THE SOVIET ECONOMY IN 1975 (S-09081)

Created: 12/5/1975

OCR scan of the original document, errors are possible

cia historical review program, release as sanitized

8 December5

MEMORANDUM FOR THE RECORD

SUBJECT: The Soviet EconomyS;

aVtacned report was forwarded to Mr. David Evans Assistant Director for Non-MarketEP, for his information.

' l. ;

As stated

1

Mr. David Evans

Asst. Director for Non-Market Economies

CIEP, Room

5

The Soviet Economy5

According to official data, national incomeroughly equivalent to the Western concept of GNPgrew byercent This was only about half the planned rate and the lowest rate achieved in. Despite high rates of growth in most economic sectors during the first half of the year, the severe and continuous drought cut sharply into Soviet economic performance during the last six months Since agriculture accounts for almost one-fourth of Soviet GNP, the harvest failure is having widespread economic repercussions in other sectors as well. Industrial production, for example, which increasedercent5 according to the official but inflated index, is scheduled to grow byercenthe lowest rate of increase planned since World War II. As in previous downturns, consumer good^ and services willhe bvlint of next year's reduced industrial growth, although heavy industry will experience cutbacks as well.

Total grain production5 is reported to haveillion metric tons, orillion tons below target. In coping with this shortfall, the Soviets will undoubtedly draw down their' grain stocks, which we believe are inillion-ton range. They have contracted for2 millionigure which we estimate will rise to aboutillion tons for delivery beforeaken together, reserve stocks and imports will narrow the gap between the harvest outturn and requirements, but the Soviets presumably will have toombination of additional, unpalatable steps such as: (a) buy more grain up to the logistical import limit ofillion tons annually; (b) buy more soybeans and meat: (c) reduce the quality of bread and other bakery products; Id) cut livestock feed rations, and (c) slaughter additional livestock.

The poor showing in the Soviot economy has beenby slow-down in exports to the recension-ridden West and record imports of grain and equipment. The Soviet hard currency deficit5 nayecord S5eficit is also expected6 with the size depending on Soviet export performance.

Original document.

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