ECONOMIC SUMMARY FOR GREECE, BELGIUM, LUXEMBOURG

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000600050013-8
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 6
• Document Creation Date: December 16, 2016
• Document Release Date: October 18, 2004
• Sequence Number: 13
• Publication Date: October 30, 1975
• Content Type: MF

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CENTRAL INTELLIGENCE AGENCY
,WASIIINGroN, D.C. 20505
C>~! 5--~"~Co75
/--`
MEMORANDUM FOR: Mr. James Carnes
International Security Affairs
Department of Defense
SUBJECT
LC0I d l- I' I.;; ~~~ 1~1~-1~
Economic Summary for Greece,
Belgium, Luxembourg
Enclosed is the background information you requested
for Secretary Schlesinger on the economies of Belgium,
Luxembourg,and Greece. If we can provide any additional
~., information or
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Attachments:'
As stated
answer any questions you may have, please
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GONFIDF. i~-11 I A L
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Belgium
The Tin'lemans government expects Belgium to remain in
the grips of recession at least through early 1976. Real
GNP growth will likely be zero this year. Joblessness has
climbed rapidly to a current 6.6%, placing ever increasing
burdens on the unemployment compensation system. Rising
unemployment payments already have necessitated one un-
scheduled increase in this year's government budget. The
1976 budget has been predicated on.a much lower rate of
unemployment and will likely come in for revision. Inflation,
now at a 15% annual rate, is worsening, driven by escalating
wages. Industrial production is well down from last year,
espeGi.ally in steel, and industry in general is operating
at only 75% of capacity.
Brussels has proposed a plan that would continue the
recent price freeze and hold down wages. The plan also
calls for increased aid to labor-intensive industries,
more government jobs for the unemployed, and some financial
aid to ind',istry. At present, labor organizations oppose
the program and are continuing to block its acceptance.
Even should labor aquiesce, it is doubtful the plan is
strong enough to have much impact.
In first half 1975, the trade deficit fell to $260
million from $1.1 billion in first half 1974. Although
the value of exports fell by 2.7% in this period, imports
dec'.ined even more, dropping 7.6%.
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Gr". irtV' , ;
Luxemboung
The heavy dependence of Luxembourg's economy on those
of West Germany and Be.'_gl um has contributed heavily to
the 7.5% decline in GNP now estimated for 1975. inflation
has stabilized at a high 10.7% annual rate. The steel
industry, which exports 95% of its output and accounts for
25% of GNP, is seriously depressed. Luxembourg's steel
production was 22.9% lower in the'first seven months of'
1975 than in the like period in'1974, while steel output
in the-rest of Europe was down only 15.4%.' Luxembourg's
construction industry was off by 19.,3%, and output in other
manufacturing industries was down 1!.4%. The government
feels it can do little to revive the economy on its own.
The only measure taken so far has been the launching of small
scale -public works projects to generate orders for steel.
Officials are resigned to rising unemployment and reduced
working hours until general recovery in Europe takes place.
Greece
Economic activity in Greece has been improving.slowly
since early 1975 especially in the agricultural and construction
sectors. After declining by 2.1% in 1974, GNP will likely
increase 2% this year. Government policy ha:? been only mildly
expansionary because of Athens' fear of rekindling inflation.
Price increases have been slowed and are now runninq at 13%
(annual rate), less than the government's target of 15% and
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bout half the mid-1974 level. The employment picture
stabilized in mid-year but will likely worsen as workers
return from abroad.
The 1975 trade deficit will be about $3 billion, up
from $2.8 billion in 1974. Exports rose in the first half
by 19% while imports -- over twice as large -- increased
by 7%. Although improved invisible earnings from tourism,
shipping, and foreign workers have been an offsetting
factor, the deficit on current account will likely rise this
year by 9% to $1.35 billion. Athens has attracted enough
foreign capital to offset half the shortfall and has arranged
for enough official borrowing from abroad to cover the rest.
First half 1976 should show some improvement in output
without much deterioration in the fight against inflation.
Real GNP next year should grow close to 3%. The trade
picture will likely remain the same as in 1975. The trade
deficit will probably be the sarn size as this year while
some small improvement could be expected in the current
account.
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