North Korea’s economic slide picks up speed

20 06 2008

Joongang Ilbo (North Korea’s economic slide picks up speed 2008/06/19)  North Korea’s economy shrank 2.3 percent in 2007 from a year earlier, its second straight year of contraction as devastating floods hit harvests, the South Korean central bank said yesterday.

The Bank of Korea estimated that the country’s gross domestic product shrank more than twice as much as the 1.1 percent contraction in 2006. The 2006 slide was the first in eight years and was due mainly to worsening international relations following its first nuclear test and severe flooding. North Korea’s economic growth was estimated from information given by various institutions including the National Intelligence Agency.

“Last year the North Korean overall economy suffered difficulties as a fall in agricultural production deepened its food shortage,” the central bank said in a report.

The gap between the economies of the two Koreas is growing ever wider. The central bank said North Korea’s nominal gross national income was 24.8 trillion won ($24.2 billion) last year, just 2.8 percent of South Korea’s 902.5 trillion won. North Korea’s per capita GNI is 1.1 million won, only 5.7 percent of South Korea’s 18.6,626,000 won.

The North, with 23.2 million people, has less than half the population of the south, with 48.5 million. North Korea’s agricultural sector contracted 9.4 percent last year from a year earlier, much greater than the 2.6 percent fall in 2006, the bank said. A bright spot is growth in the service industry ? the number of international tourists, including South Koreans, visiting Mount Kumgang increased to 377,000 last year from 266,000 in 2006.

North Korea exported $920 million in goods, such as ore and minerals, last year. It imported $2 billion in products like cars and textiles. Of the North’s total trade, that with South Korea made up $1.8 billion.

Since a full-scale famine in the mid to late 1990s that killed hundreds of thousands, the North has relied on international aid to help feed its 23 million people. Severe food shortages have been reported this year. A recently obtained North Korean government document indicates that the country is facing grave food shortages, according to Good Friends, a South Korean organization working to help hungry North Koreans.

Aid groups say North Korea may see tens of thousands of people dying of starvation in two months if there is no emergency foreign aid. The Seoul government estimates the North needs at least 5.42 million tons of cereals annually but is 1.24 million tons short this year.

IFES NK Brief (“DPRK EMBRACES COMPARATIVE ADVANTAGE TO STRENGTHEN FOREIGN ECONOMIC RELATIONS “, 2008/06/17) reported that a ccording to an article run in the June 10 issue of the Rodong Sinmun, the newspaper of the DPRK Workers’ Party, economic independence “is not closing the doors and solving everything 100 percent on our own,” and stressed the fundamental rule of ‘selling what is present and buying what is missing’, otherwise known as comparative advantage, as the key to advancing overseas foreign economic relations. The article closed by noting, “the important, fundamental issue as [the DPRK] maintains the basic path toward the construction of a powerful economic state…is keeping the economic structure’s distinctive qualities alive while technically reviving the people’s economy,” and furthering the development of heavy industries and national defense industrial sector.

Joongang Ilbo (“IN NORTH KOREA, SIGNS OF RECOVERY“, 2008/06/17) reported that the DPRK ‘s economy has been gradually recovering from the country’s worst economic troubles since the mid-1990s. A JoongAng Ilbo special reporting team visited the DPRK from May 8 to 13 and took a tour around the country. Pyongyang’s electricity supply seemed to have stabilized and passersby on the streets looked livelier compared to observations made during the team’s first visit in 2006. In Pyongyang, the capital, red banners were hanging all over the city, exhorting citizens with slogans such as “Enhance agricultural production, the foundation of a great, strong country” and “Bring a new wave of improvement in the production of consumer products.”



One response

13 10 2009
North Korea gets to thinking « Asian Correspondent

[…] their inexhaustible mental powers in a think-fest.Whether anyone will ponder why North Korea's Gross National Income per capita is 5.7 per cent of their southern neighbour remains to be […]

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