SUPPORT FOR SECRETARY KISSINGER'S TRIP TO MOSCOW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001900010217-7
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 7
• Document Creation Date: December 19, 2016
• Document Release Date: May 23, 2006
• Sequence Number: 217
• Publication Date: March 11, 1974
• Content Type: MF

 11 ma
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reh 1974
USSR and ,astern Europe
TEROUC1: L Director of Economic Research
SUEJt CT : Support for Secre;;ary Kissinger.'s
Trip to Moscow
Attached are an original and two copies WE
U/SR's contribution covering the 1974 economic
outlook in the USSR. If you have any questions
concerning the contribi}.tion, please call
1A L
Acting Chief
USSR/;'astern Lampe Division
Distribution: (S-5982)
Orig. & 2 - Addressee
1 -- D/OER
1 - Ch/D/U
1 -- DCh/D/U
1 - St/P/C
Q - SA/ER
2 -- U/SR
w/att
n
25X1'
(11 I?iarch 1974)
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Soviet Economic Outlook for 1974
(Support for Secretary Kissinger's Trip to Moscow)
USSR Branch
11 March 1974
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Soviet Economic Outlook for 1974
The USSR's economic growth is expected to subside somewhat
in 1974. Last year's record agricultural performance will be
hard to match although industry will have the benefit of a
larger flow of raw materials from Soviet farms.
-- The increase in gross national product, assuming
an average weather year in agriculture, probably will
be about 5%, compared with almost 8% in 1973 (Table 1).
-- Farm output will grow, but by much less than in
1973 when exceptionally good weather resulted in fine
harvests of grain, potatoes, cotton, and other crops.
A leveling off or decline in crop production should
be more than offset by sizeable gains in the livestock
sector.
-- Industry should do better in 1974 than in
1973, partly on the strength of a marked improvement
in supplies of farm products like meat, milk, cotton,
and vegetable oil. Although continued shortfalls
in meeting energy targets are expected, shortages of
fuel are not expected to prove to be an industrial
bottleneck.
Encouraged by the economy's performance in 1973 after two
lackluster years, the leadership seems to be planning no major
policy initiatives. The emphasis continues to be on bolstering
agriculture and on raising productivity.
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-- The distribution of investment resources will
again favor agriculture.
-- Intermittent rumors of pending changes in the
system of economic management have been vague as to
the substance of proposed reforms. The economic reforms
introduced since 1965 have had little effect, and a
su=-?picion of decentralized decision-making deters radical
experimentation.
-- The leadership, as a consequence, hopes to spur
productivity by gaining greater access to Western
technology. It believes that its bargaining power
in this respect has increased as a result of the
changed position of raw material producers in the world.
The gradual growth in defense spending evident since
1969 is likely to continue in 1974, despite the announced
cutback in the budget allocation for defense. Indeed, the
programs can be accommodated within a slowly rising total
budget by redistributing funds among competing systems.
After persevering with its consumer-oriented policies
through the difficult years of 1971 and 1972, the Politburo
this year will be able to point to some tangible improvements
in consumer welfare,. Supplies of unprocessed foods such as
fruit and vegetables began to improve in the last half of 1973.
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Last year's record grain harvest is bound to result in a
sizeable growth in the availability of meat, milk, and
eggs in 1974. Meat was particularly short in 1973 as the
leadership directed a determined and successful campaign
to expand livestock herds. Soviet consumers can also count
on pronounced gains in production of soft goods and consumer
durables. Car ownership is becoming a serious possibility
for the average Soviet citizen.
Moscow's foreign trade position should improve considerably
because of substantially higher prices for its exports of oil
and reduced outlays for grain.
-- Soviet imports from the Developed West will
probably fall by about 10% in 1974. The USSR's exports
to the Developed West should rise by 40-50%.
-- The USSR should be able to meet its export
commitments for oil. It may fall somewhat behind in
deliveries of gas to Western Europe because of
technical problems.
-- To pay for imports from the West, the USSR
will not be forced to sell gold as in the past two
years. Some sales are likely, however, to take
advantage of current high prices.
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-- Last fall's record grain harvest, coupled with
deliveries on 1972 purchases, allowed the USSR to
rebuild stock and export some grain to non-Communist
countries. Nevertheless, the expected heavy
requirements for livestock feed in 1974 will
incline the leadership to buy more grain this year
to avoid exposing their meat program to the vagaries
of this year's weather. The size of these purchases
will depend on world prices as well as the policy
toward increasing reserve stocks.
USSR: Post-Khrushchev Rates of Economic Growth
Average
1965-70
1971
1972
1973
Gross national product
5.7
4.2
1.7
7.7
By producing
Agriculture
sector
4.7
0.3
-7.2
15.0
Industry
6.4
6.0
5.2
5.9
Other
6.0
5.5
4.9
4.9
By major end izse
Per capita consumption 5.7
3.4
0.9
3.6
Investment 7.5
8.2
7.6
5.2
Defense 2.5
-1.1
1.1
2.7
b~leCi (Lj~.iL'?1 L. 1..
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