ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500140020-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 20, 2016
• Document Release Date: March 20, 2006
• Sequence Number: 20
• Publication Date: June 28, 1973
• Content Type: REPORT

 Economic Intelligence Weekly
Secret
CIA No. 7696/73
28 June 1973
Copy NoIJ9
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Page
US Aluminum Scrap in Strong Demand
1
Brazil's Soybean Bonanza
1
Soviets Push for Better Terins in US Machinery Deals
1
China Interested in Canton Fair Reforms
I
,.Egypt Turns to US Companies for Pipeline Financing
2
Argentina's Return to Peronist Economic Policies The economic
outlook is dimmed by new legislation penalizi,rg foreign in>>estment
and agriculture.
Soviet Livestock Up, Meat Down The USSR's state and collective
farms have successfully maintained their livestock through a winter
of diminished feed supplies, but the campaign has been costly to the
consumer.
High Prices Threaten US Petroleum Imports from Europe Rising
petroleum prices, spurred by growing US demand, may force West
European governments to curtail petroleum exports to the United
States.
North Vietnam's Reconstruction Activities Hanoi's reconstruction
effort is beginning to take shape with aid from its Communist allies. 6
US Share of World Coil Trade Declines The declio-_: can be
a'',ihuted partly to reduced prices offered by other coal exporting
countries and partly to increased costs and prices in the United
States.
World Grain Developments Both the world rice and wheat markets
Were quiet this Week. 8
to I
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ECONOMIC INTELLIGENCE WEEKLY
Notes
US Aluminum Scrap in Strong Demand
Heavy foreign demand for US aluminum scrap is contributing to sharp
domestic price increases. During the first four months of 1973, US exports
of aluminum scrap were 87'%% above the comparable 1972 period, and, since
January 1973, US domestic scrap prices have risen by 25%. Japan, the major
foreign buyer, has accounted for about one-half the increase in US exports
this year. Other buyers are South Korea, Canada, and West Germany.
Brazil's Soybean Bonanza
Brazil's just-completed soybean harvest is estimated at 4.9 million tons,
up 47% from last year's crop. Brazil exports most of its output, ranking
as the second largest supplier (after the United States). The bumper crop
and record prices will result in soybean exports of about $1 billion this
year, compared with $285 million in 1972. Because soybean traders already
have discounted larger Brazilian shipments this summer, prices are likely
to remain near the current level at least until October, when the US harvest
will begin to be marketed. Brazilian officials are predicting a 1974 harvest
of some 7 million tons, or about one-fifth of the 1972 US crop. 7
Soviets Push for Better Terms in US Machinery Deals
The USSR is attempting to reduce its large trade deficit with the United
States by seeking more favorable trade arrangements for Kama truck plant
purchases. A visiting delegation of trade officials is trying to persuade
potential sellers of US equipment for Kama to accept Soviet machine tools
as part payment. In addition, the USSR is now financing most US equipment
purchases with Eximbank and US commercial bank credits rather than
paying a!sh, as was the case last year.
Chinese commercial officers in the United States, dissatisfied with the
results of the spring Canton Fair, are requesting advice from US business
nn ways to improve marketing procedures for the forthcoming October fair.
High prices and slow business at the spring fair caused a lar a number of
buyers to leave early or make only token purchases. 25X1
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Argentina: Selected Economic Indicators
1968
1969
1970 1971
1972
19731
Percent
Increase in output
Rcal gross domestic
product
4.6
7.9
0.2
3.8
4.1
4-6
Agriculture
-3.9
4.2
1.5
-2.7
-4.4
Manufacturing
Investment as a share
of grow domestic
6.9
11.1
5.1
6.3
7.6
product
Increase in consumer
15.2
13.6
14.1
17.4
18.0
prices
9.6
6.7
21.7
39.1
64.1
60-80
Exports
1,368
1,612
1,773
1,740
1,7101
2,900
Imi.orts
1,169
1,576
1,694
1,869
2,0001
2,300
Trade balance
Foreign reserves
:99
36
79
-129
-2901
600
end of year
773
553
686
283
465
(UNCLASSIFIED)
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SE,CR ET
Egypt Turns to US Companies for Pipeline Financing
Egypt is seeking competitive bids from US firms for the financing and
building, of the 200-mile Suez-to-Alexandria (Sumcd) pipeline, in the latest
attempt to get construction started. Over the course of two years of
negotiations with a French-led West European consortium, the Egyptians
have been confronted with a substantial rise in the price of the project
caused by escalating steel prices and general cost increases. Egypt hopes
to get not only a lower bid from the US companies (because of the US
cost advantage from dollar devaluation) but also more lenient repayment
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The Israeli government has announced a three-month price freeze in
aia effort to defuse inflation as a major issue in next month's labor
negotiations and the general elections later this year. The action followed
a rash of actual and threatened strikes over wages. Up to now the
government has been reluctant to move because of possible political
repercussions. Inflation has accelerated from an annual rate of 12% to 13%
in the past two years to a current rate of nearly 20%.
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Argentina's Return to Peronist Economic Policies
Foreign-owned firms and agricultural interests are the main targets of
the Campora government's first economic moves. The package of 20
legislative proposals, which probably will soon be rubberstamped by
Congress, also will substantially increase state control over the economy.
The government's proposals appear to go further in penalizing foreign
interests than had been expected. Foreign ownership will be subject to
Andean Pact Investment Code provisions, which call for a gradual transfer
of equity to national interests. Profit remittances will be held to a 12-1/2,,
annual return on invested capital. All Argentine firms purchased since the
military took power in 1966 will be nationalized, a move that will
immediately affect three US-owned banks, among other enterprises. US
interests in petroleum, mining, and insurance are vulnerable to further
nationalistic measures, and all US direct investments (totaling $1.4 billion)
will be subject to stricter controls.
Other measures poLtt to a damaging shift of resources from agriculture
to industry. To reduce urban food costs, the government already has forced
a 20% rollback on beef prices and frozen prices of other major items. The
rural sector - still the source of most Argentine exports - faces laws
permitting a government monopoly on beef and grain sales, a land tax based
on potential productivity, and expropriation of underutilized farmland. At
the same time, industry is to receive higher protective tariffs and credit
subsidies.
Many of these steps are reminiscent of Peronist policies during the
late 1940s and early 1950s. Urban labor and industry in that era were
heavily favored at the expense of agriculture and foreign investment, a
formula that led to economic dislocations from which the country has never
fully recovered. This time the economy could encounter serious difficulties
in short order because Argentina lacks the large foreign reserves that
previously cushioned the impact of Peron's policies.
After a good performance in 1969 and stagnation in 1970, the
economy has grown moderately while inflation has risen sharply. Although
exports are up sharply this year -- because of bumper crops and high prices
for grains and meat - the political instability and violence that marked
the Peronists' accession to power have already darkened the economic
picture. 25X1
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SECRET
Soviet Livestock Up, Meat Down
The USSR's state and collective farms, which account for almost 60%
of Soviet meat production, have successfully maintained their livestock herds
through a winter of diminished feed supplies. The campaign has been costly
to the consumer in the short run, and meat shortages have been widespread.
Soviets Trim Meat Output
to Build Livestock Herds
Meat Production
Million Tons
Per Capita
(Kilograms)
1966-70 annual
average
11.6
48.6
1970
i 2.3
50.7
1971
13.3
54.3
1972
13.6
54.9
1973
Original plan
14.3
57.2
Revised plan
12.9
51.6
On I May, inventories in all major categories of livestock were higher
than a year earlier. This was a distinct improvement over January, which
had shown slippage in the numbers of hogs and sheep. The Soviet press
conducted an intensive campaign during the winter to prevent the
widespread distress slaughtering that had occurred after 1963's poor harvest.
The campaign was aided by an early spring in much of the country, which
allowed pasture gr.mrth to bolster dwindling winter feed supplies.
Although the successful wintering campaign will pay off eventually
in higher meat output, the immediate effect has been to reduce supplies
of meat below the 1971-72 levels. From January to May the output of
industrially processed meat was about 10% below the same period last year.
Embassy travelers and Soviet citizens report that supplies of meat were
short and queues especially long a~ state retail outlets. Meat continues to
be available at collective farm markets, but only at considerably higher
prices. Rising personal incomes - coupled with the leadership's policy of
increasing herds to meet its ambitious 1974-75 livestock goals -- suggest
that meat shortages will continu at least through summer.
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S EC R E'1'
High Prices Threaten US Petroleum Imports from Europe
Skyrocketing prices on the West European spot market threaten to
deprive the United States of another source of petroleum products. To ease
the price pressures and avoid domestic shorta;es, some countries Mal,' curtail
exports, as Canada did recently.
During the last 12 months, West European spot market prices have
risen by 130% for gasoiine and 110% for home treating oils. US imports
of West European petroleum products have increased sharply - to about
10% of US imports - ind have helped to drive prices up. Gasoline imports
in February 1973 aniounted to 982,000 barrels, nearly three times the
amount in all of I9"2. Import of fuel oil in March amcunted to 7 million
barrels - more than twice the March 1972 level.
Most of Western Europe's petroleum products are marketed under
ion. -,term contracts or through integrated company channels, with only
marginal quantities being sold on the spot market. Esl,alating spot prices,
however, present problems for the small West European retailers who obtain
supplies on the open market. Moreover, high spot prices probably will
encourage widespread price rises in newly negotiated long-term contracts.
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North Vietnam'. Reconstruction Activities
North Vietnam's reconstruction effort is moving ahead, mainly with
aid from Communist allies. A new economic and military aid agreement
for 1974 was si ncd in Peking on 8 Junco 25X1
on- ommunrs coup rtes have con rr a cr HIM rus tar to recons uc i n.
Press reports indicate construction activity at practically every
important manufacturing and electric power facility damaged by the 1972-
bombing. The Soviets are active at the large Thac Pa
hydroelectric powerplant and the Uong Bi powerplant and in port
construction at Haiphong. The Soviets are also assisting in constructing the
important Da River darn intended for power production and flood control.
Plans for a 120-megawatt powerplant, to be built by Czechoslovakia,
apparently were completed in early June. The Chinese probably are at work
on the Thai Nguyen Iron and Steel Combine, Bac Giang Chemical Fertilizer
Plant, Nam Dinh Textile Plant, and associated power facilities.
In an effort to strengthen the reconstruction program, Hanoi
announced on 14 June the creation of a new Ministry of Building -- a
merger of the State Commission for Capital Construction and the former
Ministry of Construction. The move appears designed to afford more
centralized command of the nation's reconstruction effort.
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US exports of bituminous coal declined sharply in the first four months
of 1973 despite rising demand by steel producers in Japan and Western
1=.urope. Coal exports were down 16% from the comparable period in 1972.
The US competitive position has deteriorated partly because prices
offered by other coal exporting countries are lower than those of the United
States, where costs of production and rail transport have increased
substan'ially. Another factor has been intensified effort by importing
countries to diversify their sources of supply -- especially since 1970, when
a temporary shortage of coking co,-'. caused by a surge in world steel
production led some US consumers to urge an embargo on exports of coal.
While US exports fell from 64 million tons in 1970 to 51 million
tons in 1972, sales of the main US competitors in worid coal markets were
on the upswing. Australian exports rose from 17 million to 21 million tons,
and Canadian exports from 4 million to 8 million tons. Poland, the world's
second largest coal exporter, also increased its sales to the West to 17 million
tons last year.
Further decline in the US share of world coal trade may be in prospect.
For example, Brazil recently agreed to buy a minimum of 4 million tons
of Polish coking coal in exchange for iron ore during 1974-80, thus ending
the almost complete domination of the Brazilian coal import market by
US suppliers. (UNCLASSIFIED)
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World Grain Developments
Rice was traded this week only in small quantities and at high prices,
reflecting the low level of exportable stocks. Most rice importing countries
are not able to meet their immediate import needs. For example,
Bangladesh. Indonesia, and the Philippines now face serious rice shortages,
but are meeting minimum food needs with imports of other grains.
The only substantial
transaction us MORE has been China's agreement to to sell 100,000 tons
of rice to Malaysia in exchange for rubber.
Reactions to the possibility of restrictions on US exports of scarce
agricultural goods include efforts by a number of countries, in particular
Japan, to step up purchases of wheat and feed grains in the United States
for future deli, cry. India, on the other hand, is delaying purchases of grain
needed for immediate shipment, hoping for lower prices and offers of grain
on concessicnal credit terms from the United States and Canada l
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28 June 1973
MEMORANDUM FOR: Recipients of Economic lntelligence
Weekly, CIA No. 769.6/73, 28 June 1973
SUBJECT Revision of Comparative Indicators
Chart
Attached is a revision of the Comparative Indicators
Chart, normally located inside the back cover of the
Economic Intelligence Weekly. The following four new
categories have been requested and are to be found in this
and future versions of the charts "Money--Market Rates,"
"Export Prices" (in US dollars), "Exports," and "Imports."
The Indicators now have one page for domestic activity
and one for external. Beginning with the 6 July issue,
both pages (Unclassified) will be perforated for easy
removal.
FOR THE DIPI'CTOR, OFFICE OF ECONOMIC RESEARCH:
Chief
Production Staff
Attachment:
Comparative Indicators Chart
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GNP"
(Constant i Market Prices)
United Stales
Japan
West Germ iny
France
United Kingdom
Italy
Canada
DOMESTIC ECONOMIC INDICATORS
Average Annual
Growth Rota Since
Percent Change
Latest
od train Previous 1970 Eorlinr Earliierhs
Per
73 I
73 I
72 IV
72 IV
73 1
72 IV
73 I
INDUSTRIAL PRODUCTION'
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
RETAIL SALES'
(Current Prices)
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
May 73
May 73
Mar 73
Apr 73
Apr 73
Feb 73
Feb 73
7.9
16.0
4.7
4.3
7.1
2.7
8.0
9.7
19.4
7.3
7.9
9.1
-1.0
10.2
May 73
Feb 73
Mar 73
Mar 73
Feb 73
Jan 73
Dec 72
0.7
2.7
-2.2
-2.6
0.4
-3.0
2.0
1.5
1.7
-5.7
4.1
3.8
-8.3
-0.5
5.3
9.4
2.9
5.3
2.9
3.1
6.3
5.6
9.4
4.2
6.6
4.3
-0.8
6.9
MONEY-MARKET RATES
United States
Japan
West Germany
France
United Kingdom
Canada
Euro-Dollars
11.6
11.6
9.1
6.3
12.1
8.1
9.3
Ropresenlalive Rates
Prime finance paper
Call money
Interbank loans (3 months)
Call money
Local authority deposits
Finance paper
Three-month deposits
28 June 1973
11.8
20.3
5.9
7.0
17.4
11.9
10.1
Previous
Gunner
7,9
15.2
7.4
7.4
6.2
8.6
12.1
Average Annual
Growth Role Since
Percent Change'
Latest from Previous I Year 3 Months
Period Period 1970 Earlier Earlier
WHOLESALE PRI(`~S
(Industrial)
United States
Japan
West Germany
"ranee
United Kingdom
Italy
Canada
May 73
May 73
May 73
App '3
May 73
Apr 73
Mar 73
1.1
0.9
0.6
0.8
1.0
1.1
2.3
15.7
14.1
7.1
20.2
0
18.7
27.3
10.4 United States
23.3 Japan
9,8 West Germany
-6.0 France
17.0 United Kingdom
-21.2 Italy
13.7 Canadb
14.7 United States
33.9 Japan
14.2 West Germany
6.7 France
23.7 United Kingdom
3.3 Italy
9.9 Canada
May 73
Apr 73
May 73
Apr 73
Apr 73
Apr 73
May 73
May 73
Mar 73
Apr 73
Mar 73
Apt 73
Nov 72
May 73
Percent Rate of luleresl
1'1 Months 3 Months 1 Month
Latest Father Earlier Ear her
Jun 22
Jun 16
Jun 20
Jun 22
Jun 8
Jun 22
Jun 22
1.50
6.50
13.50
7.63
7.90
6.88
8.94
4.03 6.50
4.75 5.50
4.50 8.75
3.75 7.62
3.79 7.75
5.25 5.25
5.25 I 8.56
6.75
5.92
NA.
7.44
7.28
6.25
8.50
1.0
2.9
-0.6
0.8
2.2
2.0
-2.0
4.8
3.8
4.7
8.2
6.0
6.4
6.6
7.0
12.3
6.4
12.0
5.3
12.1
12.3
4i
7.0
6.1
5.8
8.6
6.7
4.8
7.6
18.9
12.2
12.5
12.2
20.0
13.8
5,5
9.4
7.8
6.7
9.2
10.4
7.3
6.1
27.5
9.5
9.9
13.1
18.7
8.6
9.3
23.5
8.3
6.0
13.2
13.7
8.8
5.6
29.9
6.9
-3.4
19.1
23.2
0
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Average Annual
Growth Rate Since
Latest from Proviaui 1 Year 3 Months
Period Pcriod 1070 Earlier Earlier
EXTERNAL. ECONOMIC INDICATORS
EXPORT PRICES
(US$)
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
EXPORT PRICES
(National Currency)
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Apr 73
Feb 73
Mar 73
Dec 72
Apr 73
Dec 72
Doc 72
Apr 73
Feb 73
Mar 73
Dec 72
Apr 73
Dec 72
Dec 72
1.3
4.2
7.4
4.9
1.8
0.2
0.3
1.3
0.4
1.7
4.7
1.8
0
1.0
5.8
9.2
11.0
8.4
9.9
8.2
4.0
IMPORT PRICES
National Currency)
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Apr 73
Feb 73
Mar 73
Dec 72
Apr 73
Dec 72
Dec 72
OFFICIAL RESERVES
5.6
0.8
1.0
4.3
8.5
3.2
2.0
10.0
13.7
12.4
7.1
4.2
4.2
6.9
10.0
7.4
0.5
0.5
9.6
0.9
6.1
18:4
5.0
3.2
0.2
22.9
3.7
4.4
Billion US $
EXPORTS'
(f.o.b.) Latest
Period
19.0
United States
Apr 73
16.1
Japan
May 73
52.5
West Germany
Apr 73
18.0
France
May 73
40.4
United Kingdom
May 73
2.5
Italy Apr 73
5.0
Canada Apr 73
IMPORTS'
Period
19.0
United States
6
Japan
-5.1
West Germany
Apr 73
18.8
France
May 73
15.4
United Kingdom
May 73
3.8
Italy
Apr 73
10.3
Canada
Apr 73
TRADE BALANCE'
Cumulative (Million US S)
Million US $ 1973 19/2
5,487
2,845
5,048
3,2x12
2,303
1,491
1,983
Jon-Apr 20,908
Jan-May 13,757
Jon-Apr 19,087
Jan-May 13,848
Jan-May 11,125
Jan-Apr 5,779
Jan-Apr 7,7'
15,130
11,011
14,803
10,408
9,675
5,909
6,260
Million US $ 1973 1972
2,574 Jan-May 11.014 7,369
3,797 an-Apr 15,008 12,008
3,215 Jan May 13,328 10,153
2,832 Jan-May 12,651 10,226
1,700 Jan-Apr 6,390 5,322
1,747 Jan-Apr 7,219 i,968
(f.o.b./f.o.b.)
40.4
United States
Air 73
5.5
Japan
May 73
5.0
West Germany
Apr 73
17.2
France
May 73
36.9
United Kingdom
May 73
7.4
Italy
Apr 73
6.8
Canada
Apr 73
Latest Period 1 Y
3 M
h
ear
ont
s
Ehd of June 1970 Earlier Err liar
United States
May 73
14.0
16.3
13.3
14.0
Japan
May 73
15.9
4.1
18.0
19.1
West Germany
May 73
32.2
8.8
9.9
29.5
Frunce
May 73
11.0
4.4
8.5
10.6
United Kingdom
May 73
6.7
2.8
7.9
5.9
Italy
Apr 73
6.4
4.7
4.3
5
8
Canada
May 73
5.9
4.3
6.0
.
6.1
196 Jan-Apr -637
271 Jan-May 2,743
1,251 Jan-Apr 4079
-1:f Jan-May 520
-529 Jan-May -1,526
-209 Jan-Apr '-614
233 Jan-Apr 541
Per Unit Doc 66
-1,035
3,842
2,797
255
-551
587
292
18 Doc 71 19 Mar 73 15 Jun 73
Japan (Yon)
0.0038
36.86
10.29
-0.71
-0.16
West Germany loeutsrre
Mark;
0.3917
55.81
26.23
10.62
0.93
Franc (Franc,) (Penn)
0.2375
17.63
20.62
7.76
1.50
United Kingdom sinning)
2.5751
-7.72
-1.17
4.64
-0.25
Italy (Lira)
0.0017
5.12
-2.15
-4.92
3.12
Canada (Dollar)
1.0019
8.62
0.41
0.42
0.20
TRADE-WEIGHTED EXCHANGE RATES
Percent Change horn
Dec 66 i8 Dec 71 19 Mar 73 15 Jun 73
United States
-18.78
-9.27
-2.51
-0.36
Japan
23.89
9.90
-2.10
-0.34
West Germany
27.82
11.04
8.06
-0.08
France
-8.04
5.09
2.05
0.48
United Kingdom
-27.43
-13,57
0.88
-0.84
Italy
-19.61
-18.42
-11.57
2
32
'Seasonally Adjusted
Canada
4.44
-2.09
-0.44
.
0.12
28 June 1973
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