3. Economic factors. (See Appendix "B"). Production of high-priority armament items such as ships and aircraft, may continue to expand for some time, even though the rapid growth of Japan's basic industry has been levelling off since the beginning of 1944. Further substantial growth of the Japanese steel and other basic industries is believed impossible in the light of the present Japanese shipping position. Shipping is now barely adequate to sustain current production rates in the basic industries, and sinkings exceed launchings.