ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79B00457A000200040001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 48
• Document Creation Date: December 12, 2016
• Document Release Date: January 9, 2002
• Sequence Number: 1
• Publication Date: September 22, 1977
• Content Type: REPORT

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Economic Intelligence Weekly
Secret
ER EIW 77-038
22 September 1977
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
DISSEMINATION CONTROL ABBREVIATIONS
NOFORN- Not Releasable to Foreign Nationals
NOCONTRACT- Not Releasable to Contractors or
Contractor/ Consultants
PROPIN- Caution-Proprietary Information Involved
NFIBONLY- NFIB Departments Only
ORCON- Dissemination and Extraction of Information
Controlled by Originator
REL. .. - This Information has been Authorized for
Release to ...
Classified by 015319
Exempt from General Declassification Schedule
of E.O. 11652, exemption category:
?5B(1), (2), and (3)
Automatically declassified on:
date impossible to determine
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SECRET
Noforn
ECONOMIC INTELLIGENCE WEEKLY
22 September 1977
25X6
Italy: Union Power and Wage Growth
Underlie Economic Difficulties . . . . . . . . . . . . . . . . . . . .
The high real wage level is incompatible with full employment,
balance-of-payments equilibrium, and price stability.
Non-OPEC LDCs: Current Accounts Improve,
Imports Still Constrained . . . . . . . . . . . . . . . . . . . . . .
We expect the combined current account deficit of these countries to
improve by roughly $2 billion in 1977, provided that restraints on imports
continue.
Poland: Gloomier Agricultural Outlook . . . . . . . . . . . . . . . . . 15
Cool, cloudy, and rainy weather may cause shortfalls in grain, fruits, and
vegetables, raising the specter of panic buying.
Improved Conditions at OPEC Ports . . . . . . . . . . . . . . . . . . 16
Ships at OPEC ports in the Middle East and Africa are encountering delays
of 30 days or less compared with the six- to seven-month delay commonly
experienced in 1976.
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25X6
ITALY: UNION POWER AND WAGE GROWTH
UNDERLIE ECONOMIC DIFFICULTIES*
One of Italy's most significant economic problems is a real wage level incom-
patible with full employment, balance-of-payments equilibrium, and price stability.
Since the late 1960s, Italian unions have won big pay gains, nailed them down
through indexing, and supplemented them with perquisites and expanded social
insurance benefits.
*This article summarizes an Intelligence Memorandum to be published shortly.
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Prime Minister Andreotti's current economic program does not come to grips
with the problem of excessive wages, and political realities suggest that future
governments also will be unable to buck the unions on this issue. Instead, Rome will
continue to choke off demand to contain balance-of-payments deficits and curb
inflation, meanwhile deploring the side effects of slow growth, high unemployment,
and a shift of industrial activity into unregulated "black market" channels.
Background
During the 1950s and 1960s, Italy experienced an "economic miracle," posting
rates of real GDP growth among the high-
Low Italy: GDP Growth Rates
est and most stable in the world
.
wages led to large profits, which both
induced and financed heavy investment.
Investment raised productivity and gen-
erated more profits, perpetuating the pro-
cess. Rapid expansion of the export mar-
ket-propelled by growth of neighboring
economies, favorable exchange rates, and
European economic integration-assured
ample demand for the swelling stream of
Annual average xate trercent)
1951-55
5.2
1956-60
5.4
1961-65
5.1
1966-70
5.9
1971-76
2.9
products. The system was self-perpetuating so long as wages rose no faster than labor
productivity and the international situation remained expansionary. An ample pool
of labor in the backward south and the preoccupation of union leaders with political
maneuvers and interunion rivalries kept wage growth relatively low until the late
1960s.
The death knell of the economic miracle was sounded in 1969, when the
rank-and-file union membership initiated widespread work disruptions to back up
stiff demands. Subsequently, organized labor has used its bargaining power to push
up wage rates rapidly. Concurrently, on the legislative front, labor has won big
increases in social insurance and other benefits. Rising wages and social insurance
taxes have cut deeply into the profits of business firms, weakening both the
incentive for investment and the ability to finance capital projects. Soaring prices
have undermined the lira and spawned stop-go government policies aimed at
containing balance-of-payments problems.
Union Accomplishments
Thanks largely to union pressure, real industrial wages have climbed 77 percent
since 1970, the steepest rise in Western Europe. Social insurance taxes and fringe
benefits add another lira to every lira paid in wages. Unit labor costs (in national
currency units) are rising faster than in any other major country. Sharp depreciation
of the lira has been required to maintain international competitiveness.
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Labor has protected its pay gains through contract clauses tieing wage rates to
the consumer price index. Whereas indexation originally protected workers from
inflation originating in Italian monetary and fiscal policies, in recent years it has
insulated workers from increases in the world prices of oil, raw materials, and grain.
This in turn has thrown the adjustment burden for the entire Italian economy
disproportionately ?onto owners of capital, discouraging investment. At the same
time, indexation has lessened the effectiveness of indirect taxes and currency
devaluation as adjustment mechanisms. When a negotiated wage increase, a boost in
indirect taxes, or a currency devaluation pushes up consumer prices, the indexation
machinery triggers an increase in wage rates that pushes up prices again and
frustrates the adjustment process. Indexation now accounts for a greater portion of
wage increases than does direct wage bargaining.
Union labor enjoys almost complete immunity against cyclical swings in
demand. Under terms of a crucial bargain struck in early 1975, management
guarantees certain temporarily laid-off and short-time workers 90 percent of their
usual wages for at least a year. Long before 1975, unions had become effective in
protecting their members against outright dismissal.
Workers also have the protection of extensive legal guarantees and the most
generous social insurance benefits in the European Community. A legislated
"workers' charter" limits managerial control over employees, preventing managers,
for example, from demanding that workers who claim sick leave present evidence of
illness. The charter also assures unions the checkoff privilege, the right to conduct
assemblies during business hours, and the tight to rent-free offices at work sites.
Some Negative Results
Growth of labor productivity has slowed in the 1970s under the impact of
strikes, absenteeism, and labor immobility. Italy leads the major industrial countries
in time lost through strikes. Moreover, many stoppages are carefully orchestrated to
minimize worktime lost while maximizing the disruption of production. Numerous
strikes have been aimed at social or political objectives far outside the control of
individual firms or industries.
Absenteeism now averages more than twice the rate prevailing in the United
States or France, thanks largely to the protection provided by the workers' charter.
Labor has become less mobile, with unions resisting shifts in work assignments as
well as geographical transfers.
Officially reported employment in industry has slumped in recent years and
become limited more and more to males between the ages of 30 and 50. Growing
numbers of older men, youths, and women have been forced to seek illicit
employment as (a) temporary pieceworkers on subcontracts or (b) employees of
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firms small enough to evade union wage scales or even the statutory minimum wage
and social insurance taxes. The drying up of job opportunities abroad and a reversal
of the secular decline in labor participation rates have contributed to growth of this
"black market," with its often harsh working conditions.
Prospects
Prime Minister Andreotti's economic program does not get at the fundamental
problem of the labor market-a level of real wages that Italy's economy cannot sup-
port. The program centers on austerity measures designed to weaken aggregate de-
mand. It will temporarily slow price inflation and wage increases; it will not reduce
union power or significantly alter the troublesome system of wage indexation.
Andreotti's program will reduce the current account deficit from $1.7 billion in
1976 to near zero this year, while slowing consumer price inflation from 22 percent
in the 12 months to December 1976 to about 13 to 14 percent over the course of
this year. Real GDP will increase only about 2.4 percent in 1977. Unemployment
stands at 6.6 percent of the labor force and is expected to rise.
Given high wages and their balance-of-payments implications, future growth of
production will likely continue more slowly and less steadily than in the 1950s and
1960s. Annual real industrial investment, which rose at an average clip of 6.4
percent in 1960-70, presently stands below the 1970 level. The small amount of
investment being undertaken is aimed primarily at cutting the wage bill by
substituting capital for labor. High wages will continue to:
? Discourage employment-expanding investment in the modern sector and
limit internal financing capability.
? Lead to stop-go policies that also will reduce the willingness of firms to
expand.
? Channel a growing share of production to the small, less modern
enterprises in which wages are more responsive to supply and demand.
The sensitivity of the wage question and the political muscle of organized labor
militate strongly against reduction of real union wage rates. Hence, Rome will
continue to lean toward demand restraint despite its negative side effects.
(Confidential)
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NON-OPEC LDCs: CURRENT ACCOUNTS IMPROVE,
IMPORTS STILL CONSTRAINED*
We expect that the non-OPEC LDCs will show a current account deficit for
1977 at the low end of a range of $23 billion to $26 billion. If-as now appears
likely-they persist in braking imports, this would mean an improvement of roughly
$2 billion over their 1976 performance.
1976
Continued
Import
Restraint'
Relaxed
Import
Restraints
Continued
Import
Restraint'
Relaxed
Import
Restraint
Trade Balance
-16
-13
-16
-11
-18
Exports (f.o.b.)
109
122
122
137
137
Imports (f.o.b.)
125
135
138
148
155
Services, net
-13
-15
-15
-16
-17
Investment income, net
-8.0
-9.6
-9.6
-11.0
-10.6
Other services, net
-5.0
-5.4
-5.7
-5.5
-6A
Balance on goods8 services
-29
-28
-31
-27
-35
Private transfers, net
4.5
5.0
5.0
5.6
5.6
Current account balance
-25'
-23
-26
-21
-29
' This table accompanied the opening article in the international financial series on
non - OPEC LDCs.
Estimated.
Projected.
' Option 1.
Option 2.
' Includes $3 billion in technical assistance services provided by developed countries and not
reported by LDCs.
So far this year, the non-OPEC LDCs have achieved sharp growth in exports,
accompanied by only moderate increases in imports. As a result, the foreign
exchange reserves of the group continued to grow through the first half, after having
recovered substantially in 1976. Price breaks in several key commodities are taking
the bloom off export gains; at the same time import prices are expected to grow at a
slower pace toward yearend.
The non-OPEC LDCs have been slow to use their enlarged foreign exchange
reserves to stimulate more rapid growth. In several instances, this hesitance reflects
*This article is the last in a series on the international payments prospects and policies of the non-OPEC LDCs.
Following a general introductory article, 12 articles described the international financial position of individual
LDCs-- the Philippines, South Korea, Argentina, Brazil, Taiwan, Peru, Jamaica, Zaire, Chile, Egypt, and
India.
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the internal realignments that inevitably follow massive foreign borrowing and
chronic domestic inflation. For all members of the group, the present caution is also
induced by uncertainty over the pace and strength of economic recovery in the
industrial nations. As usual, individual LDCs are suffering from internal political
problems, poor economic management, or depressed exports that have caused their
payments positions to move against the broad pattern of improvement.
The most important element in the current account improvement is the
continued restraint most developing countries have imposed on imports. Imports by
non-OPEC LDCs for first half 1977 were only 11 to 12 percent above those of first
half 1976. Most of the increase derived from higher prices for fuel and manufactured
goods. In volume terms, imports rose only 1 to 2 percent, as governments continued
a variety of commercial, monetary, and fiscal policies designed to dampen overseas
purchases. Political pressures have spurred growth and imports have begun to mount
in the second half, as import prices grow less rapidly and exchange reserves continue
to pile up.
Exports by non-OPEC LDCs moved strongly in early 1977, but recent price
breaks in a number of key commodities are trimming growth rates in the second
half. In the first half, a sample of 40 countries showed total export value up about
20 percent over the same 1976 period. The best performers were the coffee
exporters; many noncoffee nations-notably the East Asian exporters of
manufactures-also did particularly well.
Sharp declines in such important lines as coffee, soybeans, copper, and cotton
are eroding the earnings of many of the early winners. For example, Brazil's export
growth is losing momentum, as lower coffee earnings are accompanied by declines in
soybean prices. LDC exports in second half 1977 accordingly will increase only
about 5 percent above those of second half 1976. On balance, the export value
increase for the year should be about 10 to 12 percent.
Reserves of the non-OPEC LDCs rose $4 billion by June over those of yearend
1976.* The overall ratio of reserves to imports continued to rise even though it had
exceeded the equivalent of three months' imports at the end of 1976. LDC
borrowing on private capital markets, after a sharp gain late last year that helped
restore reserves, subsided in first half 1977. Gross medium- and long-term borrowing
by the group on Eurocurrency markets dropped to an annual rate of less than $8.5
*The reserve increase was not evenly distributed among all the LDCs. India accounted for nearly $1.5 billion of
the increment, while other major countries-Brazil and Taiwan, for example-suffered moderate declines in their
positions.
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Non-OPEC LDCs: International Reserves of Selected Countries'
1977
1st
2d
Country 1973
1975
1976
Quarter
Quarter
EIW Financial Series Countries
Argentina
Reserves (Million US $)
1,318
452
1,608
1,705
1,978
Reserve/Import Ratio
0.433
0.093
0.399
Brazil
Reserves (Million US $)
6,415
4,035
6,541
5,863
5,791
Reserve/Import Ratio
0.725
0.243
0.376
Chile
Reserves (Million US $)
178
109
454
497
554
Reserve/Import Ratio
0.104
0.047
0.199
Egypt
Reserves (Million US $)
363
294
339
387
554
Reserve/Import Ratio
0.183
0.057
0.066
India
Reserves (Million US $)
1,142
1,373
3,074
3,747
4,559
Reserve/Import Ratio
0.277
0.205
NA
Jamaica
Reserves (Million US $)
127
126
1,255
59
57
Reserve/Import Ratio
0.138
0.088
0.026
Mexico
Reserves (Million US $)
1,355
1,533
1,501
NA
NA
Reserve/Import Ratio
0.214
0.144
0.141
Peru
Reserves (Million US $)
568
467
330
352
344
Reserve/Import Ratio
0.340
0.141
0.110
Philippines
Reserves (Million US $)
1,038
1,358
1,640
1,391
1,531
Reserve/Import Ratio
0.470
0.308
0.344
South Korea
Reserves (Million US $)
1,094
1,550
2,960
3,212
3,502
Reserve/Import Ratio
0.236
0.194
0.298
Taiwan
Reserves (Million US $)
1,124
1,169
1,607
1,349
1,411
Reserve/Import Ratio
0.25
0.170
0.182
Zaire
Reserves (Million US $)
235
59
105
43
93
Reserve/Import Ratio
0.163
0.035
Other Latin American Countries
Bolivia
Reserves (Million US $)
72
156
168
196
187
Reserve/Import Ratio
0.212
0.221
0.217
Colombia
Reserves (Million US $)
534
521
1,158
1,454
1,644
Reserve/Import Ratio
0.318
0.220
0.434
Costa Rica
Reserves (Million US $)
51
51
98
141
213
Reserve/Import Ratio
0.094
0.062
0.105
Import data include merchandise and services. All data are as of the end of the period.
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Non-OPEC LDCs: International Reserves of Selected Countries' (Cont.)
1977
1st
2d
Country 1973
Dominican Republic
Reserves (Million US $) 88
116
127
92
102
Reserve/Import Ratio 0.065
0.105
NA
El Salvador
Reserves (Million US $) 62
127
205
341
408
Reserve/Import Ratio 0.134
0.176
0.242
Guatemala
Reserves (Million US $) 212
304
511
678
729
Reserve/Import Ratio 0.368
0.323
0.417
Honduras
Reserves (Million US $) 42
97
131
207
196
Reserve/Import Ratio 0.123
0.200
0.228
Nicaragua
Reserves (Million US $) 117
122
146
217
195
Reserve/Import Ratio 0.245
0.184
0.207
Paraguay
Reserves (Million US $) 57
115
160
183
243
Reserve/Import Ratio 0.331
0.360
0.494
Uruguay
Reserves (Million US $) 240
218
315
342
382
Reserve/Import Ratio 0.605
0.304
0.402
Other Asian Countries
Burma
Reserves (Million US $) 100
141
126
122
125
Reserve/Import Ratio 0.408
0.490
0.508
Malaysia
Reserves (Million US $) 1,345
1,524
2,472
2,564
2,715
Reserve/Import Ratio 0,433
0.352
NA
Pakistan
Reserves (Million US $) 480
406
532
418
438
Reserve/Import Ratio 0.346
0.145
0.187
Singapore
Reserves (Million US $) 2,286
3,007
3,364
3,469
3,493
Reserve/Import Ratio 0.410
0.345
0.345
Sri Lanka
Reserves (Million US $) 87
58
92
108
127
Reserve/Import Ratio 0.187
0.070
0.131
Thailand
Reserves (Million US $) 1,306
1,775
1,893
1,981
2,017
Reserve/Import Ratio 0.562
0.483
0.460
Other Middle Eastern Countries
Jordan
Reserves (Million US $) 306
492
491
492
570
Reserve/Import Ratio 0.728
0.516
0.417
Syria
Reserves (Million US $) 412
735
361
NA
NA
Reserve/Import Ratio 0.594
0.381
0.138
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Non-OPEC LDCs: International Reserves of Selected Countries' (Cont.)
1977
1st
2d
Country
1973
1975
1976
Quarter
Quarter
Other African Countries
Cameroon
Reserves (Million US $)
51
29
44
43
Reserve/Import Ratio
0.099
0.035
0.054
Chad
Reserves (Million US $)
1
3
23
20
Reserve/Import Ratio
0.010
0.013
0.131
Ethiopia
Reserves (Million US $)
177
288
306
284
319
Reserve/Import Ratio
0.592
0.659
0.660
Gambia
Reserves (Million US $)
16
29
21
26
31
Reserve/Import Ratio
0.455
0,461
0.254
Ghana
Reserves (Million US $)
189
150
104
134
185
Reserve/Import Ratio
0.350
0.163
0,107
Ivory Coast
Reserves (Million US $)
88
103
76
271
374
Reserve/Import Ratio
0.077
0.059
0.039
Kenya
Reserves (Million US $)
233
173
276
389
534
Reserve/Import Ratio
0.268
0.139
0,216
Mali
Reserves (Million US $)
4
4
7
10
8
Reserve/Import Ratio
0.025
0.016
0.030
Mauritania
Reserves (Million US $)
42
48
82
68
52
Reserve/Import Ratio
0.156
0.165
0.215
Rwanda
Reserves (Million US $)
16
29
64
66
71
Reserve/Import Ratio
0.251
0.221
0.394
Sudan
Reserves (Million US $)
61
36
24
24
23
Reserve/Import Ratio
0.133
0.037
0.026
Tanzania
Reserves (Million US $)
145
65
112
193
238
Reserve/Import Ratio
0.255
0.080
0.152
billion for the period through May, compared with about $11 billion in 1975. With
reserves still building, the LDCs have cut their borrowing rather than moving toward
expansionary programs.
Positions on the Recovery Path
Since the 1973/74 oil crisis, it has become harder to group non-OPEC LDCs in
relation to global economic cycles, as new financial mechanisms have allowed them
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to spread or defer their adjustments. Until recently, the growth rates for both
exports and GNP of many LDCs tended to follow the business cycle in the Big Seven
by six to 18 months. Many could sustain growth and development only by tapping
official aid and private trade credits to offset declining exports. With the
quadrupling of oil prices in 1973/74, the non-OPEC LDC group began to broaden
its use of foreign capital sources, including new facilities of the IMF and a much
more responsive Eurocurrency market. This and other developments have increased
the dispersion in recovery patterns.
Major Country Positions
Of the major developing countries, South Korea and Taiwan are farthest along
on the growth/payments recovery track. The strong position of both these countries
in manufactured exports permitted early gains from the incipient recovery in the
developed nations. South Korea is also helped by its large service accounts earnings
from Middle East construction contracts, which have offset rising debt repayments
and may permit a small current account surplus in 1977. The absence of
Korean-scale services earnings means Taiwan must accept a deficit this year as a
concomitant to a higher growth rate.
The positions of Brazil and Mex- Selected LDCs: Swings in the Current Account
ico were roughly similar at the begin- Deficit, 1977
ning of the year. Brazil has subse- Million US$
quently been hit by declines in coffee Brazil ................................. 1,500
and soybean prices. The Brazilian Mexico ................................ 1,424
government has further aggravated the Argentina ........................... 600
situation by an export policy that has Peru .................................... 532
South Korea ....................... 350
priced the nation's coffee out of the Jamaica ............................... 281
market for the last four months. As a Philippines ......................... 229
result, the current account deficit is Zaire ................................... 0
now expected to decline to only Taiwan ............................... -194
about $4.5 billion rather than to the India ................................... -350
originally estimated $3.2 billion. The Chile.................................... -383
government will have a hard time appreciably relaxing its year-old austerity program
before mid-1978. Mexico, on the other hand, has enjoyed unexpectedly strong
export growth, while tough austerity measures have cut import demand.
Consequently, the Mexican government should be able to relax its financial
stabilization measures beginning early next year.
Among other key countries, the Philippines continues to avoid slowing
economic growth despite potential payments problems. The Philippines should
achieve 7-percent growth in GDP this year, while holding the import increase to half
the rate of export expansion. Manila is running some risk in maintaining rapid
economic expansion, since the nation's reserve import ratio is well below 1973 levels
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and reserves declined in first half 1977. Peru and Jamaica are both tightening
economic austerity to bring their respective financial requirements in line with their
ability to borrow.
Argentina and Chile have already gone through the worst of their austerity
measures. Argentina seems to have successfully reorganized its debt structure and to
have boosted exports; it should be considered on the upswing in its recovery. The
reserve/import ratio was near 1973 levels at yearend 1976 and reserves have
continued to grow in 1977. With debt repayments increasing only moderately and a
bright export picture, ample room exists for accelerated import and GNP growth
over the next several years. Chile's position is substantially recovered from the
chaotic Allende period, although room still exists for improvements in growth and
price performances and international accounts. Reserves are triple the level of 1973.
The reserve/import ratio nonetheless is still quite low. Although economic growth is
expected to run close to 6 percent in 1977, sustained expansion similar to that
prevailing in countries higher up on the recovery path is unlikely.
Unlike most other developing countries, India is probably in the strongest
financial position it has seen. Economic growth, however, will continue to be driven
more by agricultural production patterns than by the external sector.
For the developing countries not covered individually in the EIW series on
international accounts, the broad patterns in reserves and imports permit some
classification of positions on the recovery track.
As a group, the Latin American nations are in the best position, following their
strong export performance in the first half. Even so, many of them will be hurt by
the recent breaks in coffee prices. Of the 10 "other Latin American countries"
(shown in the table), seven had yearend 1976 reserve/import ratios higher than those
prevailing in 1973. Furthermore, only one showed reserve levels declining in both
quarters of 1977, and several showed very strong reserve growth in one or both
quarters. By this ranking, Colombia, Costa Rica, Honduras, and Paraguay appear to
be in good position to expand imports.
The picture is neither as uniform nor as optimistic in Asia, the Middle East, and
Africa. The best prospects for countries in these regions lie among those
conservatively managed economies with traditionally high reserve/import
ratios-notably Thailand, Malaysia, and Singapore. In Africa, Kenya and Ivory Coast
fall in this group. Few others in Africa, however, have been able to capitalize
sufficiently on economic recovery in the OECD countries to appreciably affect
either their payments or growth outlook. (Unclassified)
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POLAND: GLOOMIER AGRICULTURAL OUTLOOK
Unfavorable weather has further dampened Poland's harvest outlook, raising
official fears of renewed panic buying of flour, rice, and cereals. A recent speech by
Polish Premier Jaroszewicz reportedly was edited to substitute a categorical
assurance of adequate food supplies for a vague pledge of government action. To
make up for the likely shortfall in the harvest of grain and potatoes, Warsaw
probably will press Moscow for more grain and seek additional US grain on credit.
Officials Worry About Consumer Reactions
Shortfalls are likely this autumn in the output of grain, fruit, vegetables, and
potatoes because of the continued cool, cloudy, and rainy weather in Poland. Late
in August, reports of harvest problems caused by rains and floods set off a buying
spree, which cleared the shelves of staples in many stores. Although Polish officials
contend that supplies of foodstuffs will be adequate, they complain of difficulty in
allaying consumer doubts. Officials are fearful that continued reports about a poor
harvest will cause another run on the stores and turn an uneasy economic balance
into a political crisis.
Grain and Potato Harvests Down
We estimate that 1977 grain output will be about 20 million tons-nearly 2
million tons less than Polish officials had anticipated and almost 1 million tons less
than last year's output. The milling and breadmaking quality of some of the grain
has been adversely affected by the wet harvesting conditions. The wet weather also
has hit the potato crop (an important source of feed for hogs) particularly hard,
fostering the spread of blight; in past years, blight has reduced the potato crop
between 10 and 30 percent.
Imports of Grain and Fodder Up
Because of the unfavorable harvest outlook, we expect grain import needs in
the fiscal year ending 30 June 1978 to be between 6 million and 7 million tons,
compared with imports of about 6 million tons last year. Imports of oilseed meal
may exceed last year's purchases of about 1.1 million tons. Aside from bread-quality
wheat, the composition of imports of grain and fodder for livestock will be
determined largely by relative prices and availability of credits.
Polish officials are confident that the USSR will supply 1 million to 1.5 million
tons of grain; they will probably press for more.
25X1X
Warsaw has applied for $300 million in Commodity Credit Corporation creaits,
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 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
which would cover 3 million tons. So far $150 million in credits have been
approved, including $135 million for about 1.5 million tons of grain. Purchases of
grain on credit are also expected from Canada and France.
Record imports of grain and feed are needed if the government is to prevent
setbacks to its livestock program. Warsaw has been rebuilding animal holdings since
livestock numbers tumbled in early 1976. Meat, nonetheless, remains scarce; even
with substantial imports of feed grains, increased supplies of meat are not expected
before mid-1978. Meanwhile, planned meat imports will not be sufficient to offset
lower production, and per capita consumption will fall below last year's level.
Shortages of fruit, vegetables, and potatoes will compound consumer dissatisfaction
over meat shortages. (Confidential)
IMPROVED CONDITIONS AT OPEC PORTS*
The unprecedented congestion plaguing OPEC ports in the Middle East and
Africa since 1975 has eased considerably.
At most ports ships are encountering delays of 30 days or less, a vast
improvement over the six- to seven-month waiting periods experienced last year. As
a result, surcharges and demurrage fees, which reached record levels in 1976 because
of the congestion, have been greatly reduced or eliminated. Damage to cargo also has
become less prevalent due to the less crowded port facilities. These improvements,
by allowing for more expeditious movement of goods through the ports, permit
more orderly progress on development projects.
The completion of several port expansion projects should further improve
operations over the next 12 months. By 1985, the region as a whole will have a
comfortable margin of extra port capacity. The bottlenecks in the system will then
have become the outdated internal transportation network.
Technology Leads the Way
The primary reason for the improvement in efficiency at OPEC ports is the use
of modern shipping technology-primarily ro/ro (roll-on/roll-off) vessels, LASH
(lighter-aboard-ship) vessels, and containerships. This factor is most clearly evident
at Jidda, where an estimated 25 percent of imports arrived by containerships in
1976. Similarly, ro/ro vessels-which only began calling at Jidda in late 1975-now
22 September 1977
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SECRET
deliver one-third of total monthly imports. As a result, 1.4 million tons of cargo
were offloaded at the port during the first two months of 1977, an amount almost
equal to the total cargo unloaded during all of 1974.
Improved Management and Higher Labor Productivity
Speed Cargo Handling
Cargo-handling efficiency at OPEC ports also has been raised, primarily through
better management methods introduced by West European and American firms. In
Iran and Saudi Arabia, for instance, the ministries in charge of ports have been
reorganized and incompetent officials replaced. Improvements in labor productivity
have helped alleviate some problems. Foreign firms and laborers are being hired in
growing numbers to handle specific tasks-for example, organizing training
programs, arranging cargo within storage areas, and designing custom forms. The
performance of indigenous workers, who make up the bulk of the labor force at the
ports, is also being slowly upgraded-although at widely varying rates, depending on
the situation at each port.
Major OPEC Ports: Waiting Period'
Country and Port
1 Jan 1976
1 Sep 1976
1 Sep 1977
Kuwait
Shuwaikh
12
50
45
Iran
Bandar Abbas
100
100
25
BandarShahpur
140
120
10
Khorramshahr
225
180
10
Iraq
Basrah
90
30
2-3
Umm Qasr
90
30
0-1
Libya
Benghazi
60
7
30
Tripoli
60
15
30
Nigeria
Lagos/Apapa
180
180
160
Saudi Arabia
Dammam
150
80
1-2
Jiddah
90
160
1-2
'Represents maximum waiting period, normally for ships carrying bulk cargoes.
Some liner conferences as well as ro/ro vessels and containerships receive priority
berthing.
22 September 1977
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Dammam, Saudi Arabia
Dammam, the largest deep water port in the Persian Gulf, has had great success in dealina
with congestion. Since 1975 the number of berths has more than tripled and special facilities for
ro/ro and LASH vessels have been put into operation. In addition, projects to widen road and rail
causeways and to construct large new storage facilities outside the port have greatly improved the
port's interface with the inland transport system.
Port Expansion Gives Elbow Room
The completion of several major port expansion projects has contributed to the
reduction in congestion. Iran, Iraq, Saudi Arabia, and other OPEC states have had
extensive port development projects under way for the past several years. By 1985
these countries will have spent at least $15 billion on building new berths and
warehouses, acquiring forklift trucks and other handling equipment, and otherwise
beefing up facilities. If all berths currently planned or under construction are
25X1 0
25X1 D
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completed, the region will have more than 560 dry-cargo berths available by
1985-nearly four times the number in operation in 1975. Several major expansion
projects have already started to pay off,
Slower Import Growth Lightens Burden
Despite continuing huge current account surpluses, real import growth in
several OPEC countries has leveled off or even fallen during the past 18 months. In
Iran, for example, the volume of imports entering the country has remained
essentially the same since late 1975. In Iraq, real imports in first half 1977 have
actually fallen about 15 percent. As a result, the ports in these two countries have
been given a breather, allowing the port development programs launched during the
past few years to take hold. As for Saudi Arabia, even though imports are running
one-fourth higher this year, this represents a marked decline in the rate of growth.
22 September 1977 SECRET
25X1 D
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 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
Impact
The shorter delays at OPEC ports have led to a reduction in the surcharges and
demurrage fees levied by steamship companies. The major liner conferences, in
particular, have lowered or eliminated their surcharges. The lowering of liner
conference surcharges, however, has been offset at least partially by the increase in
costs attributable to the use of ro/ro vessels, LASH vessels, and containerships.
These vessels, because of their faster turnaround time, charge rates substantially
above general cargo vessels to move the same cargo. As a result, we estimate that
freight and insurance charges in Iran, Iraq, Saudi Arabia, Libya, and Nigeria-which
averaged roughly 16 percent of import costs in 1976-will decline only slightly this
year.
Another important byproduct of the recent alleviation of congestion and the
more efficient cargo handling has been a lowering of import costs. At the height of
congestion, government officials in Saudi Arabia were estimating that damage to
cargo left in open storage was driving up import costs at certain projects by 20
percent or more. Similarly, one business official in Iran stated that nearly 10 percent
of the equipment that arrived last year was destroyed by rust before it could be put
into operation. Moreover, because of the extensive damage, projects were delayed
and costs soared as equipment had to be reordered-at a substantially higher cost,
because of inflation. Although these problems still exist at all ports to some degree,
especially in Iran, the situation is nowhere near as serious as it was a year ago.
Internal Transport: A New Constraint
The improvements cited above suggest that OPEC ports are well on their way
to becoming modem high-capacity ports-provided that certain standards of physical
upkeep, administration, and discipline are maintained. Yet OPEC countries still face
a fundamental distribution problem. Their inland transport systems are old,
backward, and inadequately located for present-day needs.
During the past three years, the highway and rail systems in Iran, Iraq, and
Saudi Arabia-among the largest OPEC nations-have further deteriorated under the
massive new import traffic. As port congestion is reduced, the choke points in the
inland transport system stand out more prominently, especially since local transport
authorities in most cases have not properly maintained the roads and rail lines in
their jurisdictions.
Iran, Iraq, and Saudi Arabia, in particular, have drawn up ambitious
development plans to remedy their internal transport problems. Between 1976 and
1980, these three countries together will spend about $10 billion on these facilities,
triple the amount spent in 1971-75. Most of the programs are focused on upgrading
existing networks and providing links to new industrial mining centers. Except in
20 SECRET
22 September 1977
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 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
Saudi Arabia, where substantial upgrading of highways has already been achieved,
most internal transport projects are in the design or early construction stages. By the
mid-1980s sufficient improvements, however, should have been made to effectively
support the ambitious industrial development programs envisioned in these
countries. (Secret Noforn)
Note
Soviet Grain Purchases Total 14 Million Tons
On 15 September we stated that the Soviets were likely to purchase 10 million
o 15 million tons of grain for delivery i
25X1X
25X1X
Publications of Interest*
Arms Sales to the Third World
(ER 77-10500, September 1977,
This publication analyzes global arms purchases by LDCs in 1976. It focuses on
Middle East clients and provides tabulated data on arms acquisitions by LDCs over
the past five years.
*Copies of these publications may be ordered by callingM
22 September 1977 SECRET
25X1A
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 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
SECRET
The RYAD Computer: A Program in Trouble
(ER 77-10491, August 1977, Confidential Noforn)
This paper discusses recent Soviet problems with the production of
third-generation RYAD computers, prospects for future production, and the
economic and military implications of the program.
Communist Aid and Trade Activities in Less Developed
Countries, Second Quarter 1977
(ER CAT 77-004, September 1977,
This report contains the usual detailed listing of Communist aid and trade
activities in individual LDCs. In addition, feature articles in the quarterly summarize
Communist economic and military activities in Third World countries in first half
1977 and provide details on Soviet aid to fishing industries in LDCs.
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Secret
Secret
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 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
ECONOMIC INDICATORS
Prepared by
The Office of Economic Research
ER El 77-038
22 September 1977
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 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
This publication is prepared for the use of U.S. Government
officials. The format, coverage and contents of the publication are
designed to meet the specific requirements of those users. U.S.
Government officials may obtain additional copies of this document
directly or through 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
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 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
1. The Economic Indicators 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 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 are revised every few months. The most
recent date of publication of source notes is 20 April 1977. Comments and queries
regarding the Economic Indicators are welcomed.
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 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
INDUSTRIAL PRODUCTION INDEX: 1970=100, seasonally adjusted
United States
West Germany
130
120
JAN APR JUL OCT JAN APR JUL T N APR
Approved or release 'b02~2/l V : t1A-KbP??Bd'45AfA0662 4d(1b1A9R JUL OCT
1972 1973 1974 1975 1976 1977
A-2
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United Kingdom Semilogarithmic Scale
11o
Vol 100,
Italy
120 3i If -
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1972 1973 1974 1975 1976 1977
Percent
Change
AVERAGE ANNUAL
GROWTH RATE SINCE
Percent
Change
from
AVERAGE ANNUAL
GROWTH RATE SINCE
LATEST
from
Previous
1 Year
3 Months
LATEST
Previous
1 Year
3 Months
MONTH
Month
1970
Earlier
Earlierl
MONTH
Month
1970
Earlier
Earlierl
United States
AUG 77
0.6
3.5
5.3
6.1
United Kingdom
JUL 77
2.8
0.4
- 1.1"
-8.5
Japan
JUL 77
-0.9
3.8
1.2
0./
Italy
JUN 77
0.7
4.0
12.<
-1.3
West Germany
JUN 77
1.8
2.2
3.6
6.6
Canada
JUN 77
0.3
4.1
4.-
1.4
France
JUN 77
3.2
3.6
4.1
8.0
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1Average for latest 3 months compared with average for previous 3 months.
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UNEMPLOYMENT PERCENT OF LABOR FORCE
-1965-74 AVERAGE
Japan
West Germany
5
4
3
2
France
1.2
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A-4
 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
United Kingdom
6
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 are 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
1972 1973 1974 1975 1976 1977
1 Year 3 Months
Earlier Earlier
1 Year 3 Months
Earlier Earlier
United States United Kingdom
Japan Italy
West Germany Canada
France
NOTE: Data are seasonally adjusted. Unemployment rates for France are estimated. The rates shown for Japan, Italy and Canada are
roughly comparable to US rates. For 1975-77, 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.
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 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
DOMESTIC PRICES' INDEX: 1970=100
1Wholesale price indexes cover industrial goods.
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A-6
 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
United Kingdom
275
250
225
200
175
268
ss
Percent
Change
AVERAGE ANNUAL
GROWTH RATE SINCE
Percent
Change
from
AVERAGE ANNUAL
GROWTH RATE SINCE
LATEST
from
Previous
1970
1 Year
3 Months
LATEST
Previous
1970
1 Year
3 Months
MONTH
Month
Earlier
Earlier
MONTH
Month
Earlier
Earlier
United States
AUG 77
0.6
8.5
7.2
5.7
United Kingdom
AUG 77
0.9
14.8
20.0
13.4
JUL 77
0.4
6.6
6.7
6.9
JUL 77
0.1
14.0
11.6
8.0
Japan
JUL 77
-0
5
7.7
1.1
2.6
Italy
JUN 77
0.3
15.8
15.9
6.7
IIJI. 77
.
0.3
10.5
7.7
0.7
AUG 77
0.7
13.2
20.0
9.8
West Germany
JUL 77
0
5.3
2.2
0.3
Canada
JUN 77
-0.2
10.0
9.6
2.2
0
3
JUL 77
0.1
5.6
4.3
3.1
JUL 77
0.9
7.5
3.4
1
.
MAR 77
0.9
8.4
8.2
7.6
France
JUL 77
0.9
9.1
10.1
10.9
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A-7
 Approved For Release 2002/02/01 :
kKQ ,a@P0457A000200
-
GNP'
Constant Prices
Constant Market Prices
Average
Average
Annual
Growth Rate Since
Annual Growth Rate Since
Percent Change
Percent Change
Latest
from Previous
1 Year
3 Months
Latest
from Previous 1 Year Previous
Month
Month
1970
Earlier
Earlier'
Quarter
Quarter 1970 Earlier Quarter
United States
Jun 77
-0
2
3
2
4
1
3
3
United States 77 II
1.6 3.2 4.7 6.4
.
.
.
.
Japan
May 77
-3.8
9.9
2.3
9.5
Japan 77 II
1.9 5.6 5.6 7.6
West Germany
Jun 77
0.9
2.4
4.4
-9.8
West Germany 76 IV
1.5 6.7 5.1 6.0
France
Jun 77
7.7
-0.3
1.0
-8.1
France 76 IV
0 3.9 4.9 0
United Kingdom
Jul 77
3.1
1.1
-1.7
3.9
United Kingdom 77 I
-1.9 1.6 -1.3 -7.5
Italy
Mar 77
0.2
2.9
-0.3
16.3
Italy 76 IV
1.1 3.0 5.5 4.6
Canada
Jun 77
-0.7
4.1
-3.7
-8.7
Canada 76 IV
-0.6 4.8 3.4 -2.5
' Seasonally adjusted.
Seasonally adjusted.
2 Average for latest 3
months compared with avera
ge for prev
ious 3 mont
hs.
FIXED INVESTMENT'
WAGES IN MANUFACTURING'
Non-residential; constant prices
Average
Anncal
Growth Rate
Since
Average
Percent Change
Annual Growth Rate Since
Latest
from Previous
1 Year
3 Months
Percent Change
Period
Period
1970
Earlier
Earlier'
Latest
from Previous 1 Year Previous
Quarter
Quarter 1970 Earlier Quarter
United States
Jul 77
0.6
7.5
7.6
8.1
United States 77 II
2.2 2.1 9.6 9.0
Japan
Jun 77
1.7
17.3
12.5
8.7
Japan 77 II
0.5 1.1 4.5 2.0
West Germany
77 II
1.7
9.5
7.5
7.2
West Germany 76 IV
7.7 0.5 5.8 34.5
France
77 I
2.3
14.1
13.9
9.5
France 75 IV
8.8 4.2 2.9 40.1
United Kingdom
Jun 77
0.3
15.7
3.4
3.6
United Kingdom 77 I
-0.6 0 3.4 -2.5
Italy
May 77
5.3
21.1
29.4
33.2
Italy 76 IV
5.2 3.0 15.4 22.4
Canada
Jun 77
1.3
11.5
10.7
11.7
Canada 76 IV
8.5 6.8 5.1 38.7
' Hourly earnings (seasonally adjusted) for the United Stat
es, Japan, a
nd Canada; h
ourly wage
rates for others. West German and F
rench data refer
to the beg
inning of the quarter.
Seasonally adjusted.
Average for latest 3
months compared with that for previous
3 months.
MONEY MARKET RATES
Percent Rate of Interest
1 Year
3 Months
1 Month
Representative rates
Latest Date
Earlier
Earlier
Earlier
United States
Commerical paper
Sep 14 6.01
5.38
5.40
5.75
Japan
Call money
Sep 16 4.88
7.00
5.63
5.75
West Germany
Interbank loans (3 months)
Sep 14 4.07
4.58
4.23
4.10
France
Call money
Sep 16 8.50
9.50
8.75
8.56
United Kingdom
Sterling interbank loans (3 months)
Sep 14 6.09
12.03
7.75
6.75
Canada
Finance paper
Sep 14 7.50
9.43
7.14
7.38
Eurodollars Three-month deposits
Sep 14 6.49
? ?Th~ rns
5.58
n,~ ~7an
5.80
nn'nnn.~
6.38
nnn1
 EXPORT PR)F roved For Release 2002/02/01 :
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us $
ational
urre
ncy
Average
Average
Annua
l Growth Rate Since
Annual Growth Rate Since
Percent Change
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
Jun 77
-0.4
9.8
5.6
2.5
United States
Jun 77 -0.4 9.8 5.6
2.5
Japan
Jun 77
2.0
10.8
14.9'
10.1
West Germany
Jul 77 0.9 4.5 0.5
2.1
West Germany
Jul 77
3.5
11.7
12.8
17.0
France
May 77 0.6 9.5 12.8
1.3
France
May 77
0.9
11.3
7.1
3.6
United Kingdom
Aug 77 1.9 16.1 16.7
10.1
United Kingdom
Aug 77
2.9
1 1.0
13.9
15.7
Italy
Mar 77 - 1.1 16.8 22.9
17.1
Italy
Mar 77
0.5
11.3
16.9
16.7
Canada
Jun 77 -0.3 8.2 5.4
9.6
Canada
Jun 77
0.5
9.8
8.6
12.3
IMPORT PRICES
OFFICIAL RESERVES
National Currency
Average
Annual
Growth Rate Since
Billion US
$
Percent Change
Latest Month
Latest fr
om Previous
1 Year
3 Months
1 Year
3 Months
Month
Month
1970
Earlier
Earlier
End of Billion US $ Jun 1970 Earlier
Earlier
United States
Jun 77
-1.4
13.5
7.9
2.1
United States
Jun 77 19.2 14.5 18.5
19.1
Japan
Jun 77
-0.8
10.9
0.3
-14.8
Japan
Aug 77 17.8 4.1 16.3
17.3
West Germany
Jul 77
0.3
4.4
-0.3
-1.2
West Germany
Jun 77 35.1 8.8 33.3
34.7
France
May 77
-0.5
10.5
17.4
2.5
France
Jun 77 10.2 4.4 9.6
9.8
United Kingdom
Aug 77
-1.0
19.3
13.9
1.7
United Kingdom
Aug 77 14.8 2.8 5.0
9.9
Italy
Apr 77
1.0
21.1
13.7
15.1
Italy
Jun 77 9.7 4.7 5.2
6.4
Canada
Jun 77
0.5
9.2
9.0
7.4
Canada
Jun 77 5.1 4.3 6.0
5.1
CURRENT ACCOUNT B
ALANCE'
BASIC BALAN
CE'
Current and Long-Term-Capital Transactions
Cumula
tive (Million
US $)
Cumulative (Million
US $)
Latest
Period Million US $
1977
1976
Change
Latest
Period Million US $ 1977 1976
Change
United States 2
77 I
-4,317 -
4,317
540
-4,857
United States
No longer published'
Japan
Jul 77
1,554
4,661
1,242
3,419
Japan
Jul 77 1,368 3,521 1,629
1,892
West Germany
Jul 77
-546
1,731
1,188
543
West Germany
Jul 77 -875 -2,039 1,196
-3,234
France
77 II
-438 -2,101
2,052
- 50
France
77 1 -1,354 - 1,354 -2,015
660
United Kingdom
77 I
-773
-773
-502
-271
United Kingdom
76 IV -277 N.A. -4,171
N.A.
Italy
77 I
-929
-929
1,413
484
Italy
76 III 779 N.A. 1,096
N.A.
Canada
77 I
-1,624 -1,624
1,911
287
Canada
77 1 -583 -583 882
-1,465
' Converted to US dollars at the current market rates of exchange.
'Converted to US dollars at the current market rates of exc
hange.
' As recommended by
the Advisory Committee an the Presentation of Balance of Payments
Seasonally adjusted.
Statistics, the Department of Commerce no longer publishes a basic balance
.
EXCHANGE RATES
TRADE-WEIGH
TED EXCHANGE RATES'
Spot Rate
As of 16 Sep 77
Percent Change from
Percent Change from
As of 16 Sep 77
US $
1 Year
3 Months
1 Year 3 Months
Per Unit
19 Mar 73
Earlier
Earlier
9 Sep 77
19 Mar 73 Earlier Earlier 9 S
ep 77
Japan (yen)
0.0037
- 1.47
7.49
1.82
0
United States
6.40 2.27 0.32
0.05
West Germany
0.4299
21.41
6.60
1.18
-0.06
Japan
4.58 10.17 2.04
0.01
(Deutsche mark)
West Germany
26.23 5.96 1.32
0.01
France (franc)
0.2027
-8.03
-0.76
0.10
-0.21
France
-7.84 -2.70 0.08 -
0.18
United Kingdom
1.7425
-29.20
0.49
1.33
0
United Kingdom
-28.97 0.85 2.11
0.06
(pound sterling)
Italy
-38.40 -6.58 0
0.07
Italy (lira)
0.0011
-36.05
-4.79
0.18
0
Canada
-4.56 -9.57 -1.32 -
0.08
Canada (dollar)
0.9307
- 6.72
- 9.31
- 1
25
- 0
09
Weighting is based on each listed country's trade with 16 other industrialize
d countries to
.
.
reflect the competitive impact of exchange rate variations among the major currencies.
pproved or a ease
 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
Exports to (f.o.b.) Imports from (c.i.f.)
UNITED STATES 3
1974
.............
1975
.............
1976
.............
1st
Qtr
........
2d
Qtr
........
3d
Qtr
........
4th
Qtr
........
1977
1st
Qtr
........
2d
Qtr
........
JAPAN
1974
.............
1975
.............
1976
.............
1st
Qtr
........
2d
Qtr
........
3d
Qtr
........
4th
Qtr
........
1977
1st
Qtr ........
Apr
& May .....
WEST GERMANY
1974 .............
1975 .............
1976 .............
1st Qtr
........
2d Qtr
........
3d Qtr
........
4th Qtr
........
1977
1st Qtr
........
Apr ...........
FRANCE
1974 .............
1975 .............
1976 .............
1st
Qtr
........
2d
Qtr
........
3d
Qtr
........
4th
Qtr
........
1977
1st
Qtr
........
Apr
...........
UNITED
KINGDOM
1974
.............
1975
.............
1976
.............
1st
Qtr
........
2d
Qtr
........
3d
Qtr
........
4th
Qtr
........
1977
1st
Qtr
........
2d
Qtr
........
World Seven OECD OPEC 3 munist Other
98,507 45,866 15,630 6,723 3,406 26,882
107,592 46,926 16,191 10,765 3,699 30,011
114,997 51,298 17,612 12,567 3,936 29,584
27,360 12,184 4,088 2,751 1,144 7,193
29,695 13,383 4,496 3,113 1,088 7,615
27,437 11,944 4,073 3,106 850 7,464
30,505 13,787 4,955 3,597 854 7,312
29,454 13,752 4,716 3,136 951 6,899
31,673 14,282 4,707 3,389 816 8,479
55,610 18,591 6,862 5,450 4,367 20,340
55,812 16,468 6,091 8,423 5,283 19,547
67,364 22,406 8,588 9,278 5,049 22,043
14,429 4,848 1,827 1,872 1,289 4,593
16,431 5,402 2,092 2,271 1,348 5,318
17,542 5,897 2,272 2,476 1,135 5,762
18,962 6,259 2,397 2,659 1,277 6,370
17,911 5,848 2,449 2,459 1,409 5,746
13,017 4,404 1,611 1,823 875 4,304
89,365 30,820 36,431 4,066 9,473 8,575
90,181 28,331 36,406 6,776 10,629 8,039
101,980 33,443 41,811 8,245 10,310 8,171
23,467 7,918 9,519 1,710 2,430 1,890
24,570 8,215 10,110 1,838 2,421 1,986
25,147 8,003 10,272 2,235 2,510 2,127
28,796 9,307 11,910 2,462 2,949 2,168
27,804 9,281 11,609 2,307 2,156 2,451
9,230 3,058 3,849 799 694 830
45,914 19,361 14,854 3,017 2,265 6,417
52,189 19,960 15,454 4,909 3,477 8,389
55,680 22,438 16,081 5,067 3,558 8,536
13,639 5,524 3,921 1,240 917 2,037
14,769 5,911 4,395 1,221 1,059 2,183
12,409 4,922 3,446 1,280 729 2,032
14,863 6,081 4,319 1,326 853 2,284
15,323 6,250 4,540 1,392 847 2,294
5,232 2,193 1,569 460 288 722
38,615 11,704 15,544 2,554 1,458 7,355
43,751 12,399 16,310 4,535 1,768 8,739
46,312 14,016 17,492 5,133 1,619 8,052
11,637 3,415 4,362 1,238 433 2,189
11,553 3,532 4,307 1,259 420 2,035
11,058 3,430 4,100 1,262 386 1,880
12,064 3,639 4,723 1,374 380 1,948
13,150 4,008 5,145 1,521 413 2,063
14,375 4,195 5,700 1,687 530 2,263
World
Seven
OECD
OPEC 2
munist
Other
100,218
49,490
9,415
15,636
1,282
24,395
96,140
46,715
8,170
17,083
1,156
23,016
120,677
56,626
9,058
25,017
1,445
28,531
27,319
12,884
2,226
5,570
327
6,312
28,367
14,332
2,242
5,582
372
5,839
32,452
14,285
2,228
6,952
389
8,598
32,539
15,125
2,362
6,913
357
7,782
34,990
15,124
2,566
8,324
366
8,610
37,907
17,059
2,578
8,673
411
9,186
62,074
18,755
6,219
19,970
3,684
13,446
57,853
16,917
6,083
19,404
3,382
12,067
64,895
17,534
7,777
21,877
2,926
14,781
14,832
4,083
1,696
5,213
671
3,169
15,903
4,347
1,948
5,400
667
3,541
16,818
4,497
2,137
5,406
747
4,031
17,342
4,607
1,996
5,858
841
4,040
17,452
4,717
1,845
6,246
801
3,843
11,988
3,195
1,380
3,925
575
2,913
69,659
23,878
25,504
9,211
5,153
5,913
74,986
27,085
27,761
8,239
5,526
6,375
88,211
31,281
32,632
9,720
6,718
7,860
20,147
7,130
7,577
2,189
1,502
1,749
21,571
7,704
8,133
2,223
1,625
1,886
21,791
7,565
7,894
2,575
1,699
2,058
24,701
8,883
9,028
2,732
1,891
2,167
24,084
8,465
8,828
2,578
1,270
2,943
7,991
2,892
2,949
756
428
966
52,874
22,062
13,620
10,117
1,714
5,361
54,238
23,039
14,350
9,665
2,065
5,119
64,256
27,750
16,894
11,336
2,384
5,892
15,529
6,567
4,157
2,818
595
1,392
16,187
7,149
4,324
2,610
593
1,511
14,841
6,431
3,733
2,723
577
1,377
17,699
7,603
4,680
3,185
619
1,612
17,885
7,494
4,840
3,056
600
1,895
5,788
2,499
1,543
879
194
673
54,107
18,158
17,968
8,695
1,870
7,416
53,260
18,387
18,370
6,912
1,726
7,865
56,029
19,653
18,732
7,292
2,143
8,209
13,641
4,704
4,597
1,824
510
2,006
14,052
5,041
4,547
1,738
579
2,147
13,787
4,744
4,547
1,893
528
2,075
14,549
5,164
5,041
1,837
526
1,981
15,575
5,786
5,068
1,783
514
2,424
16,623
6,009
5,718
1,702
602
2,592
Approved For Release 2002/0/? : CIA-RDP79B00457A000200040001-7
 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
Developed Countries: Direction of Trade
(Continued)
Big
Other Com-
Big
Other
Com-
World
Seven
OECD OPEC 2 munist
Other
World
Seven
OECD OPEC 2
munist
Other
ITALY
1974 ............. 30,252
13,894
7,135
2,238
2,701
4,284
40,682
17,949
6,394
9,384
2,513
4,442
1975 ............. 34,825
15,626
7,519
3,718
3,228
4,734
37,928
17,284
6,189
7,854
2,431
4,170
1976 ............. 35,364
16,698
8,276
4,027
2,592
3,771
41,789
18,585
7,755
7,831
3,000
4,618
1st Qtr 7,398
3,513
1,713
756
597
819
9,092
4,063
1,708
1,689
608
1,024
2d Qtr ........ 8,705
4,157
2,040
951
623
934
10,716
4,786
1,918
2,092
744
1,176
3d Qtr ........ 9,398
4,505
2,191
1,057
657
988
10,335
4,497
1,860
2,035
792
1,151
4th Qtr ........ 9,863
4,523
2,332
1,263
715
1,030
11,646
5,239
2,269
2,015
856
1,267
1977
1st Qtr ........ 9,668
4,520
2,264
1,236
655
993
11,299
4,964
2,130
2,166
720
1,319
Apr & May ..... 7,480
3,435
1,719
981
540
805
8,523
3,829
1,561
1,605
523
1,005
CANADA 4
1
979
1974
.............
32,390
26,827
1,970
626
851
2,116
32,408
25,965
1,508
2,613
343
,
1975
.............
31,778
25,885
1,753
827
1,255
2,058
34,050
27,181
1,579
3,126
311
1,853
1976
.............
37,746
31,415
2,048
930
1,270
2,083
37,922
30,383
1,661
3,171
363
2,344
1st
Qtr ........ 8,539
7,197
424
167
334
417
9,159
7,331
367
843
85
533
2d
Qtr ........ 10,015
8,441
496
183
345
550
10,290
8,175
421
954
95
645
3d
Qtr ........ 9,216
7,486
568
271
354
537
8,834
6,965
433
716
91
629
4th
Qtr ........ 9,976
8,291
560
309
237
579
9,639
7,912
440
658
92
537
1977
1st
Qtr ........ 9,672
8,201
524
248
231
468
9,640
7,850
391
742
87
570
2d
Qtr ........ 10,740
9,055
540
278
292
575
10,841
9,007
430
677
96
631
' Data are unadjusted. Because of rounding, components may not add to the totals shown.
2 Including Gabon.
3 Import data are f.a.s.
Import data are f.o.b.
Approved For Release 2002/02/01 : ~I-RDP79B00457A000200040001-7
 g~oved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
FOREIGN RADE BILLION US $, f.o.b., seasonally adjusted
United States
Semilogarithmic Scale
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1972 1973
1974 1975 1976 1977
Approved For Release 2002/02/01 i CIA-RDP79B00457A000200040001-7
 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
United Kingdom
6.0
5.0
4.0
LATEST
MONTH
MILLION
US $ 1977
1976
CHANGE
LATEST
MONTH
MILLION
US $ 1977
1976
CHANGE
United States
JUL 77
United Kingdom
AUG 77
4,579
39,260
33,044
18.8%
Balance
Balance
245
-3,196
-4,236
1,041
Japan
JUL 77
4,950
35,179
30,759
14.4%
Italy
JUL 77
3,365
25,581
22,305
14.7%
Balance
1,701
10,289
6,411
3,878
Balance
206
-388
-2,078
1,691
West Germany
JUL 77
Canada
JUN 77
3,703
21,728
18,940
14.7?,o
Balance
16
747
--166
912
France
Balance
JUL 77
5,480
38,287
33,873
13.0%
Balance
-158
-1,826
-1,052
-775
Approved For Release 2002/02/0f 1: lA-RDP79B00457A000200040001-7
 FO f A O MtI.SAIIIf P70?O 7A000200040001-7
United States INDEX: JAN 1975 =100
Japan
West Germany
JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
u
1974 1975
lExport an giViedeFb QFdl rlJ< -,2AA dp9'is~9 -RDP79B00457A7000200040001-7
A-14
 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
France
United Kingdom
Italy
104
102
105
103
APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT
1974 1975 1976 1977
Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
A-15
 Approve E EGMU t VEbC) GPC: *W6EfiO040001-7
MONEY SUPPLY'
INDUSTRIAL PRODUCTION'
Avera
ge
Average
A
nnual Growth
Rate Since
Annual Growth Rat
e Since
Percent Change
Percent Change
Latest
from Previous
1 Year
Latest
from Previous
1 Year
3 Months
Month
Month
1970
Earlier
Period
Period
1970
Earlier
Earlier I
Brazil
Jan 77
-3.1
35.5
28.2
Brazil
76 II
0.1
11.0
10.7
0.4
Egypt
Apr 77
1.2
18.6
23.0
India
Feb 77
3.5
5.5
6.9
18.7
India
Mar 77
1.8
12.3
20.5
South Korea
Jun 77
8.3
22.7
14.3
21.6
Iran
Mar 77
14.5
30.4
52.2
Mexico
Apr 77
0.6
5.6
0.4
17.5
South Korea
May 77
3.4
31.3
35.0
Nigeria
76 IV
0.2
11.3
9.0
0.7
Mexico
Jun 76
-0.3
17.0
16.6
Taiwan
Apr 77
1.9
14.9
12.7
-8.4
Nigeria
Feb 77
5.9
35.9
54.8
' Seasonally adj
usted.
Taiwan
Mar 77
-0.2
24.4
21.2
Average for latest 3 months compared with average for previous 3 months.
Thailand
May 77
1.5
13.5
13.0
Seasonally adjus
ted.
CONSUME
R PRICES
WHOLESALE PRICES
Average
An
nual Growth Rate Since
Average
Percent Change
Ann
ual Growth
Rate Since
Latest
from Previo
us
1 Year
Percent Change
_
Month
Month
1970
Earlier
Latest
from Previous
1 Year
Month
Month
1970
Earlier
Brazil
Apr 77
3.3
26.6
44.4
India
Mar 77
0.6
8.2
9.1
Brazil
Apr 77
4.3
27.3
45.9
Iran
May 77
2.6
12.4
29.3
India
Mar 77
0.2
9.3
11.9
South Korea
Jun 77
1.0
14.6
10.1
Iran
May 77
1.8
11.0
22.2
Mexico
Jun 77
1.2
14.7
32.5
South Korea
Jun 77
0.8
16.6
9.1
Nigera
Feb 77
- 1.7
14.5
8.2
Mexico
Jun 77
1.0
16.5
50.9
Taiwan
May 77
0.4
10.4
3.0
Taiwan
May 77
0
9.2
4.4
Thailand
Jun 77
0.7
8.7
8.5
Thailand
May 77
1.2
10.1
5.9
EXPORT PRICES
OFFICIAL RESERVES
US $
Million US $
Average
Latest
Month
-
Annual Growth Rate Since
1 Year
3 Months
Percent Change
End of
Million US $ Jun 1970
Earlier
Earlier
Latest
from Previous
1 Year
3 Months
Period
Period
1970
Earlier
Earlier
Brazil
Feb 77
5,873 1,013
3,667
5,139
Egypt
Apr 77
405 155
375
389
Brazil
Oct 76
-0.4
14.5
26.5
17.0
India
May 77
4,431 1,006
2,258
3,481
India
Sep 76
-3.8
9.2
6.4
-6.6
Iran
Jun 77
11,025 208
8,621
10,355
Iran
May 77
0
36.5
18.6
0
South Korea
May 77
3,519 602
1,911
2,872
South Korea
77 I
1.7
8.8
11.9
6.9
Mexico
Mar 76
1,501 695
1,479
1,533
Nigeria
May 76
-0.1
33.2
8.2
6.6
Nigeria
May 77
4,740 148
6,087
4,937
Taiwan
May 77
0.4
12.3
9.4
14.7
Taiwan
Apr 77
1,289 531
1,146
1,581
Thailand
Dec 76
2.0
13.3
13.1
77.7
Thailand
Jul 77
2,017 978
1,929
2,006
A-16
Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
 Approved For Release 2002/02/01 : CIA-RDP79B00457A000200040001-7
Latest 3 Months
Percent Change from
Apr 77 Exports
- 1.2
38.6
13,904
11,244
23.7%
Apr 77 Imports
- 11.5
- 1.1
16,077
16,064
0.1%
Apr 77 Balance
-2,173
-4,821
2,648
76 IV Exports
-97.9
-47.8
NA
NA
NA
76 IV Imports
76 IV Balance
-93.5
-54.7
NA
NA
NA
NA
NA
NA
Mar 77 Exports
77.7
11.2
6,496
5,612
15.7%
Mar 77 Imports
- 18.2
3.2
5,650
6,595
- 14.3%
Mar 77 Balance
845
-982
1,828
Iran
May 77 Exports
32.1
14.4
34,022
28,883
17.8%
Mar 77 Imports
135.4
9.1
15,148
12,200
24.2%
Mar 77 Balance
14,710
12,956
1,754
South Korea
May 77 Exports
60.8
29.6
11,347
7,632
48.7%
May 77 Imports
106.6
27.4
11,661
9,562
21.9%
May 77 Balance
-313
-1,931
1,617
Mexico
May 77 Exports
25.9
28.9
5,071
4,240
19.6%
May 77 Imports
-33.8
-23.1
7,665
8,728
- 12.2%
May 77 Balance
-2,594
-4,488
1,894
Nigeria
Apr 77 Exports
-25.0
5.2
13,706
11,320
21.1%
Dec 76 Imports
Dec 76 Balance
83.0
6.6
NA
NA
NA
NA
NA
NA
Taiwan
May 77 Exports
128.9
20.6
12,325
8,953
37.7%
May 77 Imports
122.4
21.3
10,766
8,750
23.0%
May 77 Balance
1,559
203
1,356
Thailand
Jan 77 Exports
34.3
22.9
4,206
3,172
32.6%
Mar 77 Imports
30.1
22.7
4,205
3,748
12.2%
Jan 77 Balance
-301
-812
511
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AGRICULTURAL PRICES MONTHLY AVERAGE CASH PRICE
WHEAT CORN
100
1-13 SEPII 0 0 1-13 SEPII 0
1973 1974 1975 1976 1977 1973 1974 1975 1976 1977
SOYBEANS
15 $ PER BUSHEL
SUGAR
$ PER METRIC TON 75 C PER POUND
1-13 SEPII
1973 1974 1975 1976 1977 0 0 1973 1974
1.0 $ PER POUND
Memphis Middling 1 1/16"
13 SEP 0.4884
7 SEP 0.4930
AUG 77 0.5335
SEP 76 0.7376
COFFEE /TEA
$ PER METRIC TON 400 C PER POUND
2,000
350
7.52
1-13 SEPII
1975 1976 1977
TEA
COFFEE
London Auction
Milds Washed
29 AUG
100.2
13 SEP
200.00
22 AUG
97.9
7 SEP
202.00
AUG 77
99.2
AUG 77
201.30
SEP 76
77.0
SEP 76
165.40
13 SEP 7.50
7 SEP 7.65
AUG 77 7.62
SEP 76 8.18
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37.5 PER HUNDRED WEIGHT
No. 2 Medium Grain, 4% Brokens,
f.o.b. mills, Houston, Tex.
SOYBEAN MEAL
$ PER TON
22 AUG
15.00
13 SEP
141.00
15 AUG
14.75
7 SEP
143.50
AUG 77
140
58
AUG 77
14.94
.
SEP 76
14.10
SEP 76
178.86
200 160
$ PER METRIC TON 0 5 $ PER POUND
7,000
19 AUG 213.50
12 AUG 225.00
AUG 77 222.22
SEP 76 122.02
13 SEP 0.1865
7 SEP 0.1983
AUG 77 0.2113
SEP 76 0.2250
CPYRGHT
1-19 AUG 1,000 1-13 SEPI I 0
II 0
1977 1973 1974 1975 1976 1977
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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INDUSTRIAL MATERIALS PRICES MONTHLY AVERAGE CASH PRICE
COPPER WIRE BAR
140 9 PER POUND
-K Mt I RIC TON 45 C PER POUND
LME US ;3,000
13 SEP 53.5 60.6
7 SEP 54.6 60.6
AUG 77 52.7 63.9
SEP 76 66.2 74.6
1-13 SEPII 1,000
1973 1974 1975 1976 1977 10 1973
14,000
150 250
Us
:400
200
PER POUND
650 C PER POUND
$ PER METRIC TON
LME
US
2,000
LME
US
13 SEP
23.1
34.0
13 SEP
489.3
537.7
7 SEP
24.1
34.0
7 SEP
495.0
540.8
AUG 77
23.6
34.0
AUG 77
511.8
556.4
SEP 76
32.2
40.0
SEP 76
360.1
396.4
$ PER LONG TON
1-13 SEPII
1974 1975 1976 1977
PLATINUM
$ PER METRIC TON $ PER TROY OUNCE
1-8 SEPI I
13 SEP 25.7 31.0
7 SEP 26.1 31.0
AUG 77 24.9 31.0
SEP 76 21.7 25.0
1-13 SEPII 4,000
1976 1977
MP USD
13 SEP 167.0 149.2
7 SEP 167.0 148.0
AUG 77 167.0 147.9
SEP 76 180.0 158.3
1-13 SEP1II
1973 1974 1975 1976 1977
PER METRIC TON
1,000
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ALUMINUM
Major US Producer
t per pound
53.00
49.17
48.00
41.00
US STEEL
Composite
$ per long ton
359.36
339.27
327.00
290.33
IRON ORE
Non-Bessemer Old Range
$ per long ton
21.43
21.43
20.51
18.75
CHROME ORE
Russian, Metallurgical Grade
$ per metric ton
150.00
150.00
150.00
150.00
CHROME ORE
S. Africa, Chemical Grade
$ per long ton
58.50
58.50
42.00
44.50
FERROCHROME
US Producer, 66-70 Percent
t per pound
41.00
43.00
44.00
53.50
NICKEL
Composite US Producer
$ per pound
2.16
2.41
2.24
2.20
MANGANESE ORE
48 Percent Mn
$ per long ton
72.00
72.00
72.00
67.20
TUNGSTEN ORE
65 Percent W03
$ per short ton
9169.22
10,534.69
7,502.70
5,241.58
MERCURY
$ per 76 pound flask
115.00
173.20
116.90
138.10
SILVER
t per troy ounce
449.49
486.01
428.96
449.50
GOLD
147.55
148.23
114.14
144.09
CPYRGHT
10 1973
1-13 SEPII
1977
INDUSTRIAL MATERIALS INDEX
300
LUMBER INDEX6
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 "bell wethers" of US lumber construction costs.
1-6SEPII
1975 1976 1977
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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