ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000500140015-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 9, 2016
• Document Release Date: March 19, 1999
• Sequence Number: 15
• Publication Date: April 16, 1975
• Content Type: REPORT

/~ ~ /~ /''~?~ n [?' I ~ f~ ~,r ~py~ov~ed~r Q~lease 2p0D109114 :CIA`-RDh86Tj~?D608120QD500140095~7
,/"
?c,or~onrnic., Lnt~l~l?ig~enc.e~ Wee ,~I~y ~' i` 6 Ap'
 Approved For Release 2000/09/14 : CIA#~BR86T00608R000500140015-7
~ec~et
No Foreign Dissem
Economic Intelligence Weekly
~ccr~t
ER EIW 75.15
16 April 1975
Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7CopY NO ~~9
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
~, ~.:,
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Claulftcd by OISJ79
Exoinpt from ynaral doclauificafion rchcd~le
of E.O. 11632,) oxomptlon catoporyi
AulomatBclalllYYfd~claaif~~ om
Dato Impouiblo to Dotormino
Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
Secret
No I'orei~n Dissem
ECONOMIC INTE1_LIGEIVCE WEEKLY
16 April 1975
East Asia: Exports Tamble ~ .
.
3
6
.
Major Developed Countries: Rising Share in the OPEC Market .
8
.Egypt: Serious Pro~lems Still hiamper Economic Progress
I~oies, 'r'ublications of Interest, Statistics
11
Protectiunist Moves by Developed Countries are being made hesitantly.
Restrictions usually have been aimed at only a few consumer-oriented goods such
as autos, textiles, clothing, and some foodstuffs. Although several countries with
large current account deficits and high unemployment have turned ~o or are
considering import controls, the threat of widespread restrictions may abate in
coming months with the spread of a more optimistic economic outlook. The
ccuntries imposing restrictions have stressed their temporary nature, and their
trading partners Have so far shown great forbearance. Only one case of direct
retaliation has occurred; Ankara reacted to British sluotas on cotton. imports by
temporarily banning imports frorn the United Kingdom.
Australia and Finland are the only two countries to impose general import
restrictions -- at the same time that Italy and Denmark were relaxing the controls
enforced last year. The Finnish government has been shaken by a $1.4 billion
current account deficit in 1974 and by a staggering $500 million deficit in the
first two months of 1975. On 22 March, Helsinki initiated an import deposit
scheme on about half its imports, mostly consumer goods.
Note: Comments and queries regrrding the Economic Intelligence Weekly arc welcomed. They may be directed
25X1A to the Office of Economic Research, Code 143, Extension 7892.
Approved For Release 2000/09/14 :CIA-RDP~rTa00608R000500140015-7
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
PJlost nations have been aa!~isfied with monitoring, jawboning, or imposing
limited restrictions.
? France r s banned imports of Italian wine, and its steel federation is
trying -- with little success-- to push the European Co~~l and Steel
Community into protecting steel.
Exports to OPEC by the Ssven Major Developed Countries increased 81?!0
last year. American and ~apanese exporters were the most aggressive, accounting
for 40% of the $15 billion increase in safes to OPEC and substantially increasing
their shares of the market. The remaining fire -- the United Kingdom, West
Germany, France, Canada, and Italy -just about maintained their sha~?e:; in the
OPE ~ markets, as did LDCs and Communist countries. The smaller developed
countries did poorly, accounting for only 9% of the increase in sales to OPEC.
Soviet Borrowing in the Eurodollar Market wilt be used to help finance the
growing volume of equipment orders placed in the West, especially in tFe United
States, on a cash basis. A co;is~rtium of European and l;S banks has completed
arrangements for. a 5-1/2-year, $25f1 million eurodollar loan to the USSR, raising
the total to $350 million borrowers in the Eurodollar market in the last four months.
fUnclassiried-
z
Secret
Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
Secret
Exports of the smaller East Asian countries - Taiwan, South Korea, Singapore,
and Hong Kong -are plummeting, ending more than a decade of rapid expansion.
During the 1960s and 1970s, their exports, mainly light manufactures, expanded
twice as fast as world trade, permitting the economies to weather global slumps
with ease. The current decline reflects the severity of the present world recession,
and, to a lesser extent, import restrictions in Australia and Western Europe. South
Korea and Taiwan have been hardest hit by the trade fallof;, while Singapore has
been less affected because of its position as a major entrepot.
The Export Drive
East Asian exports noseclived in the second half of 1974, the volume falling
at a 30Io annual rate. A sharp contraction in US and Japanese demand, particularly
for textiles and electronic products, was the chief cause. These two categories
account for roughly two-thirds of East Asian exports. Sc?~ ~th Korea, with 40?I? of
its sales going to Japan, has been particularly vulnerable to the Japanese downturn.
The East Asian countries have not been able to expand their share of the shrinking
US market as they did in the 1971 slump. In the past few years, they have upgraded
their product lines and in some instances lost a considerable portion of their cost
advantage because of currency changes. Both developments have been putting them
more directly in competition with US firms.
The timing and severity of the export decline is as follows:
Taiwa~r -Export volume began dropping in the second quarter of 1974,
with the annual rate of decline reaching 60% in the fourth quarter. By
early 1975, volume was 40?lo below the year earlier level.
Soot/r Korea -- Aftur reaching an all-time high in mid-1974, export volume
fell at a 23?Io annual rate in the second half.
Si~lgapore -Export volume climbed through mid-1974, but by yearend
had dropped more than 10% below the peak.
Hong Kong -Export volume fell off through most of 1974, ending 10?Io
below the last quarter of 1973.
Approved For Release 2000/09/14 :CIA-R~P,~,~T00608R000500140015-7
 Approved For Release 2000/09/14 :CIA-RDP~$6T00608R000500140015-7
ecret
EAST ASIA: TRENDS III TRADE V[1lUIIAE
Export Voiuma (Seasonally ~djusted-
2so ~-
i u ni iv
1972
J. /nduding meappLt
n w iv ~ n .n iv
1973 197,E
Import Volume (Seasonally adjusted)
soo~
i
Secret
Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
Fragmentary data indicate that the declines continued for all countries into early
19"%5. Textile exports have been hardest hit. In tl~e fourti~ quarter of 1974, ilte
value of textile exports was at least one-third below the previous year; the drop
in volume was even greater. Exports of consumer electronics, light machinery, and
most other manufactured goods have also declined substantially.
Domestic Impact
be^ause of the fall in exports -the engine of growth in these economies -
real GNP in Taiwan, South Korea, and Hong Kong leveled off or declined in the
second half of last year. Only Singapore leas managed to grow at all since mid-1974.
Unemployment in the past nine months has steadily risen (particularly in South
Korea) with the reduction in the pace of key industries. All four East Asian
governments have shifted fiscal and monetary policy away f-om restraint to
moderate expansion, falling back on the anti-inflationary front.
The falloff in domestic economic activity has resulted in a decline of imports
of raw materials, component parts, and intermediate products used largely in the
export-oriented industries. Imports of capital equipment also show signs of
weakening as unused capacity becomes widespread. Tlie volume of imports fell
in the second half of 1974 at an annual rate of 28~o below the first half peak.
Because import prices in 1974 rose faster than export prices, the composite trade
deficit jumped $4 billion, to $6 billion. With the exception of South Korea,
financing the deficit has not yet become a major problem. Seoul was among the
largest borrowers from the ?"4F oil facility last year and will need additional funds
in 1975.
East Asian trade will not revive until late 1975 or early 1976, after the
expected upturn in US and Japanese demand. Even then considerable time will
be needed for the countrie,: to regain high rates of trade growth as they make
the necessary changes in the structure of their exports. We believe the growth
rate of their exports, although below the level of the 1960s, will be among the
highest of any regional group. (Confidential)^
Approved For Release 2000/09/14 :CIA-RD`~g6}f00608R000500140015-7
 25X6
Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
Next 1 Page(s) In Document Exempt
Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
L'ecret
MAJOR DEVELOPED COUNTRIES: RISING SHARE
IN THE OPEC MAi~KET
The major developed countries captured nearly three-fourths of the ~; I S billion
increase in world sales to OPEC states last year. The value of the Big Sevens
combined exports to OPEC went up 81% from 1973, 2-I /2 times tl~e ;ate for
their other exports. Their inroads into the OPEC market were mainly at the expense
of the other developed countries. As a group, the smaller developed countries
claimed only 13% of the OPEC market, compared with 1 C?Io in 1973, while the
LDCs and Communist countries together held on to about 19% of the mar),:et.
Approved For Release 2000/09/14 :CIA-RD~~~f00608R000500140015-7
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
Secret
Key Beneficiaries
Most of the export gains among the major developed countries went to the
United States and Japan. Together they accounted for 4010 of the increase in world
sales to OPEC, improving their combined position from 3110 to 34?l0 of the OPEC
market. The rest of the major countries showed little change in their market shares.
France, West Germany, and Canada gained a little while Italy and the United
Kingdom lost slightly.
Exporter
1973
1974 (est.)
Major developed countries
65.0
68.2
United States
17.5
18.9
Japan
13.1
15.5
Wes :;ermany
11.2
11.3
France
8.3
8.5
United Kingdom
7.8
7.0
Italy
5.8
5.4
Canada
1.5
1.7
Other developed countries
1G.0
13.0
LDCs and Communist countries
18.9
18.9
US sales to OPEC were up by mare than $3 billion from 1973. More than
half of the increase went to two countries, Iran and Venezuela. Roughly one-third
of the additional sales of $1 billion to Iran were military equipment, with anothr~r
$0.5 billion divided between food and transportation equipment. About half of
the increase in US sales to Venezuela consisted of machinery ar~d equipment; an
additional one-third was chemical products and agricultural goods. The United
States also sold several hundred million dollars worth of military goods to Saudi
Arabia and large amounts of capital goods and food to all OPEC countries.
25X6
Approved For Release 2000/09/14 :CIA-RD~'~6'tT00608R000500140015-7
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
Secret
Other Exporters
More than two-fifths of the gain in France's sales came with its former colony,
Algeria, where strong trade ties continue.
Exports to OP1VC
Prospects
Total world sales to OPEC are expected to reach about $50 billion this year
and $60 billion in 1976. The major developed countries should continue to
dominate this growing market; the United States and Japan should remain the
c}uef suppliers, with Wcst Germany perhaps gainiro in its market share. Competition
among the Big Seven is intense because of the prevalence of excess capacity.
(Confidential 1Vo Foreign Dissem)^
Approved For Release 2000/09/14 :CIA-RDt~~~~00608R000500140015-7
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
Secret
EGYPT: SERIOUS PROBLEMS STILL HAMPEF, ECONOMIC PROGRESS
Although Sadat's political and economic flexibility leas improved Egypt's
long-term economic prospects, Cairo continues to be plagued by economic
difficulties, few of which will be ameliorated by recent changes in government.
Developments Since the October War
For a brief period after the October 1973 war, an improved financial situation
permitted progress in selected areas. Increased infusions of cash aid from other
Arab countries and a sharp upsurge in cotton prices permitted the government
to replenish stockpiles of food and other essential commodities and to ,fount a
reconstruction program in the Suez Canal area. A spurt in private investment in
real estate and tourist facilities quickly heightened economic activity in major urban
centers. Under the auspices of a revitalized petroleum ministry, exploration and
development expenditures mounted in the oil sector. Promises of other private
investment appeared to augur a continuation of the immediate postwar boom.
Since early 1574, Egypt's financial fortunes leave deteriorated. The steep rise
in import prices has substantially offset the increase in Arab aid. Recession and
balance-of-riayments problems in Western Europe have reduced demand for
Egyptian goods and presage a reduction in foreign exchange income of $400 million
in 1975.
The financial picture has also been darkened by the death. of King Faysal
of Saudi Arabia, wlto lead provided Egypt with about $500 million amitially in
cash gants since 1972, frequently overru'.~ng his sceptical subordinates. -
gypt are far more uncertain.
future levels of Arab aid to
Even if the financial situation improves, capacity constraints will continue
to hamper economic growth for some time. Congestion throughout the
transportation and distribution system will ;emit the volume of producer and
consumer goods available to Egypt's import-dependent economy. Failure to
anticipate chronic hydroelectric production problems at Aswan has begun to pinch
power supplies and threaten shortages that could impede industrial ot~tpu t. Lack
of hotel capacity has dampened growth in thF tourist sector, an important source
of foreign exchange.
Approved For Release 2000/09/14 : CI!$eI~P86T00608R000500140015-7
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
Sacrot
Sadat will be hard pressed to satisfy consumer demands for a higher standard
of living. Recent minor improvements will be insufficient for those who remember
higher levels of consumption prior to 1967 and who resent the living standards
of the "new elite," mostly foreigners and Egyptians associated with the embryonic
private sector. A recurrence of strident consumer complaints may tempt Sadat to
favor consumption over state investment.
If the Sadat regime can placate consumers and at the same time avoid
jeopardizing foreign investment, substantial relief should be forthcoming by 1977
or 1978. Reopening of the Cuez Canal, completion of the first phase of the Sumed
pipeline, construction of several new luxury hotels, and the development of
promising new oil and gas fields could redress unfavorable trade trends and reduce
dependence on Arab grants. Expansion of the port of Alexandria, scheduled for
completion late in 1977, will eliminate+ the principal physical obstacle to the
importation of goods. Improvements under way in the pu,~lic production and
distribution systems could be completed, permitting the government to maintain
higher stocks in state stores. (Confidential)^
EC Surplus Wheat Problem
The EC Commission has agreed to subsidize storage during the next 10 months
of 1.2 million tons of wheat, mostly low-grade grain suitable for feed. An influx
of corn in the past several months has undercut EC support prices for wheat and
reduced its use in feed rations. The EC action is unlikely to succeed in strengthening
prices; thus intervention agencies probably will need to purchase wheat. More than
2 million tons of EC wheat from the bur,~per 1974 harvest Mill is available for
export. Foreign commercial demand for this wheat will remain sluggish without
an aggressive export subsidy program. (For Official Use Only)
Latin American Sugar Conference
Twenty-one Latin American and Caribbean countries will meet in Puerto Plata,
Dominican lZepublic, on 21-24 April to formally establish a regional sugar
producers organization. Concerned that the recent sharp drops iti world sugar prices
will continue, the participants are. expected to explore price stabilizing measures,
such as a new international sugar agreement. They are in no position to establish
iz
Approved For Release 2000/09/14 :CIA-[~Q~~6T00608R000500140015-7
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
Secret
a cartel along the lines of OPEC because they account for only half the sugar
traded on the world free market. The meeting will also review recent market
developments and will take up the exchange of information on technology,
production, and plans for expansion. (Confidential)
Chile: Implications of the Worsening Trade and Payments Position
(ER IM 75-8, Aprii 1975, Confidential No Foreign Dissem)
As a result of low world copper prices, Chile faces a large balance-of-payments
deficit in 1975, which it has nc chance of financing. Extensive commercial
borrowing is precluded by the country's already enormous foreign debt and its
low foreign reserves. Foreign aid is small, mainly because of international distaste
for the military government. The memorandum analyzes the effect of the
prospective deficit on imports, GNP, and domestic economic policy.
Indonesia: Recent Changes in Fortune
(ER IR 75-10, April 1975, Confidential)
New economic policies in the late 1960s stabilized the Indonesian economy
and set the stage for a record performance in 1973-74. Growth was featured by
the oil boom, two good years in agriculture, high prices for non-oil exports, and
rapid accumulation of foreign exchange reserves. Growth in the 7%-9% range should
be sustained over the next five years even without new commitments of
concessionary aid.
The Economic SitWation in South Vietnam, March 1975
(ER IR 75-12, April 1975, Secret No Foreign Dissem)
The monthly report for March describes the initial economic impact of (a) the
latest Communist offensive and (b) the rapid and disorderly withdrawal of South
Vietnamese forces from much of the government's territory.
Approved For Release 2000/09/14 :CIA-~2~86T00608R000500140015-7
ecret
 Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
Next 4 Page(s) In Document Exempt
Approved For Release 2000/09/14 :CIA-RDP86T00608R000500140015-7
 INDUSTRIAL MATERIALS PRICES ManihlyAverAOD CashPricD
140 I- 35
COPPER ~ Par Pound
July 1972 1973 1974
150 r
STEEL SCRAP
63.6
61.4
LME US
14 Apr 58.9 83.6
l Apr 01.3 01.0
Mar 75 60.0 D3,6
Apr 74 137.5 86.0
LME US
14 Apr 34.6 3A.0
7 Apr 35.5 38.0
Mer 15 36.4 38.8
Apr 74 76.9 34.6
us
10 Apr 96.33
1 Apr 84,;3
Mar 75 84.2D
Apr 74 123.10
I1.14A.PA
r r
July 1912 1973
150 '-` ~ -+
JDiy 1972 1973 1914 1915
1.10 APO
0 100
July 1972 1973 1974 1975 July 1912 1973 1974
I Approsimates world merkot price Irequently used by major world producers and tratlors,
allhaugh only small quantities of (hose metals ere actually Iroded on the LME,
2 Producers' prica, rovers most primary metals sold in the United Stales.
30uolad an Now York market. 4 Composila prico for Chicago, Philodelphio, and PiOSburgh.
b?~rM: styrene, US Los. eapon prica. A?D
Approved For Release 2000109114 :CIA-RQ
LME
14 Apr 21.0
lApr 21.1
Mar 15 24.8
Apr 74 31.8
US
24.5
24.5
24.5
21.5
LME U5
14Apr 31!1.5 355.11
TApr 3271 3fiD.0
Mer l5 334.8 366 0
Apr 74 917,3 4408
MP USU
190.7 14 Apr 1100 146,0
7 Apr 1TO.D 193.9
Mar 76 179.9 162.1
Apr 74 190.0 227.9
SELECTED MATERIAL;
Aluminum Major US Prod., cAh
Steal Composite. $AT
Imn Dm NomOessemar Old Aanpe,
Chrome Ora Aussion,S4Vif
Chromo Ora S. Alriw. SAT
Ferrochrome US Charge, c4h
Nickel Major US Prod.Cethode,$4h
Manganaso Ore 45%Mn. SAi
Tungsten Ore U5%W03, $rSf
Morcury NY, $IJ6lh Flask
Silver LME wsh. tJfrar Os
INDUSTRIAL
MATERIALS
25D f- INDEX
A roved ForYf~eTease 2000109114 :CIA-R
pp
LME US
4 Apr 50.9 03.6
Yr T5 60.8 03.6
LME US
14 Apr 34.0 3B.D
;Mar 15 36,4 38.D
U5
y Apr 84.33
air 15 641D
pr.14 123,10,
t}ja~elp(uabaydOP~t~bur h. 0015-7
150
MP USD
150.7 14 Apr 1700 145.0
7 Apr 110.0 153.6
Ma116 170,0 r52.7
Apr 14 1 DD.O 227.5
loo
LME U5
14 Apr 21.6 24.5
7 Apr 21.1 24.5
Mar 75 24.6 24.5
1pr 74 31.6 21.5
LME US
14 Apr 319.6 356.D
7 Apr 3211 3GD.D
Mor 75 334,8 3Gfi.0
Apr 74 4173 4400
I
SELECTED MATERIALS
Numinum MejorUS Prod., rQh
Stool Composite, SAT
'son Ore NomOmsemer Oltl Aengo, SAT
Chrama Ore Ause'cn $RrTT
Chrome ora s. Alrire. SAT
Forrachrome US Chorpe, utb
Nickel Major US Prod Cathode, SAb
Monganesa Oio 40%Mn.,SAT
TungslanOro 05%W00,SrST
Morcury rJY, S/10Lh Flask
Silver LME wsh, dfmY Oa
1D
Currant
39.00
289.63
11.53
135.00
57.5D
5358
201
A71D
5,144,15
1s2.ao
412.86
114 APA
Lao
July
INDUSTRIAL
MATERIALS
INDEX
Nov 74
39.00
218A3
1D.Du
55.50
49.5D
a2,Do
1.85
54.72
6,021.34
254.94
467.01
Jon 74
29 BD
212.13
12J6
38.00
33.50
22.50
1.62
52.80
2,872.40
275.54
36019
dan 73
25A0
209,66
11.98
45.]5
25.50
2DOO (
1.53
31.40
2,241,20
262.56
2011.15
NR SR
14 Apr 291 N.A.
7!Ipr 29.2 N,A.
Mnr 75 29.2 NA.
Apr 74 42.8 25.]
1970=100
This is o cnmpilad indea
by the Econai. Est for 19
raw malariols which
enter imernolianal trade.
Commodities ore
weighted by 3?year moving
averages of imports into
industrialised cauntrios.
 AGRICULTURAL PRICES MonthlyAv9rageCashPrice
7,5
5.0
WflEA3 $ Per Uuadol
Kanaea City No. 3 Hmd Winier
'~
3.81
2.5
14Apr
3.70
7 Apr
3.84
Mar 75
3.88
Apr 14
4.18
I.14 APA
_L~.
~~:
0
~, July 1972 1913
~ 1,0 r
144 APA
1974 1975
14Apr 5.62
7 Apr 5.74
Mar ]5 5.52
Apr 74 5.58
14Apr 0.4150
1Apr 0.4125
Mir 75 0.4014
Apr 74 D.8800
Approved For Release 2000109114 :CIA-RDP
0 '- ' D
July 1972 1973 1974 1915 July 1912 1973 191
14 Apr 25.75
1 Apr 23.00
Mer i5 26.71
Apr 14 21.70
14 Apr 48.25
7 Apr 50.50
Mar 75 50.83
Apr 74 10.13
A roved For Release zDOO109114 :CIA-RD
pp
A?1
50 I I L_ I V50.A5
14 Apr 48.25
7 Apr 50.50
Mar 75 50,63
Apr 74 10.73
I~7APA
~~. i
0
July 1972 1973 1974 1975
7 Apr 19.50
31 Mer 19.50
Mar 75 19.50
Apr 14 29.00
COCOA C Per Pound.
Ghanaian h~ NewYorkprice
100
14 Apr I5.OD
7 APr 81.75
Mer 75 81.68
Apr 74 11D.2D
CPYRGHT
i97a=1,oo
this is a compiled index
by the Economist for 1 B
food commodities which
enter international trado,
Commodities ere
weighted by 3?year moving
averegea nl imports into
intloatrielited coentriaa.