N.Korea’s economy returns to negative growth

Posted on : 2010-06-25 12:13 KST Modified on : 2019-10-19 20:29 KST
The Bank of Korea cited decreased crop production, sanctions, discontinued humanitarian aid and controls on market activity as contributors to the decline
 May 2009. North Korea’s economy reverted to negative growth in 2009.
May 2009. North Korea’s economy reverted to negative growth in 2009.

North Korea’s economy has returned to negative growth after just one year, suffering from the aftereffects of a poor annual harvest and sanctions.

In a report released on June 24 entitled “Gross Domestic Product of North Korea in 2009,” the Bank of Korea (BOK) stated that North Korea’s real annual GDP in 2009 had fallen by 0.9 percent from that of the previous year. This was largely due to decreased production of agricultural commodities such as maize due to cold weather, and sluggish manufacturing owing to a lack of electricity and raw materials.

North Korea’s economy improved from consecutive years of negative growth in 2006 (-1.0 percent) and 2007 (-1.2 percent) to positive growth in 2008. Last year, however, it met stagnation once again, seemingly due to a combination of a number of adverse conditions. BOK explained the regression by saying it assumed that the North Korean economy had faced many international and external difficulties, as food shortage due to decreased crop production combined with reinforced sanctions and discontinued support from the international community and placing controls on market activity.

In terms of nominal gross national income (GNI), the North Korean economy was estimated to be one thirty-seventh that of South Korea, while its per capita GNI was cited as one eighteenth that of its southern neighbor. North Korea’s trade volume (goods-based) was calculated as 3.41 billion dollars, a decrease of 410 million dollars from the previous year. Bilateral trade between North Korea and South Korea, which had been steadily increasing, fell for the first time in five years. The transfer of raw materials to Kaeseong Industrial Complex increased, but overall trade decreased sharply, largely because of the shortage of general trade and humanitarian support. The BOK predicted that trade between the two states would decrease by a much greater margin this year, due to strained inter-Korean relations following incidents such as the sinking of the Cheonan.

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