
-6,954 -6,954 -4,158 -2,796 United States
2,345 8,829 3,076 5,753 Japan Jun 78
323 2,665 1,946 720 West Germany May 78
0 0 -2 2 France 78 I
682 N.A. - 14 N.A. United Kingdom 77 IV
2,390 NA. 1,629 N.A. Italy 77 III
-1,273 - 1,273 -1,484 212 Canada 78 I
Converted to US dollars at the current marke rates of exchange.
2 Seasonally adjusted.
Million US S 1978 1977
No longer published 2
1,301 5,581 2,145
-722 2,532 -543
-1 -1 -2
1,389 N.A. 5,353
2,520 N.A. 2,128
-668 -668 -584
Change
3,436
3,075
N.A.
N.A.
-84
Converted to US dollars at the current market rates of exchange.
2 As recommended by the Advisory Committee on the Presentation of Balance of Payments
Statistics, the Department of Commorce no longer publishes a basic balance.
EXCHANGE RATES
Spot Rate
As of 4 Aug 78
Japan (yen)
West Germany
(Deutsche mark)
France (franc)
United Kingdom
(pound sterling)
Italy (lira)
Canada (dollar)
US $
Per Unit
0.0053
0.4928
0.2280
1.9252
0.0012
0.8791
Percent Change from
1 Year 3 Months
19 Mar 73 Earlier Earlier
39.36
39.17
3.44
-21.77
-32.88
-11.89
41.15
12.90
11.09
10.87
4.76
-5.99
19.61
4.50
6.22
5.84
3.48
-2.19
28 Jul 78
1.81
0.51
-0.10
-0.09
0.17
-0.51
TRADE-WEIGHTED EXCHANGE RATES'
As of 4 Aug 78
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Percent Change from
19 Mar 73
-3.24
43.79
30.37
-7.19
-28.38
-42.24
-13.05
1 Year
Earlier
-8.41
37.96
2.91
0.50
2.83
-5.33
-9.14
3 Months
Earlier
-4.66
18.11
1.77
1.89
-1.10
-3.91
28 Jul 78
-0.35
1.74
0.02
-0.68
-0.54
-0.23
-0.66
' Weighting is based on each listed count y's trade wi h 16 other industrialized countries to
reflect the competitive impact of exchange rate vario ions among the major currencies.
A- 1 1
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Developed Countries: Direction of Trade '
Billion US $
UNITED STATES
World
Exports to (f.o.b.)
Big Other
Seven OECD OPEC
Corn-
munist
Other
World
Imports from (c.i.f.)
Big Other
Seven OECD OPEC
Corn-
munist
Other
1975
107.65
46.94
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
30.94
13.65
4.60
3,76
1.00
7.93
43.14
20.39
3.51
8.15
0.47
10.62
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
22.11
7.83
2.39
3.35
1.32
7.22
18.32
5.04
2.06
6.46
0.87
3.89
WEST GERMANY
1975
91.70
28.33
3644
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
20.35
7.03
8.12
1.75
1.29
2.16
18.20
6.58
6.92
1.49
0.89
2.32
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
25.90
18.19
5.97
3.00
11.94
70.50
30.28
18.24
11.82
2.46
7.70
1978
1st Qtr
18.49
7.66
5.07
1.57
0.66
3.53
19.76
8.58
5.40
3.05
0.64
2.09
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
16.86
5.09
6.27
2.03
0.55
2.92
18.87
7.44
6.68
1.80
0.55
2.40
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
26.30
1.73
0,71
1.20
2.00
38.59
29.78
1.70
3.43
0.32
2.02
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
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
' Source: International Monetary Fund, Direction of Trade.
A-12
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Developed Countries: Direction of Trade '
(Continued)
Billion US $
Exports to (f.o.b.)
Imports from (c.i.f.)
CANADA
1975
1976
1977
1st Qtr
2d Qtr
3d Qtr
4th Qtr
Big Other Com- Big Other Corn-
World Seven OECD OPEC munist Other World Seven OECD OPEC munist Other
33.84 26.30 1.73 0.71 1.20 2.00 38.59 29.78
40.18 32.01 2.03 0.81 1.25 2.09 43.05 33.55
42.98 34.77 2.13 0.94 1.06 4.08 44.67 35.67
10.35 8.37 0.53 0.23 0.22 1.00 10.92 8.64
11.34 9.23 0.54 0.24 0.29 1.04 12.28 9.92
10.25 8.12 0.54 0.23 0.29 1.07 10.38 8.17
11.04 9.05 0.52 0.24 0.26 0.97 11.09 8.94
' Source: International Monetary Fund, Direction of Trade.
A-13
1.70
1.82
1.77
0.43
0.47
0.43
0.44
3.43
3.48
3.05
0.82
0.74
0.82
0.67
0.32
0.38
0.33
0.09
0.10
0.07
0.07
2.02
2.56
3.85
0.94
1.05
0.89
0.97
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Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
FOREIGN TRADE BILLION US $, f.o.b., seasonally adjusted
United States
14.0
12.0
10.0
8.0
6.0
Semilogarithmic Scale
4.0
Japan
7.0
6.0
5.0
4.0
1.5
West Germany
10.0
8.0
6.0
France
7.0
6.0
5.0
4.0
8.5
2.0
IAN 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
A-14
1976
1977
1978
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iiss iss:sos,
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
United Kingdom
Semilogarithmic Scale
t5
Canada
4.4
1.5
4.3
3.6
3.4
JAN APR JUL OCT
1973
United States
Japan
West Germany
France
JAN APR
LATEST
MONTH
JUN 78
Balance
JUN 78
Balance
MAY 78
Balance
JUN 78
Balance
JUL OCT JAN APR JUL OCT
1974 1975
CUMULATIVE (MILLION US $)
MILLION
US $ 1978 1977 CHANGE
12,126 66,363 60,257 10.1%
13,723 82,731 71,782 15.3%
JAN APR JUL OCT
1976
United Kingdom
Italy
Canada
JAN APR
1977
LATEST
MONTH
JUN 78
Balance
MAY 78
Balance
MAY 78
Balance
JUL OCT JAN APR JUL OCT
1978
CUMULATIVE (MILLION US $)
MILLION
US $ 1978 1977 CHANGE
5,376 32.428 26,583 22.0%
5,570 33,777 29,467 14.6%
-1,597
7,794
4,864
-16,368
47,131
32,365
-11,524
38,859
30,319
4,844
21.3%
6.7%
-195
4,276
4,358
-1,349
20,329
19,314
-2,884
17,623
18,630
1,536
15.4%
3.7%
2,930
10.313
8,522
14,767
55,032
45,808
8,540
46,735
38,606
6,227
17.8%
18.7%
-82
1,621
3,401
1,014
18,983
17,447
-1,008
17,435
16,713
2,022
8.9%
4.4%
1,791
6,318
6.217
9,224
37,329
37.182
8,128
31,159
32.828
-1,670
1,096
19.8%
133%
219
1,536
722
814
100
147
1,817
576740 7-76
A-15
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?coved FOlig For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
IGN TRADE PRICES IN US Si
United States
130
120
110
100
Imports
90
INDEX: JAN 1975=100
117
Japan
130
120
110
West Germany
120
116
113
JAN APR JUL OCT JAN APR JUL OCT JAN- APR JUL OCT JAN APR JUL OCT JAN APR 'JUL OCT
1974
1975
1976
lExport and import plots are based on five-month weighted moving averages.
A-16
1977
1978
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I I I 1 1 ; I I t
France
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111
United Kingdom
120
110
100
Italy
Canada
110
100
90
JAN
APR JUL OCT
1974
JAN
APR JUL OCT
1975
JAN
APR JUL OCT JAN
1976
A-17
44%..
APR JUL OCT
JAN
104
117
APR JUL OCT
1977 1978
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ApprogtILFEEM5s1)26%.1141317:1RelEanim700080004-2
INDUSTRIAL PRODUCTION'
Percent Change
Average
Annual Growth Rate Since
MONEY SUPPLY'
Percent Change
Latest from Previous
Month Month
Average
Annual Growth Rate Since
1 Year
1970 Earlier
3 Months
Earlier
Latest front Previous 1 Year 3 Months
Period Period 1970 Earlier Earlier '
Brazil
Mar 78
2.7
36.4
43.3
34.7
India
Mar 78
1.1
4.9
0.8 17.8
India
Dec 77
1.0
13.8
13.6
26.1
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
3.4 -2.0
South Korea
Apr 78
0.4
31.4
33.3
34.4
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
easonaNy adjusted.
' S .
Thailand
Nov 77
3.3
13.1
12.3
4.7
Average for latest 3 months compared with average for previous 3 months.
' SreaseriaNy adjusted.
Average for latest 3 months compared with average for previous 3 months.
CONSUMER PRICES
Average
WHOLESALE PRICES
Annual Growth Rate Since
Percent Change
Average
Latest from Previous 1 Year
Annual Growth Rate Since
Month Month 1970 Earlier
Percent Change
Latest
front 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 Rate Since
Latest Month
Percent Change
1 Year 3 Months
Latest horn Previous 1 Year
End of Million US $ Jun 1970 Earlier Earlier
Month Month 1970 Earlier
,
Brazil ,
Feb 78
6,733
1,013
5,878
5,994
Brazil Feb 78 0.4 14.1 1.5
India
Mar 78
5,823
1,006
3,747
5,184
India Mar 77 -0.9 9.6 17.9
Iron
Jun 78
12,068
208
11,025
12,483
Iran Jun 78
o
30.8 0
South Korea
Apr 78
4,138
602
3,247
4,418
South Korea 78 I
0.7
8.7 . 7.7
Nigeria May 76
-0.1
27.3 12.3
Mexico
Nigeria
Mar 78
Jun 78
1,766
2,387
695
148
1,422
4,663
1,723
3,906
Taiwan Dec 78
- 0.7
11.2 , 3.8
Taiwan
Mar 78
1,433
531
1,349
1,447
Thailand Mar 76 2.0 13.3 13.1
Thailand ,
May 78
2,129
978
2,005
2,087
A-18
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FOREIGN TRADE, f.o.b.
Latest 3 Months
Percent Change from
Latest Period
3. Months 1 Year
Earlier Earlier
Cumulative (Million US $)
1978 1977 Change
Brazil
May 78 Exports
84.8
-3.7 4,743 4,979 I -4.7%
May 78 Imports
26.6
1.4
5,110
4,939
3.5%
May 78 Balance
-367
40
-407
India
Feb 78 Exports
4.0
12.3
912
917
-0.4%
Feb 78 Imports
-39.6
- 0.2
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
1,995
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.
NA.
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 77 Balance
-29
-23
-5
' At annual rates.
A-19
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Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
AGRICULTURAL PRICES MONTHLY AVERAGE CASH PRICE
7.5
5.0
2.5
WHEAT
$ PER BUSHEL
Kansas City No. 2 Hard Winter
26 JUL
3.14
19 JUL
3.06
JUN 78
3.11
JUL 77
2.35
$ PER METRIC TON
9.13
1-26 JUL II
0
1974 1975 1976 1977 1978
RICE
$ PER HUNDRED WEIGHT
37.5
No. 2 Medium Grain, 4% Brokens,
f.o.b. mills, Houston, Texas
17 JUL
30.0 10 JUL
JUN 78
JUL 77
22.5
15.0
7.5
19.50
19.50
19.75
15.25
$ PER METRIC TON
19.50
1-17 JUL II
0
1974 1975 1976 1977 1978
COTTON
1.0 $ PER POUND
Memphis Middling 1 1/16 inch
0.8
0.6
0.4
0.2
$ PER METRIC TON
26 JUL 0.5916
19 JUL 0.5990
JUN 78 0.5925
JUL 77 0.5938
250
200
150
100
50
800
600
400
200
CORN
PER BUSHEL
5
4
3
2
1
Chicago No. 2 Yellow
26 JUL
2.24
19 JUL
2.26
JUN 78
2.53
JUL 77
2.07
$ PER METRIC TON
2.32
1-26 JUL II
1974 1975 1976 1977 1978
SUGAR
75 C PER POUND
World Raw London. bulk
50
25
0
$ PER METRIC TON
26 JUL 6.07
19 JUL 6.25
JUN 78 7.26
JUL 77 7.78
1974 1975 1976
COFFEE/TEA
0
400 PER POUND
2,000
350
300
1,500
.5889
250
6.48
1-26 JUL II
1977 1978
COFFEE
Other Milds Arabicas, ex-dock New York
26 JUL
19 JUL
JUN 78
JUL 77
114.00
127.67
169.53
221.52
TEA
London Auction
1,000 MAY 94.9
200 APR 97.9
MAR 78 106.1
JUL 77 133.2
500
150
100
1-26 JUL II
0 50
1974 1975 1976 1977 1978
A-20
$ PER METRIC TON
1974
1975
1976
138.31
150
100
50
1,500
1,000
500
8,000
6,000
4,000
94.9
MAY 2,000
1-26 JUL
1977 1978
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Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
SOYBEANS
15 $ PER BUSHEL
10
5
Chicago No. 1 Yellow
26 JUL
19 JUL
JUN 78
JUL 77
6.30
6.35
6.80
6.33
$ PER METRIC TON
500
400
400
320
300
6.57 240
200
100
160
1-26 JUL II
80
1974 1975 1976 1977 1978
SOYBEAN OIL/PALM OIL
$ PER
SOYBEAN MEAL
$ PER TON
POUND
8 PER METRIC TON
0.5 500
0.4
0.3
0.2
PALM OIL
SOYBEAN OIL
Crude, Tank Cars, fob. Decatur 1,000
26 JUL 0.2507
19 JUL 0.2505
JUN 78 0.2686 800 400
JUL 77 0.2377
0.3141
Crude, Bulk, c.i.f. US Port _/s
26 JUL 0.3100
0.1 19 JUL 0.3150
JUN 78 0.3061
JUL 77 0.2500
120
1 1 0
100
90
80
70
600
0.2586 300
1-26 JUL II
400
200
200
0 100
1974 1975 1976 1977 1978 1974 1975 1976 1977 1978
576741 7-78 CIA
PER METRIC TON
44 Percent Bulk, fob. Decatur
26 JUL
166.50
19 JUL
170.00
JUN 78
169.36
JUL 77
163.35
400
350
300
250
200
1-26 JUL II
1974 1975 1976 1977 1978
FOOD INDEX
1970=100
382
1-18 JUL II
BEEF
Q PER POUND
AUSTRALIA UNITED STATES
Boneless Beef, Wholesale Steer Beef,
f.o.b., New York Midwest Markets
21 JUL 86.75 22 JUL 84.30
14 JUL 88.00 15 JUL 86.50
JUN 78 90.20 JUN 78 90.14
JUL 77 64.31 JUL 77 63.65
88.49
1-21 JUL
60
50
40
1-26 JUL II
1974 1975 1976 1977 1978
A-21
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.
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
INDUSTRIAL MATERIALS PRICES MONTHLY AVERAGE CASH PRICE
COPPER WIRE BAR
140 PER POUND
120
LME
26 JUL 62.1 Nb 6
19 JUL 59.6 t;4 t
JUN 78 60.2 16 ;
JUL 77 56.4 18 4
100 London Metal Exchangel
(LME)
80
60
40
$ PER METRIC TON
1974 1975 1976
ZINC
100 c PER POUND
60.2
3,000
LEAD
0 PER POUND
45
40
2,500
35
30
2,000
25
1,500 20 I
$ PER METRIC TON
LME Ii'
26 JUL 27.9 3 )
19 JUL 25.8 3 )
JUN 78 26.8 3
JUL 77 25.3
1,000
800
15
1-26 JUL II 1,000
1977 1978 10
LME
26 JUL 26.9
19 JUL 26.0
80
JUN 78 26.1
JUL 77 24.5 a,
$ PER METRIC TON
60Y lIME1 ?
1-26 JUL II
1974 1975 1976 1977 1978
TIN
650 c PER POUND
2,000
1,500
$ PER METRIC TON
LME
26 JUL 568.4 604 6
19 JUL 558.9 605-8
550 561.2 12,000
400
200
14,000
450
1,000
40 p.. 350
26.4
20
1-26 JUL II
1974 1975 1976 1977 1978
STEEL SCRAP
150 $ PER LONG TON
125
100
75
50
25
21 JUL
19 JUL 14
JUN 78 -
JUL 776'.'
500
250
JUN 78 558.4 600 9
JUL 77 473.2 518.0
LME1
10,000
8,000
6,000
1-26 JUL 4,000II
0 150
1974 1975 1976 1977 1978
PLATINUM
$ PER METRIC TON150 250 $ PER TROY OUNCE
1-21 JUL II
1974 1975 1976 1977 1978
125 225
100 200
75 175
50 150
25 125
0 100
A-22
MP 1,
26 JUL 240.0 251 LI
19 JUL 240.0 24t ?
JUN 78 227.7 246
JUL 77 167.0 146
Major Producer (MP)
11; ;14,
237.1
1-26 JUL II
1974 1975 1976 1977 1978
Approved For Release 200 /04/ 8 : CIA-RDP80T00702A000700080 04-
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
SELECTED MATERIALS
CURRENT
JAN 78
JUL 77
JUL 76
ALUMINUM
Major US Producer
t per pound
55.00
53.00
51.00
44.00
US STEEL
Composite
$ per long ton
395.81
359.36
339.27
316.36
IRON ORE
Non-Bessemer Old Range
$ per long ton
21.43
21.43
21.43
19.50
CHROME ORE
Russian, Metallurgical Grade
$ p.er metric ton
NA
150.00
150.00
150.00
CHROME ORE
S. Africa, Chemical Grade
$ per long ton
56.00
58.50
58.50
39.00
FERROCHROME
US Producer, 66-70 Percent
t per pound
42.00
41.00
43.00
45.00
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
16,772.00
21,549.00
22,821.00
13,954.00
MERCURY
New York
$ per 76 pound flask
160.00
124.33
126.23
110.00
SILVER
LME Cash
t per troy ounce
529.57
472.49
446.93
478.82
GOLD
London Afternoon Fixing Price
$ per troy ounce
187.15
160.45
140.78
125.71
RUBBER
c PER POUND
60
50
40
30
Natural4 (NR)
$ PER METRIC TON
160
LUMBER INDEX6
NR
1973=100
26 JUL
51.0
i44i
1,200
19 JUL
49.6
JUN 78
49.3
49.7
140
JUL 77
39.4
1,000
800
120
_
4,4
ihetico (SR)
20 BO
400
10
1974
300
250
200
150
1-26 JUL I I
1975 1976 1977 1978
INDUSTRIAL MATERIALS INDEX
1970=100
187
1-18 JUL I I
100
1974 1975 1976 1977 1978
60
1974
1975
1-21 JUL I I
1976 1977 1978
I-Approximates world market price frequently used by major
world producers and traders, although only small quantities of
these metals are actually traded on the LME.
2Producers' price, covers most primary metals sold in the US.
3As of 1 Dec 75, US tin price quoted is "Tin NY lb composite."
4Quoted on New York market.
5S-type styrene, US export price.
6 This index is compiled by using the average of 13 types of lumber whose
prices are regarded as bellwethers of US lumber construction costs.
7Composite price for Chicago, Philadelphia, and Pittsburgh.
NOTE: The industrial materials index is compiled by the Economist for 19 raw
materials which enter international trade. Commodities are weighted by
3-year moving averages of imports into industrialized countries.
A-23
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
576742 7-78
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2
Approved For Release 2005/04/18 : CIA-RDP80T00702A000700080004-2