USSR: CURRENT OUTLOOK FOR THE ECONOMY (S-09069)

Created: 9/18/1975

OCR scan of the original document, errors are possible

CENTRAL.LU5ENCE AGENCy

eptemberf 19

MEMORANDUM FOR: Ms. Kathy Bjrion

USSR Affairs Branch Department of Commerce

Outlook for the Soviet EcqYu ny

is an updated version of the briefingUSSR: Current Outlook for thehich yoq quested for Assistant Secretary Daxor's upcoming trip)

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At tachmen t: As stated

CiA HISTORICAL REVIEW PROGRAM RELEASE AS9

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USSR: Current Outlook for tbf gconomy

The Soviet economic performance for the firstjsf

as market) by high rates of growth in most sectors often surpassing the levels attained The donjes economy -- prices, employment. production regained lif:tl affected by the continuing inflation and slow economic growth in the West. However,expected major shortfalls

in Soviet agricultural production, the need to import grpin and the drawing down of domestic stocks, will certainly jtri Soviet economic gains for the rest of

Industrial production, by Soviet measures, incrfeas

during thealf While be loir theregisteredhis is nevertheless* thef second highest rate achieved during the current' Five-Year Plan-

State capital investment, which accounts forofj total capital investment in tho economy, increased byver the level of the firot half" Tils rate tops5 plan target of The agricultural sector and the fuel and power industries appeared tp havo the first claims on investment resources. Oil and natural gas output for the first six monthsi exceeded their plan targets by comloitafcle roorg:

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Severe drought, however, haa cut crop prospects sharply.

Grain output, for example, is estimated to beillion tons below5 plan target. Since agriculture contributes almost one-fourth of

economic prospects 4 increase in national income (Soviet definition) ofs not likely to be repeated this year. The USSR has so far purchased approximatelyillion

tons of foreign grain in Moscow'

undoubtedly will draw down grain stocks, which we believe do notillion tons and may be considerably less. In addition, the Soviets presumably will have toombination of unpalatable steps:

negotiate for further large amounts of grain from the Unitedhe only large supplier in sight,

import further amounts of soybeans from the United States and Brazil,

cut livestock feed rations to2 level while maintaining livestock numbers, saving up toillion tons, and

slaughter additional livestock % reduction in herds would saveillion tons).

Horn: major goals of the Five-Yeorill not bo mat.

Many of tho consumer goals cannot be reached because of disappointing harvestsnd because of slow construction-and assimilation, of new production capacity.

Wage Increases will be held down to keep incomes in line with available goods and services. The Soviets areull year behind in thoir schedule for implementing tne new minimum wage scales.

Oil and natural gas output will not reach their targets, largely because of the depictionlder fields and technical problems in exploiting new areas.

Soviet hard currency trade5 has been strongly affected by Western inflation and recession.

world prices have boosted Soviet export earningsbut the continuing Western recession has constrained Soviet export performance. The prospects are slim for an upswing in Western import demand for the remainder

Soviet, imports fron major Western trading partners increased throughout the first half and the large deliveries of Western grain will accelerate import growth even more.

a result, the USSR willecord trade deficit this year of between'nd S3 billion.

The Soviets should be able to cover this year's deficit largely through Western credits.

Net medium and long-term credits may4 billion in

The USSR has0 million in Eurocurrency loans sincend is presently arranging another loan0 million.

Soviet gold sales are expected to exceed..last year's total of0 million.

The main underlying problems in the Soviet economy continue to be:

stagnating factor productivity growth in both industry and agriculture, poor economic management,

slow translation of new technology and new products into large-scale production,

chronic deficiencies in the agricultural sector.

Original document.

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